Redundancy Pay Calculator 2026-27

Statutory redundancy pay is calculated based on your age, length of continuous service (up to 20 years) and weekly pay (capped at £700 for 2026/27). The formula gives: 0.5 weeks' pay per year of service under age 22, 1 week per year aged 22–40, and 1.5 weeks per year aged 41 and over.

The maximum statutory redundancy payment is therefore 30 weeks' pay (20 years × 1.5 for over-41s), capped at £21,000 (30 × £700). Your employer may offer enhanced redundancy pay above the statutory minimum.

The first £30,000 of any redundancy payment (statutory plus contractual) is tax-free. Amounts above £30,000 are subject to income tax and potentially employer NI.

Statutory redundancy formula explained. For each full year of service from age 22 to 40: 1 week's pay. For each full year from 41 to 65: 1.5 weeks. Years under 22: 0.5 weeks. Max 20 years count. Cap on weekly pay £735 (2026/27 — was £719 in 2025/26). Maximum total statutory redundancy: 30 × £735 = £22,050. To qualify: at least 2 years continuous service. Voluntary redundancy and non-redundancy dismissals have different rules.

Contractual vs statutory redundancy — know your entitlement. Many employers offer enhanced redundancy in the contract or staff handbook: typical packages 2-4 weeks per year of service uncapped, or a multiple of statutory (e.g. 3× statutory). Public sector schemes (NHS, civil service, local government) traditionally offer ~1 month per year. Check your contract, handbook, and union agreement. Enhanced redundancy must be more generous than statutory; if not, statutory applies as the floor.

Tax-free redundancy up to £30,000. The first £30,000 of redundancy pay (statutory + enhanced + ex gratia) is income tax and NI-free. Above £30,000: income tax applies at marginal rate but no NI (since April 2020 employer NI applies but not employee NI). Notice pay (PILON — Payment In Lieu of Notice) is now ALWAYS taxable (post-April 2018 rules), even if paid as part of a redundancy package. Get the breakdown of any settlement agreement in writing.

Your rights during redundancy. (1) Consultation — collective consultation if 20+ redundancies in 90 days (30 days notice if <100 redundancies, 45 days if 100+). (2) Selection — must be fair criteria (skills, attendance, performance); discriminatory selection (age, gender, disability) is unlawful. (3) Notice — statutory minimum 1 week per year (capped at 12 weeks). (4) Time off to look for work — reasonable paid time for those with 2+ years service. (5) Appeals — internal appeal then potential tribunal claim within 3 months.