How the age-banding works
The UK statutory redundancy formula has three age tiers. For each full year of service:
| Age during that year | Weekly pay multiplier |
|---|---|
| Under 22 | 0.5 weeks |
| 22 to 40 inclusive | 1 week |
| 41 and over | 1.5 weeks |
Crucially: each year is assessed at the age you were during that year, not your age at redundancy. Someone made redundant at 45 with 15 years of service has:
- 5 years aged 41+ (years 11–15) → 5 × 1.5 = 7.5 weeks
- 10 years aged 22–40 (years 1–10) → 10 × 1 = 10 weeks
- Total: 17.5 weeks × weekly pay (capped at £719 for 2026/27)
The 1.5× boost compounds with longer tenure to create meaningfully larger statutory payouts than a younger worker would receive for the same years of service.
Worked example 1 — 8 years' service, age 41, £50,000 salary
- Weekly pay: £50,000 / 52 = £961 → capped at £719
- 8 years of service, all aged below 41 except potentially the final year (depends on start age)
If you started at 33 and are now 41: - Years 1–7 (aged 33–39): 7 × 1 × £719 = £5,033 - Year 8 (aged 40–41): 1 × 1 × £719 = £719 (the year you spent aged 40, not yet 41 throughout) - Statutory total: £5,752
If you started at 34 and are now 42: - Years 1–7 (aged 34–40): 7 × 1 × £719 = £5,033 - Year 8 (aged 41–42): 1 × 1.5 × £719 = £1,079 - Statutory total: £6,112
The transition into the 41+ band creates a +£360 step-up for that single year. Over a 15-year career past age 41, the band shift accumulates substantially.
Worked example 2 — 15 years' service, age 50, £65,000 salary
- Weekly pay: £65,000 / 52 = £1,250 → capped at £719
- Started at 35, now 50
Years assessed: - Years 1–6 (aged 35–40): 6 × 1 × £719 = £4,314 - Years 7–15 (aged 41–50, all in 41+ band): 9 × 1.5 × £719 = £9,706.50 - Statutory total: £14,020.50
Compare to the same employee at age 30 with 15 years' service (impossible — would have started at 15) — the comparison shows the over-40 multiplier matters: that £14,020 figure would be roughly £8,628 without the age-band shift.
Worked example 3 — 20 years' service, age 55, £75,000 salary
- Weekly pay: £1,442 → capped at £719
- All 20 years either at 22-40 or 41+
- Started at 35, age 41 from year 7 onwards
Years assessed: - Years 1–6 (aged 35–40): 6 × 1 × £719 = £4,314 - Years 7–20 (aged 41–54, all in 41+ band): 14 × 1.5 × £719 = £15,099 - Statutory total: £19,413
This is approaching the absolute statutory maximum of £21,570 (20 years all in the 41+ band).
Enhanced redundancy at 40+
Many enhanced redundancy schemes pay materially more than statutory, regardless of age band. Common patterns for 40+ employees:
- 2 weeks per year of service, no statutory cap — gives roughly 2× statutory at 40+ where weekly pay exceeds £719
- Service-tier enhancement — separate higher rate kicking in at 10+ years (often when over-40s have been with the employer longest)
- Flat top-up — £5,000–£20,000 in addition to formula-derived figure
- Pension top-up — employer pays additional voluntary pension contribution as part of the package
Combined with the higher statutory multiplier, over-40 enhanced packages frequently exceed £40,000–£60,000 — pushing the recipient well above the £30,000 tax-free threshold and into marginal-rate taxation. Read the redundancy tax explainer →
Age discrimination protections
The Equality Act 2010 protects against age discrimination in redundancy:
- Selection criteria cannot be based on age (e.g. "we kept the younger team")
- Voluntary redundancy schemes must be equally available regardless of age
- Pension-age proximity cannot be a "tiebreaker" in selection
- "Last in, first out" can be indirectly age-discriminatory and is no longer the safe default it once was
Common selection criteria that hold up: documented performance, demonstrated skills, business-critical knowledge, multi-disciplinary versatility. The selection process should be paper-trailed and applied consistently.
If you suspect age discrimination — for example, a redundancy round that disproportionately targeted over-50s without obvious business justification — ACAS Early Conciliation is the first step, followed by an Employment Tribunal if unresolved. Strict 3-month deadline from termination.
Pension considerations at 40+
For over-40s, the redundancy and pension interaction is often the largest financial planning point:
Salary sacrifice the package above £30,000 into pension. This skips both Income Tax + NI on the sacrificed amount. For higher-rate taxpayers, every £1,000 sacrificed costs about £580 of net pay and saves £420 in tax + NI.
Pension annual allowance. The standard limit is £60,000 per year, but tapered down once total income exceeds £260,000. For most over-40s receiving a redundancy package, there's substantial room within the annual allowance to absorb sacrifice.
Pension access age. You can't access defined contribution pensions until age 55 (rising to 57 in 2028). Sacrificing redundancy into pension at 40 means the money is locked away for 15+ years — meaningful trade-off.
For over-50s, the pension access age is much closer; for over-55s it's immediate. Read the redundancy and pension article →
Tax treatment recap
Same rules as any redundancy, just often more meaningful at 40+:
- First £30,000 of statutory + enhanced redundancy: tax-free, no NI
- Above £30,000: taxed at marginal rate, no NI
- PILON, notice pay, holiday pay: fully taxable + 8% NI (or 2% above upper limit)
A 50-year-old with 15 years' service receiving a £40,000 enhanced redundancy + £5,000 holiday + £15,000 PILON sees:
- £30,000 of redundancy tax-free
- £10,000 above-threshold at 40% (assuming higher-rate band) = £4,000 tax
- £5,000 holiday at full salary tax + NI ≈ £2,000 deducted
- £15,000 PILON at full salary tax + NI ≈ £6,300 deducted
- Net: £60,000 gross → ~£47,700 net
Read the redundancy tax explainer →
The career-transition picture at 40+
Practical considerations beyond the maths:
- Career-change runway — at 40+, established career changes often take 3–9 months. The statutory + enhanced + notice combined typically funds this
- Pension consolidation — many over-40s have multiple workplace pensions from previous employers; redundancy is a common moment to consolidate
- Specialist vs generalist — over-40s often have deep specialist skills; the next role search benefits from sharper specialisation rather than broader applications
- Self-employment — roughly 30–40% of over-40 redundancies lead to some form of self-employment within 18 months
- State Pension age awareness — though distant (66–67 for current 40-somethings), pension contribution decisions made now compound substantially
Read about redundancy after 5 years → and career change at 40 → for more.
Practical checklist
- Verify the age-band split in your statutory calculation. The redundancy calculator handles this automatically.
- Check enhanced terms in your contract / staff handbook — they often add 50-100% on top of statutory for over-40s
- Consider pension sacrifice if above-threshold package is meaningful — biggest tax win
- Document the selection process — fair process is your protection against age-discrimination concerns
- Plan the runway honestly — 40+ job searches often take longer than expected; build in slack
In short
Over-40 redundancy benefits from a 1.5× multiplier on each year of service aged 41+. Combined with typical longer tenure, statutory pay is meaningfully higher than for younger colleagues with the same years of service. The £30,000 tax-free threshold still applies; enhanced packages often push above it, where pension sacrifice becomes the highest-value tax move. For older variants of this scenario, see redundancy pay over 50 → and redundancy pay over 60 →.