The formula
Statutory redundancy pay uses three age bands. For every full year you worked for your employer, you get:
| Age during that year | Weekly pay multiplier |
|---|---|
| Under 22 | 0.5 weeks |
| 22 to 40 inclusive | 1 week |
| 41 and over | 1.5 weeks |
Multiply each year's weekly pay multiplier by your gross weekly pay (capped at £719 for 2026/27). Sum them up. That's your statutory entitlement.
Three things cap the result:
- Service length cap: 20 years. Years beyond the most recent 20 are ignored.
- Weekly pay cap: £719. For redundancies on or after 6 April 2026. Uprated from £700 in 2025/26.
- Maximum payment: £21,570. This is the arithmetic ceiling — 20 years at 1.5 weeks × £719.
How "age during that year" works
For each year of service, the multiplier is determined by your age during that year — not your age at termination. So someone made redundant at 45 with 10 years of service has:
- 4 years where they were aged 41+ → 4 × 1.5 = 6 weeks
- 6 years where they were aged 22–40 → 6 × 1 = 6 weeks
- Total: 12 weeks × capped weekly pay
The age bands look complex but the calculator applies them automatically. Importantly: a full year aged 22–40 counts as a "22–40 year" even if you turned 41 partway through. Each completed year is assessed at the age you were at its start.
Worked example 1 — 2 years' service, age 28, £30,000 salary
- Weekly pay: £30,000 ÷ 52 = £577 (under the £719 cap, so used at face value)
- Years of service: 2
- Age band: 22–40 → 1 week per year
- Statutory pay: 2 × 1 × £577 = £1,154
Worked example 2 — 5 years' service, age 35, £45,000 salary
- Weekly pay: £45,000 ÷ 52 = £865 → capped at £719
- Years of service: 5
- Age band: 22–40 → 1 week per year
- Statutory pay: 5 × 1 × £719 = £3,595
Note the cap bites here — at £865/week without the cap, you'd get £4,325. The £719 ceiling costs £730.
Worked example 3 — 10 years' service, age 50, £55,000 salary
- Weekly pay: £55,000 ÷ 52 = £1,058 → capped at £719
- Years of service: 10
- Age bands: assume the first 7 years were 41+, last 3 were 22–40 (depends on start age)
- Aged 50–47: years 1–4 at 1.5 weeks
- Aged 46–43: years 5–8 at 1.5 weeks
- Aged 42–41: years 9–10 at 1.5 weeks
- All 10 years are aged 41+ (started at 40, so 9 of 10 years aged 41+)
- For 9 years at 41+ + 1 year at 22–40:
- Statutory pay: (9 × 1.5 × £719) + (1 × 1 × £719) = £9,706.50 + £719 = £10,425.50
This example shows how the age-band shift matters. If the same person had been 35 throughout, the 10 years would all be 22–40 = 10 × £719 = £7,190 — £3,235 less.
Worked example 4 — 20 years' service, age 55, £80,000 salary
- Weekly pay: £80,000 ÷ 52 = £1,538 → capped at £719
- Years of service: 20 (the cap)
- Assume all 20 years aged 41+ (started at 35; years 1–6 were 22–40, years 7–20 were 41+)
- 6 years × 1 week × £719 = £4,314
- 14 years × 1.5 weeks × £719 = £15,099
- Statutory pay: £19,413
If the person had been older throughout (started at 41+, all 20 years in 41+ band): - 20 × 1.5 × £719 = £21,570 — the absolute maximum.
What counts as "weekly pay"
The statutory week's pay is the contractual basic pay you'd receive in a normal working week, not what you actually earned in the last week of work. For most salaried employees it's annual salary ÷ 52.
What's included: - Basic salary - Regular contractual bonuses (e.g. fixed monthly bonus) - London weighting and other regional allowances - Shift premiums baked into normal working pattern - Commission paid regularly
What's not: - One-off discretionary bonuses - Tips - Overtime (unless contractual and regular) - Benefits in kind (company car, healthcare)
If your pay varies week to week (irregular hours, commission-heavy), the calculation uses your average pay over the previous 12 weeks. Pension contributions reduce your gross weekly pay for the statutory calculation — important for salary sacrifice arrangements.
When the cap really hurts
For senior or higher-earning employees, the £719 weekly cap dramatically reduces the statutory figure. A £100,000 salary earns the same statutory entitlement as a £37,388 salary — both have weekly pay capped at £719.
This is why enhanced (contractual) redundancy is meaningful: most enhanced schemes use full weekly pay without the statutory cap, so a £100k earner with 10 years of service gets roughly twice the statutory at the same multiplier.
Service length: what counts
Continuous service includes:
- Time as an employee (not self-employed contractor)
- Paid leave (annual, sick, family)
- Strike action (under specific conditions)
- Time on a fixed-term contract that was renewed without a gap
What can break continuous service:
- A genuine break of 1+ week between contracts (no exceptions)
- Termination followed by re-engagement on a meaningfully different basis
- Self-employment or contractor periods don't count
If you've TUPE-transferred between employers (e.g. your team was outsourced), your continuous service usually carries across. If you've changed roles within the same group / parent company, continuous service usually continues.
The 2-year qualifying period
Below 2 years' continuous service, you have no statutory redundancy entitlement. Some contractual schemes pay redundancy earlier (e.g. from 1 year), but that's a benefit, not a right. Unfair dismissal protection also starts at 2 years (with some exceptions: discrimination, whistleblowing).
Read more about redundancy after 2 years →
Tax treatment
The first £30,000 of redundancy pay (statutory + enhanced combined) is tax-free and free of National Insurance. Amounts above £30,000 are taxed at your marginal rate.
Statutory pay alone rarely exceeds £30,000 — only the maximum (£21,570) gets close, and it always sits comfortably under the threshold. The £30,000 ceiling matters when enhanced redundancy is layered on top.
Read the full redundancy tax explainer →
What to verify when you receive your offer
When HR hands you a redundancy figure, check three things:
- Is the gross weekly pay correct? Should match your contractual basic pay (or 12-week average if variable).
- Is the service length correct? Verify the start date used. If you TUPE-transferred or moved between group entities, ask explicitly whether the calculation uses your original start date.
- Are the age bands applied correctly? Easy to verify with the redundancy calculator — run the numbers and compare to the employer's figure.
If the employer's figure is below the statutory minimum, raise it in writing. If it's at or above the statutory floor, anything extra is enhanced redundancy.
What to do after redundancy
Statutory redundancy is paid on your last day or shortly after, usually in your final pay run. Common considerations:
- Set the money aside before normalising it as monthly income — a redundancy payment is months of runway, not a windfall
- Check your tax position for the year — if total income is straddling tax bands, timing matters
- Use the runway to plan, not to extend lifestyle — most successful post-redundancy transitions invest the first 4–6 weeks in deliberate planning before committing to a path
For the broader picture of life after redundancy — career-change routes, freelance transitions, retraining — see redundancy after 5 years and the career change at 40 editorial.
In short
The statutory redundancy formula is mechanical: age-banded weeks per year, capped at 20 years' service and £719 weekly pay for 2026/27, with a maximum payment of £21,570. The calculator does the arithmetic in seconds. Anything above the statutory figure is enhanced redundancy from your contract. Anything below means a mistake the employer needs to correct.