Redundancy Calculator

Statutory redundancy pay is a number of weeks’ pay, set by section 162 of the Employment Rights Act 1996. You earn half a week’s pay for each year of service worked under 22, one week for each year from 22 to 40, and one and a half weeks for each year from 41 onwards. The weeks are then multiplied by a week’s pay, which the law caps at £751 for redundancies on or after 6 April 2026:

statutory pay = weeks earned × min(weekly pay, £751)

The subtlety that decides most answers is which band each year falls into. Section 162 counts “reckoning backwards from the end of that period”, so the band is set by the age you held during that particular year, not by your age when you left. Take Priya at 45 with ten complete years. Counting back from her last day, the most recent year was worked at 44, the one before at 43, and so on to the tenth year at 35. Four of those years — ages 41, 42, 43 and 44 — earn one and a half weeks each, giving 6 weeks. The other six, ages 35 to 40, earn one week each, giving 6 weeks. Total 12 weeks, which at her £600.00 weekly pay is £7,200.00. Multiplying her ten years by the leaving-age band would give 15 weeks and £9,000.00 — a quarter too much.

Two limits sit on top. Service is capped at 20 years, counted backwards, so a 30-year career contributes only its most recent twenty years. And the arithmetic has a natural ceiling: 20 years all worked from 41 gives 30 weeks, which at the £751 cap is exactly £22,530.00 — the published statutory maximum. The two figures are not independent, which is a useful way to check any calculator you are given.

Her statutory redundancy pay of £7,200.00 is 12 weeks and arrives whole — it is nowhere near the £30,000 threshold, so nothing is deducted from it. The rest of the package is where the money goes: £6,960.00 of notice and holiday pay is 49.2% of her £14,160.00 total and is taxed exactly like a normal payslip, costing £1,948.80. Anyone budgeting from the headline "first £30,000 tax-free" will be short by about that much.

Twenty-four years earns him nothing beyond twenty: service is capped, and at 30 weeks he hits the statutory ceiling of £22,530.00 exactly. The £751 cap ignores £449.00 of his actual weekly pay, so four extra years and £449 a week of earnings all count for nothing. His employer's 2× scheme is what changes the picture — it takes the award to £45,060.00, pushing £15,060.00 past the exemption, and his employer picks up £2,259.00 of Class 1A on that excess.

Three years buys 2.5 weeks, not three, because the year Sam worked at 21 counts at half a week. That single half-week is the difference between £1,000.00 and the £1,200.00 a flat calculation would report — and it is the step a flat years × leaving-age multiplication skips entirely. Notice pay of £1,200.00 is larger than the redundancy payment itself here, which is normal for short service and is why a leaving package should never be estimated from the redundancy line alone.

Statutory redundancy pay is £0.00: the two-year qualifying period has not been met and there is no partial entitlement. But the rest of her package survives. One week's statutory notice at £750.00 and £900.00 of accrued holiday are separate legal entitlements that survive the qualifying gate entirely, giving a package of £1,650.00 before tax. A calculator that answers "£0, you don't qualify" and stops is accurate about one stream and wrong about her position.

At this size the exemption stops mattering. Only 25.4% of his £118,000.00 package escapes tax, and the income tax bill of £42,771.00 is driven less by the 45% band than by the Personal Allowance taper: the settlement carries his total income past £100,000, stripping the allowance he still had at £104,000. His £24,000.00 of notice pay gets no relief at all, and his employer faces £13,200.00 of National Insurance on the package — which is the practical reason settlement offers so often stop just short of £30,000.

gov.uk states that for a redundancy on or after 6 April 2026 weekly pay is capped at £751 and the maximum statutory redundancy pay is £22,530.00. Acas publishes the same two figures independently on a page last updated 7 April 2026, and the underlying rules — the age bands, the backward reckoning and the twenty-year limit — come from section 162 of the Employment Rights Act 1996 rather than from either body’s guidance. The caps are uprated by statutory instrument each 6 April; the next review falls on 6 April 2027.

Scotland, and why only the tax changes

Employment law is reserved to Westminster, so statutory redundancy pay works identically across Great Britain. Income tax on earned income is not reserved, and Scotland sets six bands rather than three. That matters for the taxable part of a large award: the Scottish advanced rate reaches 45% at £75,000 of income and the top rate 48% above £125,140, so an identical settlement can cost a Scottish taxpayer more. The Scottish toggle above therefore changes one number and leaves the redundancy arithmetic untouched. National Insurance is UK-wide and does not vary.

Northern Ireland uses a separate scheme

Northern Ireland legislates employment rights separately and its statutory redundancy figures are higher than the Great Britain ones this calculator applies. nidirect, the Northern Ireland Executive’s public information service, currently gives a weekly pay cap of £783 and a maximum of £23,490.00, on age bands, a twenty-year limit and a two-year qualifying period identical to those above.

This page does not compute a Northern Ireland entitlement. The nidirect page does not state the date from which its figures apply, and publishing a statutory number without knowing which period it belongs to is worse than sending you to the body that maintains it. If you were employed in Northern Ireland, take your figures from nidirect’s redundancy pay guidance. Everything on this page about notice pay, holiday pay and the £30,000 tax treatment applies to you unchanged, because tax and National Insurance are UK-wide.

Do you pay 40% tax on redundancy pay?

Only on the part of the award above £30,000, and only where that part lands in the higher-rate band once it is stacked on the rest of your income for the year. The exemption comes off first: a £45,000 award leaves £15,000 chargeable, and if you had already earned £62,400 by your leaving date all of it is taxed at 40%, costing £6,000. The same £45,000 award with only £18,000 of pay behind it is taxed entirely at 20%. An award can also straddle the boundary by itself: on a £40,000 salary, part of that £15,000 excess is taxed at 20% and the rest at 40%, so no single rate describes it. The widespread impression that redundancy is taxed at 40% usually traces to a different part of the package: notice pay and holiday pay carry income tax and National Insurance from the first pound, so a settlement that is mostly notice can lose a third of itself while the redundancy element beside it is untouched.

How much redundancy pay do you get for 20 years of service?

20 years is the most that can count, and the answer is best given in weeks because that form does not depend on what you earn. Twenty years worked entirely from age 41 gives 30 weeks — the statutory ceiling, which no length of service or level of pay can beat. Twenty years worked entirely between 22 and 40 gives 19 weeks, and a mixed career sits between the two: a 45-year-old with twenty years earns 22 weeks, because only the 4 years from 41 onwards attract the higher multiplier. Convert to money by multiplying by your weekly pay capped at £751, which is why 30 weeks and £22,530.00 are the same answer for anyone earning above the cap. Service past twenty years adds nothing whatever, so two people of the same age with twenty and thirty-five years behind them receive an identical figure.

Is statutory redundancy pay tax-free?

Yes, in every realistic case. Statutory redundancy pay is a termination award under section 403 of ITEPA 2003, and because the statutory maximum is £22,530.00 it cannot on its own reach the £30,000 threshold — there is £7,470.00 of headroom left even at the ceiling. What makes a package taxable is what an employer adds on top. An enhanced scheme, an ex-gratia payment to settle a claim or a golden handshake are added to the statutory figure first, and the threshold is then applied to the total once. So the honest answer is that statutory redundancy pay alone is never taxed, but it can be the reason a generous top-up beside it is. One further point is worth knowing at high incomes: unlike the Personal Allowance, the exemption is not tapered away, so a director on £200,000 gets the same £30,000 of relief as someone on £20,000.

Do I get notice pay as well as redundancy pay?

Yes — they are separate entitlements with separate rules. Statutory notice under section 86 of the Employment Rights Act 1996 is one week from 1 month's service, then one week for each complete year once you pass 2 years, stopping at 12 weeks however long you stay. Your contract can give more and often does; where it does, the contractual period wins. Your employer can have you work the notice, put you on garden leave, or pay it in lieu and end the employment immediately — the amount is the same in each case and the choice is usually theirs. If your employer gives neither notice nor a payment in lieu, the shortfall is a wrongful dismissal claim in its own right rather than something the redundancy payment absorbs. How the payment is taxed is a separate question with a counter-intuitive answer, covered under post-employment notice pay below.

What is post-employment notice pay (PENP)?

PENP is the slice of a termination payment that represents notice you did not work, calculated to a statutory formula in section 402D of ITEPA 2003. It matters because HMRC's guidance is blunt about it: "This threshold does not apply to post-employment notice pay." PENP is general earnings, so it carries full income tax and full employee and employer National Insurance with no share of the £30,000 exemption. Before 6 April 2018 a payment in lieu of notice that was not written into the contract could be treated as compensation and sheltered by the threshold, and a great deal of surviving online guidance still describes that position. Since then employers must run the PENP calculation whether the payment in lieu is contractual or not, so the drafting of your contract no longer changes the tax.

Can I get redundancy pay after less than 2 years?

Not statutory redundancy pay. 2 years' continuous service is a hard gate with no partial entitlement below it — nineteen months and twenty-three months both produce nothing, as Rachel's example above shows. Three other entitlements survive the gate and are frequently overlooked. Statutory notice starts at 1 month's service. Accrued untaken holiday must be paid whenever employment ends, without any qualifying period. Outstanding wages, commission and contractual bonus are owed as a debt. Beyond the statutory floor, some employers pay enhanced redundancy below two years as a matter of policy or contract. One statutory rule can also carry you over the line. Where an employer dismisses you with less notice than section 86 requires, section 145(5) of the same Act treats the relevant date for redundancy purposes as the date that statutory notice would have expired — so someone dismissed without notice at twenty-three months can still reach two years.

Is holiday pay included in the £30,000 tax-free amount?

No. Accrued untaken holiday paid on leaving is ordinary earnings for work you have already done, so it sits entirely outside the exemption and carries income tax and employee National Insurance in full. The same treatment applies to unpaid wages, outstanding commission and any contractual bonus paid with your final salary. gov.uk is clear that payment in lieu of untaken statutory leave is due whenever someone leaves a job, and that it must be paid "even if the worker is dismissed for gross misconduct" — it is not a discretionary part of a redundancy package. One consequence matters when an offer is being negotiated: relabelling holiday pay as redundancy pay does not shelter it, because HMRC looks at what a payment is for rather than at the heading a settlement gives it.

Do the redundancy pay caps change every year?

Yes. The weekly cap and the maximum are uprated by statutory instrument each 6 April, tracking inflation, and the figures on this page — £751 a week and £22,530.00 in total — took effect on 6 April 2026. The next review falls on 6 April 2027. What fixes which set applies to you is the date your job actually ends, not the date notice was given, the date the consultation opened or the date you were told your role was at risk. That distinction decides real money for anyone leaving within a few weeks of 6 April: if you are given notice in March but the employment does not actually end until May, the new year's figures apply to you. You have 6 months from the end of your job to claim statutory redundancy pay.

How is redundancy pay calculated if my pay varies week to week?

On an average rather than on whatever the last week happened to be. Acas guidance bases entitlement on "your average hourly rate over a 12-week period" for anyone whose weekly pay varies, which covers hourly work, shift patterns and rotas with fluctuating hours. Guaranteed and contractual overtime counts, as does contractual commission or bonus; genuinely voluntary overtime the employer is not obliged to offer generally does not. Weeks in which you earned nothing are skipped rather than averaged in as zero, so an unpaid gap does not drag the figure down. If you are on a fixed salary none of this applies — divide the annual figure by 52. Workers with no normal working hours take average weekly earnings over the same reference period rather than an hourly rate, which is the rule for piece work and for casual contracts. The subtlety worth checking is which twelve weeks the average runs over, which is covered in the mistakes section above.

Does my employer pay National Insurance on my redundancy package?

Yes, and on more of it than you do. HMRC's employer guidance for 2026/27 states that "Class 1A National Insurance contributions are due on the amount of termination awards paid to employees which are over £30,000", charged at 15%. On top of that, notice pay and holiday pay carry ordinary employer Class 1 at 15%. None of it is deducted from you — it is the employer's own cost, reported and paid alongside PAYE. It does explain a pattern people notice in negotiations: because every pound offered above the threshold costs the business an extra 15% on top, settlement offers cluster just underneath it, and moving an offer from £29,000 to £40,000 costs the employer £1,500.00 more than the headline increase. It is also why an employer may offer to pay part of a settlement into your registered pension scheme instead, which carries no National Insurance for either side.

Can I claim redundancy pay if my employer has gone bust?

Yes, through the Redundancy Payments Service, which pays statutory redundancy out of the National Insurance Fund when an insolvent employer cannot. The same caps and the same age-band arithmetic apply, so the figure this calculator gives is the figure to expect, and you can also claim statutory notice pay, unpaid wages and accrued holiday from the same route within their own limits. You will need the insolvency practitioner's reference number, which the administrator or liquidator provides. The 6-month deadline from the date your job ended still runs, and insolvency processes routinely take longer than people expect, so it is worth applying early rather than waiting for the administration to conclude.

Do I lose my redundancy pay if I turn down another job?

You can, if the job was a suitable alternative and your refusal was unreasonable. gov.uk states that "you may lose your right to statutory redundancy pay if you unreasonably turn down suitable alternative employment", which your employer may offer within your organisation or an associated company. Suitability is judged on the work itself and on the pay, benefits, status, hours and location relative to your old job, alongside your skills and personal circumstances — a role at the same grade in the same building is a very different proposition from one two hours away. You also have a statutory right to a four-week trial period in any alternative role, extendable in writing where training is needed. Use it: if you tell your employer within those four weeks that the job is unsuitable, your redundancy entitlement stays intact.

Does voluntary redundancy pay differently from compulsory?

The statutory calculation is identical. Volunteering does not reduce your entitlement, and the age bands, the 20 years service limit, the £751 weekly cap and the £30,000 tax treatment all work exactly as they do in a compulsory redundancy. What usually differs is what sits on top: employers attach enhanced terms to voluntary schemes precisely to attract volunteers, so the enhanced multiplier is where a voluntary offer becomes worth more. Two practical differences are worth knowing. Leaving voluntarily can affect a Jobseeker's Allowance claim in some circumstances, and accepting an enhanced offer often comes with a settlement agreement waiving your right to bring a claim — which requires independent legal advice before it binds you. Volunteering is also an application rather than a decision: an employer can decline your volunteer and select someone else.