Redundancy Pay UK: A Complete Guide to Statutory Redundancy Pay

Redundancy Pay UK: Quick Answer

In the UK, statutory redundancy pay is the minimum legal payment owed to qualifying employees who are dismissed because their role is redundant. You usually need at least two years’ continuous service, employee status, and a genuine redundancy situation. The amount is based on your age, length of service and gross weekly pay, with service capped at 20 years and weekly pay capped by law. For redundancies on or after 6 April 2026, the weekly pay cap is £751 and the maximum statutory redundancy payment is £22,530.

For many employees, the key issues are whether the redundancy is genuine, whether the employer has calculated weekly pay correctly, whether enhanced redundancy pay applies, and whether notice pay, holiday pay or a settlement agreement should be reviewed before anything is signed.

Redundancy Pay UK: A Solicitor’s Guide

If you are facing redundancy, one of the first questions you are likely to ask is: “How much redundancy pay am I entitled to?” This guide explains statutory redundancy pay in the UK, who qualifies, how the calculation works, whether redundancy pay is taxable, and when you should seek advice from an employment law solicitor.

Redundancy can affect employees across England and Wales, but the rules, limits and practical steps can vary depending on where you work and when your employment ends. This article is designed for employees and employers looking for clear, reliable guidance on redundancy pay UK rights and responsibilities.

If you require specialist legal advice or assistance relating to redundancy pay, get in touch today and book a free initial consultation with one of our experienced employment lawyers. Simply call 0800 086 2929, email info@elitelawsolicitors.co.uk or complete our Free Online Enquiry Form.

What Is Statutory Redundancy Pay?

Statutory redundancy pay is the minimum payment an eligible employee is legally entitled to receive when they are dismissed because their role is redundant. In simple terms, redundancy usually occurs when an employer no longer needs a particular job to be done, the workplace is closing, or the business needs fewer employees to carry out work of a particular kind.

The phrase “statutory redundancy pay” refers to the legal minimum. Some employers offer enhanced redundancy pay or contractual redundancy pay, which can be more generous than the statutory amount. If your employment contract, staff handbook, redundancy policy or collective agreement promises enhanced terms, you may be entitled to more than the statutory minimum.

The legal basis for Redundancy Pay

Redundancy pay is not simply a matter of employer discretion. The statutory redundancy payment framework is set out in Part XI of the Employment Rights Act 1996, which governs when an employee may be entitled to a redundancy payment, how service is treated, and how disputes may be brought before an employment tribunal. Referring to the statutory basis is important because an employer cannot usually contract out of the legal minimum owed to a qualifying employee.

Official GOV.UK guidance confirms that employees usually qualify for statutory redundancy pay if they have worked continuously for their employer for two years or more and are dismissed by reason of redundancy. Acas guidance also explains that employers should provide employees with a written statement showing how redundancy pay has been calculated.

Because redundancy pay is a legal entitlement, the strongest starting point is always the primary source material: the Employment Rights Act 1996, official GOV.UK redundancy guidance, Acas redundancy guidance and HMRC guidance on termination payments. These sources help confirm eligibility, calculation rules, consultation expectations and tax treatment.

Who is entitled to Statutory Redundancy Pay in the UK?

You will normally be entitled to statutory redundancy pay if you are an employee, you have worked continuously for the same employer for at least two years, and you are dismissed by reason of redundancy. Agency workers, casual workers and self-employed contractors may not qualify unless their legal employment status is in fact that of an employee.

• You must usually have at least two years’ continuous service.
• You must be an employee rather than genuinely self-employed.
• Your dismissal must be because of redundancy, not misconduct or performance.
• You may lose entitlement if you unreasonably refuse suitable alternative employment.
• Certain roles, such as some armed forces, police and Crown service positions, may be excluded from statutory redundancy pay rules.

How much is Statutory Redundancy Pay?

Statutory redundancy pay is calculated using your age, length of continuous service and gross weekly pay. The calculation works backwards from your last full year of employment and applies a different multiplier depending on your age during each completed year of service.

Length of service is capped at 20 years. For redundancies on or after 6 April 2026, weekly pay is capped at £751 and the maximum statutory redundancy pay is £22,530. If your employment ended before that date, a lower weekly cap may apply.

How to calculate Statutory Redundancy Pay

To calculate statutory redundancy pay, identify your full years of continuous service, apply the correct age band for each year, and multiply the resulting number of weeks by your gross weekly pay, subject to the statutory weekly cap. If your pay varies, weekly pay is usually based on  average earnings over the relevant 12-week period before you received your redundancy notice.

Example: if an employee aged 45 has 10 full years of continuous service and earns more than the weekly cap, their redundancy statutory pay may include one week’s pay (capped at £751) for the years worked between ages 35 and 40 and one and a half weeks’ pay for the years worked from age 41 onwards. The exact calculation depends on the employee’s age during each completed year of service, not simply their age when their employment ends.

Many people search for a statutory redundancy pay calculator because the age-based calculation can be confusing. A redundancy pay statutory UK calculation should always check the correct weekly pay cap, the employee’s full years of service, the termination date and the employee’s age upon termination.

Statutory Redundancy Pay calculation: Key factors at a glance

What should be included in weekly pay?

For many employees, the most important dispute is not the redundancy formula itself but the weekly pay figure used in the calculation. GOV.UK guidance states that:

1. If your pay varies, weekly pay is generally based on the average earned per week over the 12 weeks before the day redundancy notice was given. If an employee’s hours, commission, bonus or overtime vary, the calculation may require careful analysis of normal pay and contractual entitlements.
2. If you pay does not vary, a weeks’ pay will usually be your normal gross weekly pay, subject to the statutory cap.

Acas guidance notes that weekly pay may include guaranteed contractual overtime and contractual bonuses or commission where these form part of the employee’s entitlement. Employers sometimes calculate redundancy pay using basic salary only, which can lead to underpayment where variable pay should properly be taken into account.

Is Statutory Redundancy Pay taxable?

In many cases, statutory redundancy pay is not taxable because qualifying redundancy payments are generally covered by the £30,000 tax-free exemption. This means the first £30,000 of genuine redundancy or qualifying termination compensation is usually free from income tax.

However, not every payment made when employment ends is treated in the same way. Notice pay, payment in lieu of notice, unpaid wages, accrued holiday pay and contractual bonuses are normally taxable as earnings. If your redundancy package includes several different payments, it is important to check how each element has been classified.

HMRC guidance on termination payments explains that unpaid wages, holiday pay, bonuses, restrictive covenant payments and payments in lieu of notice are normally taxable as earnings. By contrast, the first combined £30,000 of qualifying statutory redundancy pay, enhanced redundancy pay and certain severance payments may be free from income tax and National Insurance. This distinction is particularly important when reviewing a settlement agreement or final payslip.

Who pays Statutory Redundancy Pay?

In most cases, statutory redundancy pay is paid by the employer. The employer should provide a written statement showing how the payment has been calculated. If the employer is insolvent, employees may be able to claim statutory redundancy pay from the Redundancy Payments Service, subject to eligibility and applicable limits.

What if your employer cannot pay?

If an employer is insolvent or refuses to pay statutory redundancy pay, employees may need to take formal action. GOV.UK guidance explains that employees normally have six months from the date their job ends to apply for statutory redundancy pay. In insolvency situations, certain statutory payments may be claimed through the Redundancy Payments Service, subject to eligibility, caps and evidence requirements.

Redundancy Pay and Notice Pay

Redundancy pay is separate from notice pay. If you are selected for redundancy, you should usually receive your statutory or contractual notice period, or payment in lieu of notice if your contract allows it. Notice pay is generally taxable in the normal way, even if your statutory redundancy pay is tax-free.

Redundancy consultation and fair process

Statutory redundancy pay is only one part of the redundancy process. Even where the payment is correct, a dismissal may still be unfair if the employer fails to follow a reasonable process. A fair redundancy process will normally involve warning employees about the risk of redundancy, consulting meaningfully, identifying an appropriate selection pool, applying fair selection criteria, considering alternatives to dismissal, and allowing an appeal where appropriate.

Where an employer proposes to dismiss 20 or more employees at one establishment within a 90-day period, collective consultation obligations may arise. In those circumstances, employers may need to consult recognised trade union representatives or elected employee representatives and follow statutory consultation timescales. Employees should take advice quickly if they believe consultation has been rushed, predetermined or carried out after decisions have effectively already been made.

Suitable alternative employment and trial periods

GOV.UK and Acas guidance both stress that an employee may lose the right to statutory redundancy pay if they unreasonably refuse suitable alternative employment. Whether a role is suitable depends on factors such as pay, benefits, duties, status, hours, location, skills required and the employee’s personal circumstances.

Employees are usually entitled to a four-week statutory trial period in suitable alternative employment. The trial period can be extended for training if this is agreed in writing before the trial starts and there is a clear end date. If the new role is not genuinely suitable, the employee should raise concerns promptly and in writing so that their position on redundancy pay is protected.

Common Redundancy Pay disputes

• The employer has used the wrong weekly pay figure.
• The employer has ignored enhanced redundancy pay terms.
• The employee has been told they are not entitled to statutory redundancy pay despite having two years’ service.
• The redundancy is not genuine and the role is being refilled.
• The employer has failed to consult properly before dismissal.
• The employee has been offered unsuitable alternative employment.
• The final payment incorrectly treats taxable and tax-free elements.

Evidence to check before challenging Redundancy Pay

Before challenging a redundancy pay calculation, it is helpful to gather the documents and evidence that show how your entitlement should be calculated. This can make solicitor advice more efficient and may help resolve the dispute without tribunal proceedings.

• Your employment contract and any contract variations.
• Your staff handbook, redundancy policy or collective agreement.
• Your redundancy consultation letters and meeting notes.
• Your payslips for at least the 12 weeks before notice was given.
• Details of overtime, commission, bonus payments or allowances.
• Your employer’s written redundancy pay calculation.
• Any offer of suitable alternative employment and your response.
• Your final payslip, P45 and any settlement agreement.

This evidence can help identify whether the employer has used the wrong weekly pay, excluded relevant variable pay, applied the wrong age band, ignored enhanced redundancy rights, or incorrectly treated notice pay and redundancy pay for tax purposes.

Common mistakes employers make when calculating Redundancy Pay

• Using net pay instead of gross weekly pay.
• Ignoring commission, contractual bonuses or guaranteed overtime where they should be included.
• Applying the wrong statutory weekly pay cap for the year of dismissal.
• Counting calendar years incorrectly rather than full years of continuous service.
• Failing to separate redundancy pay from taxable notice pay and holiday pay.
• Assuming an employee has no rights because they are part-time, fixed-term or on family-related leave.
• Withholding redundancy pay because an alternative role was offered without properly considering whether it was genuinely suitable.

These issues can lead to underpayments, grievances, Acas Early Conciliation and employment tribunal claims. A solicitor review can be especially useful where the employee has long service, variable earnings, enhanced redundancy terms or a settlement agreement.

Why choose Elite Law Solicitors for Redundancy Pay advice?

Elite Law Solicitors provides practical employment law advice for employees and employers dealing with redundancy, settlement agreements and workplace disputes. Our team can explain the statutory redundancy pay rules in plain English, review your employer’s calculation, identify whether enhanced redundancy pay may apply, and help you understand whether there are wider claims such as unfair dismissal, discrimination, breach of contract or unlawful deduction from wages.

We advise clients across England and Wales through our office network and remote appointments. If deadlines are approaching, early advice can help preserve your position before Acas Early Conciliation or employment tribunal time limits expire.

Where Our UK Redundancy Solicitors are based

Our experienced employment law solicitors can advise employees and employers on redundancy pay, statutory redundancy pay calculations, settlement agreements, unfair dismissal risks and related workplace disputes.

We can assist clients looking for redundancy solicitors in Amersham, Bath, Brighton, Guildford, Hitchin, Leighton Buzzard, London, Milton Keynes, Southampton, Surbiton, Winchester and surrounding areas. We also offer remote appointments via video conferencing software, making it straightforward to obtain redundancy pay advice wherever you are based in England or Wales.

If you are in need of specialist statutory redundancy pay advice, our experienced employment lawyers can help you understand your rights, check whether your redundancy payment has been calculated correctly, and advise on the best next steps before tribunal deadlines expire. Get in touch today by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or completing our Free Online Enquiry Form.

Article Accuracy, Sources and Review

This article is written for general information purposes and focuses on redundancy pay law in England and Wales. It should not be treated as a substitute for legal advice on your specific circumstances.

The article has been prepared by Philip Luff, an experienced SRA regulated employment solicitor.

Key sources referred to: Employment Rights Act 1996, GOV.UK guidance on redundancy rights and statutory redundancy pay, Acas redundancy guidance, HMRC guidance on termination payments, and employment tribunal time limit guidance.

Last reviewed: June 2026. Statutory redundancy pay limits usually change annually, so employees and employers should check the current cap before relying on a calculation.

Frequently Asked Questions about Redundancy Pay UK

Can I claim redundancy pay if I am on maternity leave, sick leave or furlough-style leave?

Yes, eligible employees can still qualify for statutory redundancy pay while on maternity leave, sick leave or another approved period of leave, provided they meet the usual requirements such as employee status, two years’ continuous service and dismissal by reason of redundancy. The calculation may need careful review if pay has varied during the relevant period.

What happens if my employer offers me another job instead of redundancy?

If your employer offers suitable alternative employment, you should consider the role carefully before accepting or refusing it. A refusal may affect your right to statutory redundancy pay if the alternative role is suitable and your refusal is considered unreasonable. Factors such as pay, duties, location, hours, seniority and working arrangements may all be relevant.

How long do I have to bring a redundancy pay or unfair dismissal claim?

Employment tribunal deadlines are short. Many employment claims, including unfair dismissal, usually require Acas Early Conciliation to be started within three months less one day of the effective date of termination. Claims for redundancy payments may have different rules, so it is sensible to seek legal advice quickly if there is a dispute.

Can directors, part-time workers or fixed-term employees receive redundancy pay?

Part-time workers and fixed-term employees can qualify for statutory redundancy pay if they are employees and meet the eligibility criteria. Company directors may also qualify if they have an employment contract and work as an employee, although their status and pay arrangements can make the position more complex.

Can I still get redundancy pay if I find a new job quickly?

Yes, finding a new job after your employment ends does not usually remove your right to statutory redundancy pay if you were already eligible and were dismissed by reason of redundancy. The position may be different if you accept suitable alternative employment with the same employer or an associated employer.

Does voluntary redundancy affect my statutory redundancy pay?

Voluntary redundancy can still involve a statutory redundancy payment if the employee meets the eligibility criteria and the termination is genuinely by reason of redundancy. However, voluntary redundancy packages often include enhanced terms, conditions or settlement agreement wording that should be checked carefully before acceptance.

Can I negotiate more than statutory redundancy pay?

Yes. Statutory redundancy pay is the legal minimum. Depending on your contract, employer policy, length of service, seniority, selection process and potential employment claims, you may be able to negotiate enhanced redundancy pay or a settlement agreement.

Speak to a Redundancy Pay Solicitor

If you are unsure whether your redundancy pay has been calculated correctly, or you believe your redundancy was unfair, our employment law solicitors can help. We can review your redundancy package, calculate your statutory redundancy pay, assess any enhanced redundancy pay entitlement, and advise on employment tribunal deadlines.

Contact our redundancy pay solicitors today for clear, practical and confidential advice on your rights. Simply call 0800 086 2929, email info@elitelawsolicitors.co.uk or complete our Free Online Enquiry Form.

The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified employment solicitors such as those within our firm.