How to Calculate Statutory Redundancy Pay: 2026/27 Age Bands & Weekly Caps

In the United Kingdom, statutory redundancy pay is the legally mandated minimum compensation an employer must pay an employee whose role is being made redundant. Codified under Part XI of the Employment Rights Act 1996, statutory redundancy entitlement is determined by a statutory formula that accounts for your age, continuous years of service, and weekly pay (subject to annual government caps) for the 2026/27 tax year.

1. Who is Eligible for Statutory Redundancy Pay?

To qualify for statutory redundancy compensation in the UK, you must satisfy three statutory criteria:

1. Employment Status: You must be an employee working under an employment contract (self-employed contractors and agency workers do not qualify).
2. Length of Service: You must have completed at least 2 continuous years of service with your employer by your official termination date.
3. Genuine Redundancy Situation: Your dismissal must be caused by workplace closure, business relocation, or a reduction in the requirement for employees to perform work of a particular kind.

2. Statutory Redundancy Age Brackets and Formulas (2026/27)

The statutory calculation provides a specific multiplier of weekly pay for every complete year of continuous service, divided into three distinct age tiers:

Under UK employment law, the maximum length of service that can be counted is 20 years. You can calculate your exact statutory redundancy entitlement in seconds with our Redundancy Pay Calculator.

3. Step-by-Step Mathematical Calculation Examples

Let us look at two worked examples illustrating how statutory redundancy pay is calculated across different age groups and service records:

Example A: Age 46 with 12 Years’ Continuous Service (Weekly Pay £600)

Suppose an employee is made redundant at age 46 having worked for the employer for 12 continuous years (from age 34 to 46):

1. Years Worked at Age 41 and Over (Ages 41–46): 5 complete years × 1.5 weeks = 7.5 weeks.
2. Years Worked Between Age 22 and 40 (Ages 34–40): 7 complete years × 1.0 week = 7.0 weeks.
3. Total Redundancy Weeks: 7.5 + 7.0 = 14.5 weeks’ pay.
4. Total Statutory Redundancy Entitlement: 14.5 weeks × £600.00 = £8,700.00.
5. Tax Treatment: Because £8,700 is well below the £30,000 threshold, the employee receives the full £8,700.00 completely tax-free.

Example B: Age 58 with 22 Years’ Continuous Service (High Earner on £1,200/week)

Suppose an employee is made redundant at age 58 with 22 years’ continuous service (from age 36 to 58) earning £1,200 per week:

1. Apply 20-Year Maximum Service Limit: Only the most recent 20 years count (from age 38 to 58).
2. Years Worked at Age 41 and Over (Ages 41–58): 17 complete years × 1.5 weeks = 25.5 weeks.
3. Years Worked Between Age 22 and 40 (Ages 38–40): 3 complete years × 1.0 week = 3.0 weeks.
4. Total Redundancy Weeks: 25.5 + 3.0 = 28.5 weeks (capped at statutory 30 weeks maximum).
5. Apply Statutory Weekly Cap: Because the employee’s £1,200 actual weekly pay exceeds the statutory cap (e.g. £700/week), calculations use the capped rate: 28.5 weeks × £700 = £19,950.00.
6. Net Cash Received: 100% tax-free lump sum of £19,950.00.

4. Statutory vs. Contractual / Enhanced Redundancy Pay

Many UK employers offer enhanced contractual redundancy pay that exceeds the statutory baseline:

• No Weekly Pay Cap: Employers calculate redundancy using your actual un-capped gross weekly salary (e.g. £1,200/week instead of £700).
• Enhanced Multipliers: Paying 2 to 4 weeks of gross pay for every year of service.
• Waiver of Service Limits: Paying enhanced compensation to employees with under 2 years of service.

5. Frequently Asked Questions (FAQ)

Q: What is the minimum length of service to qualify for statutory redundancy in the UK?
A: You must have at least 2 continuous years of service with your employer.

Q: Is statutory redundancy pay taxable?
A: No. Statutory redundancy pay is 100% tax-free because it falls well below the statutory £30,000 termination exemption.

Q: What happens if my employer goes into insolvency or liquidation?
A: If your employer is insolvent, you can claim your statutory redundancy pay, unpaid wages, and notice pay directly from the UK government’s Insolvency Service (Redundancy Payments Office).

Q: Can I be made redundant while on maternity or parental leave?
A: You cannot be selected for redundancy because of pregnancy or maternity leave. Under the Protection from Redundancy (Pregnancy and Family Leave) Act, employees on maternity leave have preferential rights to suitable alternative vacancies.

Q: What is the statutory redundancy notice period?
A: Statutory notice is 1 week for 1 month to 2 years of service, plus 1 additional week for each complete year of service between 2 and 12 years (maximum 12 weeks’ notice).

Q: Can I refuse a suitable alternative job offer from my employer?
A: If your employer offers you a “suitable alternative vacancy” and you unreasonably refuse it, you may lose your right to statutory redundancy pay.

Q: What is the 4-week statutory trial period?
A: If you accept an alternative role, you have a legal right to a 4-week statutory trial period. If either you or the employer decide the role is unsuitable during this trial, you can still leave and claim statutory redundancy.

Q: How do commission and overtime affect weekly pay calculations?
A: For workers with variable pay, weekly pay is calculated as the average gross pay earned over the 12 weeks leading up to the redundancy notice date.