How is redundancy pay calculated UK 2025?

Statutory redundancy pay: half a week's pay per year of service under 22, one week's pay per year aged 22-40, 1.5 weeks' pay per year over 41. Weekly pay is capped at £700 (2025/26) and maximum service counted is 20 years. Maximum statutory payment is £21,000.

How much redundancy pay will I get after 10 years UK?

It depends on your age throughout those 10 years. Example: 10 years aged 30-40 = 10 weeks' pay. At £700 cap, that's £7,000 statutory minimum. Your employer may offer enhanced redundancy above statutory. Plus you're entitled to notice pay.

Is redundancy pay tax-free in UK?

The first £30,000 of redundancy pay is tax-free. This includes statutory and any enhanced payment. Above £30,000 is taxed at your normal rate. Notice pay (worked or not) is always taxable. Holiday pay owed is taxable.

Can I negotiate redundancy pay UK?

Often yes — statutory is the minimum, but employers frequently offer enhanced packages. You can negotiate higher multiples, longer notice periods, outplacement support, or continuation of benefits. Get any improved offer in writing and consider taking advice.

Redundancy Pay Calculator UK — How Much Will You Get? | PocketWise

Understanding redundancy calculations helps you know what you’re entitled to and negotiate effectively.

Statutory Redundancy Pay

Calculation Formula

Your Age	Per Year of Service
Under 22	0.5 week’s pay
22-40	1 week’s pay
41+	1.5 week’s pay

Limits (2025/26)

Limit	Amount
Weekly pay cap	£700
Maximum years	20
Maximum payment	£21,000

Qualifying Criteria

Requirement	Details
Employment	2+ years continuous
Genuine redundancy	Role not needed
Dismissed	Not resigned

Calculate Your Payment

Step 1: Count Service

Calculation	Details
Start date	When you began
End date	Last day of employment
Complete years	Only whole years count
Maximum	20 years

Step 2: Calculate Weekly Pay

If You Earn	Weekly
£25,000/year	£481
£30,000/year	£577
£36,400+/year	£700 (capped)
£40,000/year	£700 (capped)
£50,000/year	£700 (capped)

Step 3: Apply Age Multipliers

Example: 15 Years Service	Age During Years
Ages 25-40 (15 years)	15 × 1 = 15 weeks
Ages 45-60 (15 years)	15 × 1.5 = 22.5 weeks
Mixed ages	Calculate each period

Worked Examples

Example 1: Simple Calculation

Factor	Value
Age now	35
Years of service	8 (all aged 27-35)
Weekly pay	£600
Rate	1 week per year
Calculation	8 × £600 = £4,800

Example 2: Multiple Age Bands

Factor	Value
Age now	45
Years service	15
Years aged 30-41	11 years @ 1 week
Years aged 41-45	4 years @ 1.5 weeks
Weekly pay	£700 (capped)

Calculation	Weeks
11 × 1	11
4 × 1.5	6
Total	17 weeks
At £700/week	£11,900

Example 3: Maximum Payment

Factor	Maximum
20 years all aged 41+	20 × 1.5 = 30 weeks
At cap	£700
Maximum	£21,000

Quick Reference Tables

By Years of Service (Age 25-40 throughout)

Years	Weeks	At £500/wk	At £700 cap
2	2	£1,000	£1,400
5	5	£2,500	£3,500
10	10	£5,000	£7,000
15	15	£7,500	£10,500
20	20	£10,000	£14,000

By Years of Service (Age 41+ throughout)

Years	Weeks	At £500/wk	At £700 cap
2	3	£1,500	£2,100
5	7.5	£3,750	£5,250
10	15	£7,500	£10,500
15	22.5	£11,250	£15,750
20	30	£15,000	£21,000

Enhanced Redundancy

What Employers May Offer

Enhancement	Example
Higher multiplier	2 weeks per year
No weekly cap	Actual salary
Higher caps	£1,000/week
Additional terms	Ex gratia payments

Typical Enhanced Packages

Type	Common Terms
Public sector	2-3 weeks per year
Corporate	True weekly pay
Senior roles	3+ months base
Negotiated	Varies widely

Example: Enhanced vs Statutory

Factor	Statutory	Enhanced
Years service	10	10
Age	35	35
Weekly pay (actual)	£1,000	£1,000
Rate	1 week/year	2 weeks/year
Cap applied	£700	None
Payment	£7,000	£20,000

Other Payments Due

Notice Pay

Your Service	Statutory Notice
1 month - 2 years	1 week
2-12 years	1 week per year
12+ years	12 weeks maximum

Notice Pay Options

Type	Treatment
Work notice	Normal pay (taxed)
Garden leave	Normal pay (taxed)
PILON	Taxed as earnings
Included in package	Still taxed

Other Entitlements

Payment	Status
Outstanding salary	Taxable
Accrued holiday	Taxable
Bonus (if due)	Taxable
Commission owed	Taxable

Tax Treatment

Tax-Free Elements

Tax-Free	Up To
Redundancy pay	£30,000
Includes	Statutory + enhanced
Termination payment	First £30k

Taxable Elements

Always Taxable	Items
Notice pay	Worked or PILON
Holiday pay	Owed
Salary	Outstanding
Bonus	If contracted

Example Tax Calculation

Element	Amount	Tax Status
Statutory redundancy	£7,000	Tax-free (within £30k)
Enhanced redundancy	£15,000	Tax-free (within £30k)
PILON (8 weeks)	£8,000	Taxable
Holiday (10 days)	£2,000	Taxable
Total package	£32,000
Tax-free portion	£22,000
Taxable portion	£10,000

Over £30,000

Excess	Treatment
Amount over £30k	Taxed at your rate
Example £40k payment	£10k taxable
At 40% tax	£4,000 tax bill

Negotiating Redundancy

What’s Negotiable

Element	Potential
Payment amount	Often
Notice period	Sometimes
Reference	Usually
Restrictions	May remove
Benefits continuation	Sometimes

Negotiation Tips

Tip	Approach
Know statutory	Your minimum
Research norms	Industry standard
Counter offer	In writing
Settlement agreement	Usually required
Get advice	Before signing

Professional Advice

When to Get Help	Why
Large sum	Worth protecting
Unfair dismissal concern	May affect
Restrictive covenants	Need reviewing
Complex tax	Optimise

Timeline

Redundancy Process

Stage	Typical Timing
Consultation	30+ days (20+ redundancies)
Selection	During consultation
Notice period	After selection
Final pay	Last day or within

Payment Timing

Payment	When
Final salary	Normal payday
Redundancy pay	Usually with final pay
Settlement	Per agreement

Summary

Statutory Calculation	Formula
Under 22	0.5 × years × weekly pay
22-40	1 × years × weekly pay
Over 41	1.5 × years × weekly pay
Weekly cap	£700
Max years	20
Tax-free	First £30,000

What to Check	Item
Years of service	Exact
Age during service	Different rates
Actual vs capped pay	Statutory uses cap
Enhanced terms	Policy or negotiated
Other payments due	Notice, holiday
Tax position	Plan for it