Redundancy Pay Calculator

Work out your redundancy pay

Enter your date of birth (or age), your start and end dates, and your gross weekly pay into the redundancy pay calculator above. It returns an estimate of your statutory entitlement in seconds, so you have a number to compare against whatever your employer has put in writing.

How statutory redundancy pay is calculated

Statutory redundancy pay is built from one simple idea: you get a number of weeks' pay for each full year you worked, and that number depends on how old you were during each of those years. The formula in plain words is:

Redundancy pay = weeks earned (by age band) × weekly pay

For each full year of continuous service you build up:

• Half a week's pay for each full year you were under 22;
• One week's pay for each full year you were 22 to 40;
• One and a half weeks' pay for each full year you were 41 or older.

Three limits then shape the result. First, you normally need at least two years' continuous service with the same employer to qualify at all. Second, only your last 20 years of service count, so the maximum you can build up is 30 weeks' pay (20 years all at one and a half weeks). Third, your weekly pay is capped at a statutory weekly maximum set by the government each April. If you earn more than that cap, the calculation uses the capped figure, not your real higher wage. Because that cap changes every tax year, check the current amount on the official gov.uk statutory redundancy pay page before you treat any figure as final.

"Weekly pay" usually means your normal gross weekly wage. For variable hours or commission, it's typically an average over the 12 weeks before you were told about the redundancy. Bonuses and overtime are included only where they're a contractual, regular part of your pay. If your hours or pay changed recently, that averaging can move your figure more than people expect.

Worked examples: redundancy pay in real numbers

Numbers make this far clearer than rules. Here are three realistic cases. In each, we assume the weekly pay is within the statutory cap so the cap doesn't reduce it.

Example 1 - a 45-year-old with 12 years' service

Imagine Priya, 45, who has worked at the same firm for 12 full years and earns £500 gross a week. You count her service backwards by the age she was in each year. She was 41 or older for the last 4 years (1.5 weeks each) and aged 22 to 40 for the 8 years before that (1 week each):

• 4 years × 1.5 weeks = 6 weeks
• 8 years × 1 week = 8 weeks
• Total = 14 weeks × £500 = £7,000

Example 2 - hitting the 20-year cap

Now take Mark, 58, with 22 years' service. Only his most recent 20 years count. Within that 20-year window he was 41 or older for 17 years and aged 38 to 40 for 3 years:

• 17 years × 1.5 weeks = 25.5 weeks
• 3 years × 1 week = 3 weeks
• Total = 28.5 weeks × his (capped) weekly pay

This shows two things at once: the two extra years beyond 20 add nothing, and once weekly pay is above the statutory cap, the calculation quietly swaps in the cap. That's why a senior, long-serving employee can be surprised the statutory figure is lower than they assumed.

Example 3 - the taxable slice of a larger package

Suppose Dan is offered a £45,000 package combining statutory redundancy and an enhanced employer top-up. A genuine redundancy payment is tax-free up to a statutory limit; anything above that limit is added to your taxable income for the year. Say £15,000 of Dan's package falls above the tax-free limit and he's a basic-rate taxpayer with room left in the 20% band - he'd pay roughly £15,000 × 20% = £3,000 in income tax on that slice. If that taxable slice instead pushed him over the £50,270 higher-rate threshold, the part above it would be taxed at 40%. To model the income-tax side properly, run the taxable portion through our income tax calculator.

Is redundancy pay taxed?

Genuine statutory redundancy pay is free of both income tax and National Insurance. So is the tax-free slice of any larger compensation package. Above the statutory tax-free limit, the balance is treated as ordinary income and taxed at your marginal rate using the 2026/27 bands: 20% basic, 40% higher and 45% additional rate, after your £12,570 Personal Allowance. National Insurance is not charged on a genuine redundancy payment.

The catch is what counts as "redundancy". Pay in lieu of notice (PILON), holiday you've accrued but not taken, and any bonus owed are not redundancy compensation - they're earnings, taxed and NI'd in the normal way. Employers often lump everything into one figure, which makes the package look more tax-free than it is. Check your accrued leave with our holiday entitlement calculator and confirm your notice using the notice period calculator so you know which parts are taxable.

How to check and challenge your redundancy figure

Once you have the calculator's estimate, compare it line by line with your employer's offer letter. The official gov.uk redundancy calculator gives a second opinion on the statutory minimum, and MoneyHelper has clear guidance on your wider rights.

• Confirm your start date. Continuous service includes some transfers and TUPE moves you might not count yourself.
• Check the weekly pay used. If you're paid monthly, divide by 4.33, not 4, to get a true weekly figure.
• Separate the elements. Statutory redundancy, contractual/enhanced redundancy, notice pay and holiday pay are taxed differently - don't let them blur together.
• Watch your final tax code. A large final payment can trigger emergency tax through PAYE; you can often reclaim any overpayment. Our emergency tax calculator helps you spot it.

If you think the figure is wrong, raise it in writing during the consultation period rather than after you've signed. Employers can pay more than the statutory minimum but never less.

Common redundancy pay mistakes

• Assuming your real salary is used. The statutory weekly pay cap limits high earners - your headline salary often isn't the figure that's multiplied.
• Forgetting the two-year qualifying rule. Under two years' continuous service usually means no statutory entitlement, even if a contractual scheme still pays out.
• Counting part-years. Only full years of service count; 9 years and 11 months counts as 9.
• Mixing up notice and redundancy. PILON is taxable earnings, not tax-free redundancy - this single mix-up causes most unexpected tax bills.
• Ignoring the P45 timing. Tax on the taxable slice is taken via PAYE, so generate or check your P45 figures and reconcile after the tax year ends.

One last practical point: redundancy doesn't end your right to other statutory protections. If you're pregnant or on family leave, your entitlements interact with redundancy rules, and tools like our maternity pay calculator can help you see the full picture.

These figures are estimates for guidance only and are not personal tax or financial advice. Always confirm your entitlement against gov.uk or take advice for your own situation.

Related calculators

Planning around a redundancy usually means looking at the wider numbers too. Estimate your future pay packets with the take-home pay calculator, check whether you're owed money back with the tax refund calculator, and confirm your notice entitlement with the notice period calculator.

The statutory formula, by age

Check the current weekly cap and your exact entitlement on GOV.UK redundancy rights.