How Is Redundancy Pay Calculated? (UK 2026/27 Guide)

Statutory redundancy pay is calculated using a formula based on three factors: your age, your length of continuous service (capped at 20 years), and your weekly gross pay (capped at £751 for 2026/27).

The age-band multipliers

Under 22: half a week's pay per year of service
22 to 40: one week's pay per year
41 and over: one and a half weeks' pay per year

The multipliers apply to the age you were during each year of service, not just your current age. So if you worked from age 40 to 43, one year gets the 22–40 multiplier and two years get the 41+ multiplier.

The weekly pay cap

For redundancies on or after 6 April 2026, the weekly pay cap is £751. Even if you earn £2,000 per week, only £751 counts. The cap is reviewed each April.

Maximum statutory redundancy pay

The maximum possible payout is 30 weeks × £751 = £22,530. This applies to someone aged 61+ with 20 years' service earning above the cap.

Enhanced redundancy

Your employer can offer more than the statutory minimum — many use a multiplier of 1.5× or 2× statutory. Check your contract or staff handbook.

Working the calculation backwards

The reliable method is to count backwards from your leaving date rather than forwards from your start date, working out your age in each year of service as you go. Doing it forwards makes it easy to misassign the year in which you crossed an age band.

Worked example

Aged 43 at the leaving date, 6 years of continuous service, weekly pay of £600.

Years at age 41 and over: ages 41, 42 and 43, so 3 years at 1.5 weeks = 4.5 weeks
Years at age 22 to 40: ages 38, 39 and 40, so 3 years at 1 week = 3 weeks
Total: 7.5 weeks × £600 = £4,500

Weekly pay is below the cap here, so the full £600 is used. Had the same person earned £900 a week, the cap would apply and the figure would be 7.5 × £751 = £5,632.50.

What counts as continuous service

Service runs from your start date to the date your notice period ends, not to the date you were told. That matters because a worked or paid notice period can push you over a service year boundary or past a birthday, either of which increases the payment.

You need two years of continuous service to qualify for statutory redundancy pay at all. Continuity is generally preserved through TUPE transfers, so if your employer changed because the business was sold, your service with the previous employer usually still counts. Short breaks between contracts do not always break continuity either.

Working out the weekly pay figure

For someone on fixed hours and fixed pay, weekly pay is straightforward. Where pay varies, it is the average weekly earnings over the 12 weeks ending with the last full week before the redundancy notice date.

Regular contractual overtime counts towards that average. Overtime that is genuinely voluntary and not guaranteed generally does not, which is a frequent source of disagreement for anyone who routinely works more than their contracted hours. Bonuses and commission may count depending on whether they form part of contractual pay.

Where the figure commonly goes wrong

If your employer's number differs from your own, the cause is usually one of these:

Part years counted as full years. Only complete years of service count. Eleven months at the end of your service adds nothing.
The wrong leaving date. Using the notice date rather than the end of the notice period can lose you a year or an age band.
The cap applied when it should not be. The cap only bites if your actual weekly pay exceeds it.
The wrong cap year. The cap is set each April and the rate that applies is the one in force at your redundancy date.
Enhanced treated as instead of statutory. A contractual scheme normally pays more than statutory, not in place of the calculation.

If your employer cannot pay

Where an employer is insolvent, statutory redundancy pay can be claimed from the Redundancy Payments Service, which pays out from the National Insurance Fund. The statutory calculation and the same caps apply, and any enhanced contractual element is treated as a debt in the insolvency rather than being guaranteed.

Check your own figure

Use our redundancy pay calculator to get your exact figure instantly, and see the tax-free allowance guide for how much of it you actually keep.

General information, not legal advice. Redundancy sits alongside consultation rights, notice entitlement and unfair dismissal protection that a calculator cannot assess. ACAS provides free impartial guidance.