Redundancy pay: how much you’re owed and how it’s calculated

Losing your job to redundancyA dismissal that occurs when your employer no longer needs the work you do, either because the business is closing, a workplace is closing, or the requirement for employees to carry out that kind of w... is unsettling even when you can see it coming. Knowing exactly what you’re owed, and being able to check your employer’s maths, is one thing you can get a grip on straight away.

Do you qualify for statutory redundancy pay

You need two years’ continuous service with your employer, counted up to the date your employment ends, whether you work full time or part time. Casual or genuinely temporary work usually doesn’t count towards this, so check your start date carefully if your history with the employer is mixed.

Under two years’ service almost always means no entitlement to statutory redundancy pay, whatever your contract says. Plenty of employers pay something anyway, out of goodwill, though nothing in the law makes them.

How the calculation works

Three numbers drive the statutory calculation: your age, how long you’ve worked there, and your weekly pay. The formula looks technical, but it’s mechanical once you have the numbers.

For each full year of service, you get:

• Half a week’s payYour "week's pay" is the figure used to calculate statutory redundancy pay, notice pay, and some other statutory payments. For most employees it's your normal weekly pay before deductions, but it's ca... 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.

Only your most recent 20 years of service count, even if you’ve worked there longer. And “a week’s pay” is capped, so however much you actually earn, the calculation won’t use a figure above the current statutory cap.

A worked example: a 45-year-old with 12 years’ service and a weekly wage of £600. Age is reassessed for each year of service, working back from the redundancy date, so of those 12 years, 5 were spent aged 41 or older (1.5 weeks each) and 7 were spent aged 22 to 40 (1 week each), 7.5 plus 7, which comes to 14.5 weeks’ pay in total. That’s 14.5 × £600, which comes to £8,700. The same person on £900 a week still only gets 14.5 × £751 (the capped figure), which is £10,889.50, not the higher amount their real wage would suggest.

Use our redundancy pay calculator to run this formula on your own numbers and sanity-check any figure your employer gives you.

Statutory pay, notice pay, and contractual enhancements are different things

These often get lumped together on a payslip, but they’re legally separate:

• Statutory redundancy pay is the amount calculated above. No tax applies on the first £30,000.
• Notice pay is what you’re owed for your notice periodThe period of time either party must give before ending the employment relationship. Your contract will usually set a notice period, but the law also provides a minimum statutory notice period based o..., whether you work it or your employer pays you in lieu. This is separate from redundancy pay entirely.
• Contractual or enhanced redundancy pay is anything above the statutory minimum that your contract or a collective agreement promises. Check your contract and any staff handbook. If it promises more than the statutory formula, you’re entitled to the higher figure, not the statutory one.

Don’t accept a total figure from your employer without asking them to break it down into these three parts. A settlement agreementA legally binding contract between you and your employer that settles any claims you might have in return for an agreed payment. You must take independent legal advice before signing one, and your emp... offer that bundles everything together can make it hard to tell whether you’re actually getting the redundancy pay you’re due.

When you might not get statutory redundancy pay

A few situations reduce or remove your entitlement:

• You’re dismissed for gross misconductBehaviour serious enough that your employer is entitled to dismiss you immediately without notice. Common examples include theft, violence, or serious dishonesty, but what counts depends on your emplo... before your redundancy date. Statutory redundancy pay can be lost entirely in this situation, though this is a separate legal question from whether the redundancy itself was genuine.
• You unreasonably refuse a genuinely suitable alternative role. Your employer has to offer you any suitable alternative vacancyA suitable alternative vacancy is a genuinely comparable role your employer must offer you before making you redundant, if one exists. If you're on maternity, adoption, shared parental, neonatal care,..., and refusing something genuinely suitable, without a good reason, can cost you your redundancy pay. What counts as “suitable” and “unreasonable” is judged on your situation, not a general standard, and a four-week trial period in the new role doesn’t affect your right to redundancy pay if it turns out not to work.
• You resign before the redundancy takes effect, other than in specific protected situations. Talk to us before resigning if redundancy is on the table. It can change your legal position in ways that aren’t obvious.

If your employer won’t pay, or you disagree with the figure

Start by asking for a written breakdown of how the figure was calculated. Genuine errors happen, often around service dates or the weekly pay figure used.

If your employer refuses to pay statutory redundancy pay you’re owed, you have six months from your dismissal date to refer the dispute to an employment tribunalAn independent court that hears disputes between employees and employers. It is free to bring a claim as a claimant, and most hearings take place in public. (or to have started early conciliationA free process run by ACAS that you must go through before you can submit a claim to an employment tribunal. ACAS contacts your employer to see if a settlement can be reached, and the process pauses y..., agreed a payment, or given written notice of your claim within that window). This is a longer window than the standard three-month unfair dismissalA legal claim you can bring if your employer dismissed you without a fair reason or without following a fair process. You normally need two years of continuous employment to qualify, though some dismi... time limitThe deadline by which you must submit a claim to an employment tribunal. For most claims the limit is three months less one day from the act you are complaining about, and it is strictly enforced. Mis..., but it isn’t unlimited, and a tribunal only has discretion to extend it where it’s genuinely just and equitable to do so. Don’t rely on that discretion if you can act sooner.

A redundancy also has to be a genuine one in the first place, not just a label. Our case study on Murray v Foyle Meats Ltd looks at how the courts decide whether a redundancy is real.

If you want an independent view on a settlement offer, or you’re not sure it reflects what you’re actually owed, you can book a call to talk it through.