How much redundancy will I get?
The short answer, the formula behind it, and the two payments people forget they are owed on top.
The short answer
Your statutory redundancy pay depends on three things and nothing else: how old you are, how long you have worked there, and how much you earn a week. The formula pays you a number of weeks’ pay based on your age in each year you worked.
½ week
per year worked under 22
1 week
per year worked aged 22–40
1½ weeks
per year worked aged 41+
What that looks like in practice
| Situation | Weeks’ pay | Redundancy pay |
|---|---|---|
| Aged 30, 4 years’ service, £450/week | 4 | £1,800.00 |
| Aged 45, 12 years’ service, £600/week | 14 | £8,400.00 |
| Aged 58, 20 years’ service, £900/week | 28.5 | £21,403.50 |
Three separate payments — not just one
This is the most common misunderstanding. Redundancy pay is one of three things you are owed, and they are calculated completely separately.
1. Statutory redundancy pay
Compensation for losing the job. Tax free. Requires two years’ service.
2. Notice pay
One week per year of service, up to 12 weeks. Paid whether you work the notice or are paid in lieu. Taxed as normal earnings. Work out your notice period.
3. Accrued holiday pay
Payment for annual leave you built up but did not take. Taxed as normal earnings. Work out your holiday pay.
How much of it will I actually keep?
Statutory redundancy pay is tax free, and the first £30,000.00 of your overall termination package escapes income tax and National Insurance. But notice pay and holiday pay are taxed as normal earnings no matter how small your package is.
Common questions
How much redundancy will I get?
Statutory redundancy pay is half a week's pay for each full year worked under age 22, one week's pay for each full year aged 22 to 40, and one and a half week's pay for each full year aged 41 or over. Service is capped at 20 years and weekly pay is capped at £751.00, so the maximum statutory payment is £22,530.00.
Do I get redundancy pay after 2 years?
Two full years of continuous service is the minimum to qualify for statutory redundancy pay. Below that you get nothing statutory, though you are still owed notice pay and any accrued holiday pay.
Is redundancy pay based on gross or net pay?
Gross pay, before tax and National Insurance. It is your average gross weekly pay, usually over the 12 weeks before you were given notice, and it is then capped at the statutory maximum week’s pay.
Will I get more than the statutory minimum?
Possibly. Many employers run enhanced schemes that pay more, either by using your actual weekly pay rather than the capped figure, or by paying more weeks per year of service. Check your contract or staff handbook for a contractual redundancy scheme.