How Statutory Redundancy Pay Works in 2026
If you are made redundant and have worked for your employer for at least two years, you are legally entitled to statutory redundancy pay. The amount you receive depends on three things: your age, your length of service, and your weekly pay (capped at £700 for 2025/26).
Weekly pay cap: £700 • Maximum redundancy pay: £21,000 • Maximum years counted: 20 • Minimum qualifying service: 2 years
The Redundancy Pay Formula by Age
The statutory formula multiplies a set number of weeks' pay by the number of complete years you have worked. The multiplier depends on your age during each year of service:
| Your Age During That Year | Weeks' Pay Per Year of Service |
|---|---|
| Under 22 | 0.5 week's pay |
| 22 to 40 | 1 week's pay |
| 41 and over | 1.5 weeks' pay |
Your weekly pay is capped at £700 for redundancies in 2025/26. If you earn £900 per week, only £700 is used in the calculation. This cap is reviewed by the government each April.
Worked Example
Suppose you are 45 years old with 10 years of service and weekly pay of £800 (capped at £700):
- Age 41-45: 5 years × 1.5 weeks = 7.5 weeks
- Age 35-40: 5 years × 1 week = 5 weeks
- Total: 12.5 weeks × £700 = £8,750
Maximum Statutory Redundancy Pay
The absolute maximum statutory redundancy payment is £21,000. This is achieved with 20 qualifying years, all at the 1.5-week rate, and the full £700 weekly cap: 20 × 1.5 × £700 = £21,000.
Tax on Redundancy Pay
Understanding the tax treatment of your redundancy payment is essential. The rules differ between your statutory redundancy pay and other payments you may receive when leaving your job.
First £30,000 is Tax-Free
The first £30,000 of a genuine redundancy payment is free from income tax and National Insurance contributions. This applies to your statutory redundancy pay as well as any additional ex-gratia payment your employer chooses to make. Because the maximum statutory redundancy is £21,000, it will always fall within this tax-free threshold.
Notice Pay and Holiday Pay
When you are made redundant you are also typically owed:
- Notice pay — either worked notice or pay in lieu of notice (PILON). Both are subject to income tax and National Insurance at your normal rate.
- Accrued holiday pay — any unused annual leave must be paid out and is fully taxable as income.
Enhanced Redundancy Pay
Some employers — particularly in the public sector or large corporations — offer enhanced redundancy packages worth significantly more than the statutory minimum. This may be a multiple of your actual salary (not capped at £700), or a set number of months' salary. Enhanced pay above £30,000 is taxable. If you are offered enhanced redundancy, consider taking independent financial advice before accepting.
The Redundancy Process
Being made redundant must follow a fair legal process. Here is what your employer is required to do:
Individual Redundancy (Fewer Than 20 Employees)
- Your employer identifies that your role is at risk and puts you at risk in writing.
- A consultation period begins. There is no fixed minimum length for individual redundancy, but it must be genuine and meaningful.
- Your employer must consider alternatives to redundancy and allow you to apply for any suitable alternative roles within the organisation.
- If redundancy proceeds, you receive written notice of termination and your final payments are calculated.
- You have the right to appeal the decision and to be accompanied to meetings by a trade union representative or colleague.
Collective Redundancy (20 or More People)
When an employer plans to make 20 or more people redundant at one establishment within 90 days, collective consultation rules apply:
- Minimum 30-day consultation before the first dismissal if making 20–99 redundant
- Minimum 45-day consultation before the first dismissal if making 100 or more redundant
- Employee representatives or a trade union must be consulted
- HMRC's HR1 form must be submitted to the Redundancy Payments Service
Redundancy During Maternity Leave
You have enhanced protection if you are made redundant while on maternity leave (or adoption/shared parental leave). Your employer must offer you any suitable alternative vacancy before anyone else — even if you are less qualified. Selecting you for redundancy because of your maternity leave is automatically unfair dismissal and may constitute pregnancy discrimination.
Unfair Selection for Redundancy
You may have a claim for unfair dismissal if you were selected for redundancy based on:
- Pregnancy or maternity leave
- Trade union membership or activities
- Whistleblowing
- Working part-time or on a fixed-term contract
- Exercising statutory employment rights
- A discriminatory reason such as age, race, sex, or disability
Claims for unfair dismissal must generally be brought to an Employment Tribunal within 3 months minus 1 day of the date of dismissal, after first going through ACAS Early Conciliation.