Redundancy Pay Calculator UK 2025

How Redundancy Pay is Calculated

Your statutory redundancy pay depends on three factors: your age, your weekly pay (capped at £700), and your years of service (maximum 20 years).

The Formula

For each complete year of service:

• Under 22: Half a week's pay
• 22 to 40: One week's pay
• 41 and over: One and a half weeks' pay

What Counts as a Week's Pay?

Your week's pay is your gross (before tax) normal weekly earnings. For variable hours, it's the average over the 12 weeks before redundancy notice. The statutory cap is £700/week (from April 2024), even if you earn more.

Tax on Redundancy Pay

Good news: statutory redundancy pay is tax-free up to £30,000. This includes:

• Statutory redundancy payment
• Any additional redundancy from your employer
• Ex-gratia payments

If your total redundancy package (excluding notice/holiday) exceeds £30,000, only the amount over £30,000 is taxed as income.

Your Rights When Made Redundant

Consultation Period

Your employer must consult with you before making you redundant. For 20+ employees being made redundant within 90 days, there are minimum consultation periods:

• 20-99 employees: 30 days consultation
• 100+ employees: 45 days consultation

Notice Period

You're entitled to notice or pay in lieu of notice:

• 1 week if employed 1 month to 2 years
• 1 week for each year if employed 2-12 years
• 12 weeks if employed 12+ years

Time Off to Find Work

If you've been continuously employed for 2+ years, you're entitled to reasonable paid time off to look for work or arrange training.

How to Use This Redundancy Pay Calculator

Our free redundancy pay calculator estimates your statutory redundancy entitlement based on current UK employment law. Follow these steps for an accurate calculation.

Step 1: Enter Your Date of Birth

Your age at the date of redundancy directly affects your entitlement. Years of service when you were aged 41 or over attract 1.5 weeks' pay per year, years at age 22 to 40 attract 1 week's pay, and years under 22 attract half a week's pay. The calculator works backwards from your redundancy date to apply the correct multiplier for each year of service.

Step 2: Enter Your Employment Start Date

This determines your total years of continuous service. You must have at least 2 years of continuous employment to qualify for statutory redundancy pay. Only complete years count. The maximum number of years used in the calculation is 20.

Step 3: Enter Your Redundancy Date

This is the date your employment is due to end. By default, the calculator uses today's date. If you know your actual redundancy date (or last day of employment), enter it for a more accurate result.

Step 4: Enter Your Weekly Pay

Enter your gross weekly pay (before tax and deductions). If you are paid monthly, you can instead enter your annual salary in the second field and the calculator will convert it to weekly pay automatically. Note that the statutory weekly pay cap for 2025 is £700. Even if you earn more than this, the calculation uses £700 as the maximum weekly figure.

Understanding Your Redundancy Rights in Full

Being made redundant can be a stressful experience, but understanding your legal rights helps ensure you receive everything you are entitled to. Here is a comprehensive guide to redundancy in the UK.

What Counts as Redundancy?

A genuine redundancy occurs when your employer needs to reduce the workforce. This can happen because the business is closing, the workplace is relocating, or fewer employees are needed to do work of a particular kind. If your employer is simply replacing you with someone else to do the same job, this may not be a genuine redundancy and could constitute unfair dismissal.

Selection Criteria Must Be Fair

When selecting employees for redundancy, employers must use fair and objective criteria. Common criteria include length of service, attendance records, skills and qualifications, work performance, and disciplinary records. Selection must not be based on age, gender, disability, pregnancy, trade union membership, or any other protected characteristic. If you believe the selection process was unfair, you may have grounds for an unfair dismissal claim at an employment tribunal.

The Consultation Process

Employers must consult with affected employees before making redundancies. For individual redundancies, there is no statutory minimum consultation period, but it must be meaningful and give you a genuine opportunity to discuss alternatives. For collective redundancies (20 or more employees within 90 days at one establishment), the minimum consultation periods are 30 days for 20 to 99 employees and 45 days for 100 or more employees. During consultation, your employer should discuss the reasons for redundancy, ways to avoid it, ways to reduce the number of redundancies, and ways to mitigate the effects.

Suitable Alternative Employment

Your employer must consider whether there are any suitable alternative roles they can offer you before finalising redundancy. If you are offered suitable alternative employment and unreasonably refuse it, you may lose your right to statutory redundancy pay. You are entitled to a trial period of at least 4 weeks in any new role to decide whether it is suitable for you.

Time Off to Look for Work

If you have been continuously employed for 2 or more years and are being made redundant, you have the legal right to reasonable paid time off during your notice period to look for new work or arrange training. This is up to 40% of a week's pay for the time off taken.

Worked Examples: Redundancy Pay Calculations

Example 1: Long-Serving Employee, Age 50

Margaret has worked for the same company for 18 years. She is 50 years old and earns £800 per week gross (capped at £700 for statutory purposes).

• Years aged 41-50 (9 years): 9 x 1.5 x £700 = £9,450
• Years aged 32-40 (9 years): 9 x 1.0 x £700 = £6,300
• Total statutory redundancy pay: £15,750
• This is entirely tax-free (under the £30,000 threshold)

Example 2: Young Employee, Age 25, Short Service

Jake has worked at his company for 4 years since he was 21. He earns £450 per week.

• Year aged 21 (1 year): 1 x 0.5 x £450 = £225
• Years aged 22-24 (3 years): 3 x 1.0 x £450 = £1,350
• Total statutory redundancy pay: £1,575

Example 3: Maximum Possible Statutory Redundancy

An employee aged 61 with 20+ years of service, all worked at age 41 or over, earning above the weekly cap.

• 20 years (maximum) x 1.5 weeks x £700 (cap) = £21,000
• This is the maximum possible statutory redundancy payment for 2025
• Many employers offer enhanced packages above this amount

After Redundancy: What Happens Next

Understanding the financial and practical steps after redundancy can help you manage the transition smoothly.

Claiming Benefits

If you do not find new employment immediately, you may be entitled to claim benefits. New Style Jobseeker's Allowance (JSA) is available if you have paid sufficient National Insurance contributions in the last 2 to 3 tax years. It is paid for up to 182 days and is not means-tested, so your redundancy payment does not affect eligibility. Universal Credit may also be available depending on your household circumstances and savings.

Tax Implications of Your Redundancy Package

Your statutory redundancy pay (and any additional redundancy payment up to £30,000 total) is tax-free. However, other elements of your final pay packet are taxed normally, including pay in lieu of notice (PILON), outstanding holiday pay, bonuses, and commission. If your total redundancy package exceeds £30,000, only the amount above this threshold is subject to income tax and, from April 2020, employer National Insurance.

Pension Considerations

Ask your employer about your workplace pension when you leave. You may be able to keep the pension where it is, transfer it to a new employer's scheme, or move it to a personal pension. If you receive a lump-sum redundancy payment, consider whether it would be beneficial to contribute some of it to your pension for tax efficiency, as pension contributions receive tax relief.

Negotiating an Enhanced Package

Many employers offer more than the statutory minimum. You may be able to negotiate a better deal, especially if you have specialist skills, long service, or if the employer wants to avoid a potential tribunal claim. Consider seeking advice from ACAS (the Advisory, Conciliation and Arbitration Service), your trade union, or an employment solicitor before accepting a settlement agreement.