How Statutory Redundancy Pay Works in the UK

Statutory redundancy pay is the legal minimum payment an eligible employee should receive when their role genuinely disappears. It is separate from notice pay, untaken holiday pay, bonuses already earned, or any enhanced package in a contract or workplace policy.

The three things that drive the calculation

Your statutory redundancy figure mainly depends on:

• your age during each full year of service
• your length of continuous service, capped at 20 years
• your gross weekly pay, capped at the statutory weekly limit

That is why two people on the same salary can receive different results. Age-banded years matter just as much as pay.

Who usually qualifies

In most cases, you need two years of continuous service to qualify for statutory redundancy pay. The dismissal must also be a genuine redundancy. That usually means:

• the business is closing
• the workplace is closing
• the employer needs fewer people to do work of a particular kind

If your employer says your role is redundant but immediately recruits someone else into essentially the same job, that can be a warning sign that the process may not be a genuine redundancy.

How the age weighting works

Each full year of service is counted using the age you were during that year:

• 0.5 week’s pay for each full year worked while under 22
• 1 week’s pay for each full year worked aged 22 to 40
• 1.5 weeks’ pay for each full year worked aged 41 or over

Only complete years count for the statutory minimum. Part years do not increase the payment.

The weekly pay cap matters

Even if your actual weekly pay is higher, statutory redundancy pay uses the legal weekly cap in force at the time of dismissal. This is one of the most common reasons an employer’s figure looks lower than expected.

Your employer may still choose to pay more than the statutory minimum. If your contract, staff handbook, or settlement discussions refer to enhanced redundancy pay, that is a separate question from the legal floor.

What statutory redundancy does not include

Employees often mix redundancy pay together with other sums due on exit. Keep these separate:

• statutory or contractual notice pay
• accrued but untaken holiday
• unpaid wages, overtime, or commission
• PILON or settlement agreement payments

When you separate those items, it becomes much easier to see whether the redundancy element itself is correct.

Checks worth making before you accept the figure

Ask for the employer’s breakdown in writing if you have not already received it. In particular, check:

• the start date used for continuous service
• whether only full years were counted
• whether the correct age band was applied to each year
• whether the statutory weekly cap was used correctly
• whether notice pay and holiday pay were left out of the redundancy figure

Practical next step

Use the Redundancy Pay Calculator to build your own estimate, then compare it with the figure from HR or payroll. If the numbers are far apart, the issue is often service length, age banding, or the pay cap rather than a random payroll mistake.

Step-by-step checklist

1

Check that you qualify

You usually need at least two years of continuous service and a genuine redundancy situation rather than a dismissal for conduct or capability.

2

Work out your age band for each year

Each full year of service is weighted differently depending on whether you were under 22, aged 22 to 40, or 41 and over during that year.

3

Apply the weekly pay cap

Statutory redundancy is based on capped weekly pay, so a higher real salary will not increase the legal minimum above the annual cap.