The arithmetic

How statutory redundancy pay is actually calculated

Statutory redundancy pay is the one number in a settlement that cannot be argued about. It is arithmetic, it is published, and it takes three inputs. Knowing how it works is useful for a reason that is not obvious: it tells you exactly how much of your offer is not compensation at all.

The three inputs

Your age, your complete years of continuous service, and a week’s pay. Nothing else. Not your seniority, not your performance, not how the dismissal was handled, not how long you will take to find other work.

You normally need at least two years’ continuous service to qualify at all.

The age bands

GOV.UK sets the rates as:

• half a week’s pay for each full year worked while under 22
• one week’s pay for each full year worked while 22 or over but under 41
• one and a half weeks’ pay for each full year worked while 41 or over

The detail people get wrong is that the band is set by the age you were during each year of service, not by your age now. You work backwards from the end of the employment, charging each completed year at the rate for the age you were while working it.

Service counts for a maximum of 20 years, counted backwards from the most recent — which is the treatment that favours the worker, because the most recent years are the ones charged at the highest band.

Worked example one: the crossover

Someone aged 43 with 6 complete years of service. Working backwards, they were 42, 41, 40, 39, 38 and 37 during those years.

Seven weeks of pay. Not six, and not nine — the two years spent over 41 are worth half as much again as the four below it.

Worked example two: why the cap changes everything

Take two people, both 43, both with 6 years’ service, so both entitled to 7 weeks under the table above.

The first earns £32,000 a year, which is about £615 a week. Seven weeks at £615 is roughly £4,307.

The second earns £78,000 a year, about £1,500 a week. But a week’s pay for this purpose is capped at £751 for the 2026/27 tax year. Seven weeks at £751 is roughly £5,257.

The second person earns nearly two and a half times as much as the first and receives about 22 per cent more statutory redundancy pay. That is the cap doing exactly what it is designed to do, and it is the single most important thing to understand about this number.

The ceiling on the whole calculation is 20 years at 1.5 weeks at £751 — £22,530 for 2026/27. There is no set of facts that produces more.

Why this matters to a settlement

Because it tells you how to read an offer.

If your employer offers you a redundancy package of £26,000 and your statutory entitlement is £5,257, then about a fifth of that offer is money you were entitled to by statute and roughly four fifths is compensation. If the same offer is made to someone whose statutory entitlement is £18,000, the compensation element is under half.

Same headline figure, very different offers. The statutory part is not a concession and should not be treated as one.

The same logic applies to notice pay, which is also fixed — section 86(1) of the Employment Rights Act 1996 gives one week per complete year, up to a ceiling of twelve, and your contract may give more but never less. Notice pay is contractual, taxed in full, and belongs in a completely different half of the settlement from the compensation.

The figures change every April

Every statutory money figure in this area is uprated on 6 April. The £751 weekly cap and the £22,530 maximum above are the 2026/27 figures. A 2025/26 figure applied to a 2026 dismissal is simply wrong, and it is the most common error in this subject — including on sites that should know better, some of which publish one year’s figure in their page text and another year’s in their structured data.

If you are reading a figure anywhere, including here, check which tax year it belongs to. That is why every number on this site carries one.

Where the argument actually is

Not here. The statutory calculation is the floor and it is not negotiable, because it is arithmetic applied to facts neither side controls.

The negotiation is entirely in the half above it: compensation for the loss of the job, which is priced against what the claim you are giving up would cost the employer to defend. What moves that figure is a different list entirely — a grievance on file, a discrimination element, a process that looks decided in advance — and none of it has anything to do with your age or your length of service.

Run your own figures through the calculator and it will separate the two for you.

All posts · Calculator · Find a solicitor