What is statutory redundancy pay?
Statutory redundancy pay (SRP) is the legal minimum your employer must pay you if you're made redundant. It doesn't matter whether your role has been restructured, your team has been cut, or the company is closing. If you qualify, you're owed it. The amount is set by law and calculated using a formula based on your age, your length of service, and your weekly pay. It's a floor, not a ceiling. Your employer can offer more, and many do.
Do you qualify?
To receive statutory redundancy pay you need to have been continuously employed by the same employer for at least two years. If you've been with your employer for less than two years, you have no statutory entitlement, though you may still have a claim if the process was unfair or discriminatory. Agency workers, the genuinely self-employed, and some other categories are excluded, but if you're an employee (not a contractor) with two or more years' service, you almost certainly qualify.
The calculation formula
The formula uses three variables: your age at each year of service, your complete years of continuous service (up to a maximum of 20), and your weekly pay (capped by law each April, the cap for 2026/27 is £751 per week).
For each complete year of service:
• Under age 22: half a week's pay • Age 22 to 40: one week's pay • Age 41 or over: one and a half weeks' pay
So if you're 38, have worked for your employer for 7 years, and earn £900 per week (above the cap), your calculation uses £751. Seven years × one week's pay = £5,257.
The bands are counted year by year, working backwards from your leaving date, not applied in a block at your current age. So someone aged 45 with 12 years' service was 33 when they started: only the four years from 41 to 45 count at 1.5 weeks, and the other eight count at one week. That is 14 weeks, not 18. The year running from 40 to 41 does not qualify for the higher rate, because you were under 41 for part of it.
The weekly pay cap
The weekly pay cap is the part most employers and employees get wrong. It rises each April in line with the retail price index. For redundancies taking effect in 2026/27, it is £751. Your actual weekly salary doesn't matter for this calculation. Only what you earn up to the cap counts. If you earn £1,200 per week, the government's formula treats you as if you earn £751. This is why higher earners often feel the statutory figure is insulting. It is, intentionally, a minimum safety net rather than a true reflection of your salary.
Because the cap and the 20-year service limit are both fixed, there is a ceiling on statutory redundancy pay: £22,530 in 2026/27, however long you have worked or however much you earn. In Northern Ireland the cap is set separately and is currently £783, giving a maximum of £23,490.
Tax treatment
The first £30,000 of any redundancy payment, including statutory redundancy pay, is tax-free. Payments above £30,000 are subject to income tax but not National Insurance contributions. This applies to the total redundancy payment, not just the statutory element. If your employer offers an enhanced package that takes you above £30,000, you should factor the tax on the excess into your decision about whether to accept.
What if your employer gets it wrong?
Statutory redundancy pay is a legal minimum. If your employer pays you less than you're owed, or refuses to pay at all, you can make a claim to an employment tribunal. The deadline is typically six months from your dismissal date. Before doing that, it's worth writing to your employer to set out the correct calculation and give them the chance to correct the error. If you're unsure whether you've been underpaid, check your figure against an independent calculator or speak to an employment solicitor, many will review a calculation for free.
Statutory rates current for 2026/27.