If you have just been made redundant and want to check whether your employer's offer is correct, this guide walks through the statutory redundancy pay calculation step by step. The formula is set by law under the Employment Rights Act 1996, and every employer must apply it correctly — there is no discretion on the method, only on whether they choose to pay more than the minimum.
The three things the calculation depends on
Statutory redundancy pay is determined by three factors only:
- Your length of service — how many complete years you have worked continuously for the same employer, capped at 20 years
- Your age during each year of that service — which determines the multiplier applied to each year
- Your weekly pay — capped at £751 per week from 6 April 2026
Your weekly pay for calculation purposes is your gross average weekly earnings over the 12 weeks before your redundancy notice was issued — not your notice period, and not your final pay date. For salaried employees this is simply annual salary divided by 52.
Step 1 — work out your qualifying years of service
Count the number of complete years you have worked continuously for your employer, working backwards from your last day of employment. Only complete years count — if you have worked for 7 years and 11 months, you get 7 years, not 8.
The maximum is 20 years. If you have worked for 25 years, only the most recent 20 count towards the calculation.
You must have at least 2 years of continuous service to qualify for statutory redundancy pay at all.
Step 2 — apply the age band multipliers
The calculation works backwards from your last day of employment through each year of service, applying a multiplier based on how old you were during that year:
- Under 22: half a week's pay per complete year
- Age 22 to 40: one week's pay per complete year
- Age 41 or over: one and a half weeks' pay per complete year
This is the part most employers get wrong when service spans multiple age bands, because it requires going through the history year by year rather than applying a single multiplier to the whole period.
Step 3 — apply the weekly pay cap
Your weekly pay is capped at £751 from 6 April 2026. This cap is reviewed by the government every April and increases most years. The cap that applies to your calculation is determined by your last day of employment — not today's date.
| Tax year | Weekly pay cap | Maximum statutory payment |
|---|---|---|
| 2024/25 | £700 | £21,000 |
| 2025/26 | £719 | £21,570 |
| 2026/27 | £751 | £22,530 |
If your weekly pay is below the cap — for example, your annual salary is £30,000, giving a weekly pay figure of £576.92 — the cap does not affect you and you simply use your actual weekly pay figure.
Step 4 — multiply weeks by weekly pay
Once you have your total number of qualifying weeks (from step 2), multiply by your weekly pay figure (from step 3). The result is your statutory redundancy entitlement.
A straightforward worked example
Sarah is 38 years old, has worked for the same employer for 8 years, and earns £40,000 a year.
- Weekly pay: £40,000 ÷ 52 = £769.23 — above the £751 cap, so £751 is used
- All 8 years were worked between age 22 and 40: 8 × 1.0 = 8 weeks
- Statutory entitlement: 8 × £751 = £6,008
A worked example with age band crossovers
James is 46 years old, has worked for the same employer for 14 years, and earns £35,000 a year.
- Weekly pay: £35,000 ÷ 52 = £673.08 — below the cap, so £673.08 is used
- Working backwards from age 46:
- 6 years worked aged 41 or over: 6 × 1.5 = 9 weeks
- 8 years worked aged 22 to 40: 8 × 1.0 = 8 weeks
- Total: 17 weeks
- Statutory entitlement: 17 × £673.08 = £11,442.36
The age band crossover is where many manual calculations go wrong. The calculation must go through each year individually — it is not sufficient to apply the age-41-plus multiplier to the whole period just because James is currently over 41.
What if you received PILON?
If your employer paid you in lieu of notice rather than having you work it, this can affect the relevant date used for your redundancy calculation. In some cases, particularly where you are close to a service year boundary, the addition of your statutory notice period to the relevant date can push you into another complete year of service — potentially increasing your redundancy pay. See our guide on PILON and redundancy pay for how this works in practice.
What to do if the figure is wrong
If you run the calculation and your employer's offer is lower than your statutory entitlement, you have the right to challenge it. A formal letter citing the Employment Rights Act 1996, setting out the correct calculation, and requesting the shortfall within 14 days is usually sufficient to prompt a correction. You have six months less one day from your last day of employment to bring a redundancy pay claim to an Employment Tribunal if the matter is not resolved.
See our guide on how long you have to claim redundancy pay for the full picture on time limits and ACAS Early Conciliation.
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