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Calculating your redundancy pay

How much redundancy pay you get depends on your wage, how long you have worked at the company and your age. When your employer gives you your redundancy payment they must also give you a statement showing how it was calculated.

Contractual redundancy pay

You should check your employment contract for how much redundancy pay you are entitled to. Some employers offer employees more generous packages than the statutory minimum as part of their employment benefits.

Your employer cannot offer you less than the statutory minimum through your employment contract.

Statutory redundancy pay

Statutory redundancy pay is based on a calculation which uses your age and length of service. The redundancy calculator can tell you how much statutory redundancy pay you might be entitled to.

The total amount you should be paid for redundancy will be based on:

  • how long you have been continuously employed
  • your age
  • your weekly pay, up to a certain limit (current maximum £490)

You will get:

  • 0.5 week's pay for each full year of service where your age was under 22
  • one week's pay for each full year of service where your age was 22 or above, but under 41
  • 1.5 week's pay for each full year of service where your age was 41 or above

The maximum number of years that can be taken into account is 20 years. You can't be given statutory redundancy pay for more than 20 years' employment.

Worked example

If you are 45, your weekly pay is £490 per week and you have completed 15 years full service, you will receive £8,330 statutory redundancy pay.

Step 1

1.5 week's x 4 years service when you were 41 or above = 6 weeks

Step 2

1 week x 11 years service when you were under 41 = 11 weeks

Step 3

6 weeks + 11 weeks = 17 weeks x £490 (max weekly wage) = £8,330

Relevant end date for your years of service

The number of weeks' redundancy pay you should receive is calculated up until a set 'relevant date'. It is important to know when this date is so you can work out how many years service you have.

In most instances, the 'relevant date' will be the date when your employment ends (the last day of your notice period). In some situations this will be different:

  • if your employer gave you a statutory notice period up until a set date, and then changed your notice period to finish earlier - the relevant date will be when your notice should have expired before it changed
  • if you are on a trial period for another position within the company and your employer lets you go because the work is not suitable - the relevant date is when your original contract ended before the trial period with the new position
  • if you do not have a statutory notice period (for example because of a payment in lieu arrangement) - the relevant date is when your employment contract would have ended if you had a statutory notice period

Tax

Redundancy pay under £30,000 is not taxable. More information on whether elements of the payment, such as pay in lieu of notice, is taxable is available from HM Revenue and Customs. Pay in lieu of notice is money paid to you by your employer as an alternative to being given your full notice.

Where to get help

If you are being denied your rights, talk to your employer first of all. If you have an employee representative (such as a trade union official), they may be able to help. If this does not work, you may need to make a complaint using your employer's internal grievance procedure.