Redundancy Pay UK — Free Calculator 2025

Overview

Calculate Redundancy Pay UK using the official rates and regulations for United Kingdom.

How it works

Enter the base amount and the calculator will apply the relevant rates and brackets to compute the result.

Understanding Statutory Redundancy Pay and Eligibility

Statutory Redundancy Pay (SRP) is a legal entitlement for employees who are made redundant after at least two years of continuous service with their employer. The amount depends on your age, length of service, and weekly pay, subject to a maximum of £700 per week for calculations in 2025-26. Employees aged 41 and over receive one and a half weeks' pay for each complete year of service, those aged 22-40 receive one week's pay per year, and those aged 18-21 receive half a week's pay per year. The maximum length of service counted is 20 years, and the maximum statutory payment is £21,000, though many employers pay significantly more through enhanced redundancy packages. Redundancy pay is tax-free up to £30,000, meaning statutory payments are entirely tax-free, while enhanced payments may have a tax liability on the amount exceeding the threshold. SRP is calculated using the employee's actual weekly pay if it is below the £700 cap, or the capped amount if earnings are higher. The calculation counts backwards from the date the employment ends, and service is rounded down to complete years. Employees on fixed-term contracts that are not renewed are also entitled to SRP if they have the required length of service.

Enhanced Redundancy Schemes and Negotiation

Many employers offer redundancy terms above the statutory minimum, either as a contractual entitlement outlined in the employment contract or as a discretionary payment to secure employee cooperation during restructuring. Enhanced terms typically multiply the statutory weeks or base the calculation on actual pay rather than the capped amount, resulting in significantly higher payments for long-serving employees. When multiple employees are at risk of redundancy, the employer must follow a fair consultation process, and employees have the right to be accompanied by a trade union representative or colleague in redundancy meetings. If you believe your redundancy is unfair, for example because the employer failed to follow a fair process, used redundancy as a pretext for dismissal, or selected you unfairly, you can appeal internally and ultimately bring a claim to the Employment Tribunal within three months of your employment ending. Legal advice is often worthwhile for senior employees or those with complex circumstances, as successful claims can result in a protective award of up to 90 days' pay in addition to the redundancy payment.

Using Our Redundancy Pay Calculator

Our redundancy pay calculator determines your statutory entitlement based on your age, length of service, and weekly pay. Enter your details to see the breakdown of weeks' pay at each age band, the total statutory payment, and the tax-free amount. For employees receiving enhanced terms, the calculator models different enhancement multiples to show the total payment and any tax liability on amounts above the £30,000 threshold. The calculator also shows the impact of taking the redundancy payment as a tax-free lump sum versus alternative arrangements such as a payment in lieu of notice or an enhanced pension contribution. Understanding your full redundancy entitlement ensures you can assess whether the offer is fair and negotiate effectively if the employer's initial proposal falls short of what you are due.

Tax Treatment of Redundancy Payments

Statutory redundancy pay is completely tax-free, as are enhanced redundancy payments up to the £30,000 threshold. Any amount above £30,000 is taxed as income at your marginal rate, which can create a significant tax liability for well-compensated senior employees. Payments in lieu of notice (PILON) are taxable as earnings and subject to income tax and NI, whether contractual or non-contractual, following changes in 2018 that eliminated the previous distinction. Holiday pay outstanding at termination, bonuses, and commission owed are all taxable as normal earnings. When negotiating a settlement package, the tax treatment of each component matters as much as the headline figure. A £50,000 package structured as £30,000 tax-free redundancy plus £20,000 PILON is worth more than a £55,000 package with £25,000 redundancy and £30,000 PILON for a higher-rate taxpayer, because the after-tax value differs. Understanding these distinctions enables you to negotiate effectively and ensure you receive the maximum after-tax value from your redundancy settlement.

Our calculator provides a complete breakdown of your redundancy entitlement, the tax-free portion, and any tax liability on enhanced payments, ensuring you have the information needed to assess any offer and negotiate from a position of knowledge.