By Team SalaryCalculate · 9/24/2025
Statutory redundancy pay is the legal minimum compensation you're entitled to when your job becomes redundant. Every employee should understand their rights and how these payments are calculated using the current 2025 figures.
This guide explains the statutory redundancy pay system, including eligibility criteria, calculation methods, age factors, and what to do if your employer doesn't pay the correct amount.
What is Statutory Redundancy Pay?
Statutory redundancy pay is a legal entitlement for employees who are made redundant through no fault of their own. It's calculated based on your age, length of service, and weekly pay, up to a maximum amount set by law.
This payment is separate from any enhanced redundancy package your employer might offer. It's the absolute minimum you must receive, regardless of your employer's financial situation or company policy.
Eligibility for Statutory Redundancy Pay
To qualify for statutory redundancy pay, you must meet specific criteria:
• You must be an employee (not self-employed or a contractor)
• You must have worked for your employer for at least 2 years continuously
• Your job must genuinely be redundant (not due to poor performance or misconduct)
• You must be aged 18 or over when made redundant
• Your employer must not have offered suitable alternative employment
How Statutory Redundancy Pay is Calculated
The calculation uses three key factors: your age, length of service, and weekly pay. Use our redundancy pay calculator to work out exactly what you're entitled to based on your specific circumstances.
The formula is: Weekly pay × Length of service × Age factor
| Age Group | Multiplier | Example (10 years service, £500/week) | Notes |
|---|---|---|---|
| Under 22 | 0.5 weeks | £500 × 10 × 0.5 = £2,500 | Half week's pay per year |
| 22-40 | 1 week | £500 × 10 × 1 = £5,000 | One week's pay per year |
| 41 and over | 1.5 weeks | £500 × 10 × 1.5 = £7,500 | One and a half weeks per year |
Important calculation rules:
• Maximum weekly pay is capped at £719 (as of April 2025)
• Maximum service counted is 20 years
• Age is calculated on the date your employment ends
• Service includes all continuous employment with the same employer
Weekly Pay Calculation
Your weekly pay is calculated differently depending on how you're paid. The calculation looks at your average weekly pay over the 12 weeks before your redundancy notice period begins.
Weekly pay includes:
• Basic salary or hourly wages
• Regular overtime (if guaranteed)
• Commission (if regular and contractual)
• Shift allowances and premium payments
Weekly pay excludes:
• Expenses and travel allowances
• Benefits in kind (company car, health insurance)
• Discretionary bonuses
• Pension contributions
Length of Service Calculation
Your length of service is calculated from the date you started working for your employer until your employment ends. Only continuous service counts - gaps in employment reset the clock.
Service includes periods when you:
• Were on maternity, paternity, or adoption leave
• Were temporarily laid off or on short-time working
• Were on sick leave (with medical certificates)
• Were on unpaid leave (up to 26 weeks)
• Were on strike (limited circumstances)
Age Factors and Maximum Limits
Your age on the date your employment ends determines the multiplier used in the calculation. The older you are, the more you receive per year of service, reflecting the increased difficulty of finding new employment.
Maximum statutory redundancy pay limits (2025):
• Maximum weekly pay: £719 (April 2025 rate)
• Maximum service counted: 20 years
• Maximum total payment: £21,570 (£719 × 20 × 1.5)
• These limits are reviewed annually in April
Payment and Timing
Statutory redundancy pay should be paid on your last day of employment, along with any outstanding wages, holiday pay, and notice pay. If your employer doesn't pay on time, you may be entitled to interest.
Payment methods:
• Usually paid through normal payroll
• May be paid as a lump sum
• Must include a written statement showing the calculation
Tax Treatment
Statutory redundancy pay is tax-free up to £30,000. This threshold applies to all redundancy payments combined, not just statutory pay. If your total redundancy package exceeds £30,000, the excess is subject to income tax and National Insurance.
Tax-free elements include:
• Statutory redundancy pay
• Enhanced redundancy pay
• Ex-gratia payments
• Compensation for loss of employment
What Happens if Your Employer Refuses to Pay?
If your employer refuses to pay statutory redundancy pay or disputes the amount, you have several options:
• Write to your employer requesting the payment in writing
• Contact ACAS for free advice and conciliation
• Make a claim to an employment tribunal
• If your employer is insolvent, claim from the National Insurance Fund
Comparing Redundancy vs Resignation
Understanding the difference between redundancy and resignation is crucial for your financial planning. Use our redundancy vs resignation calculator to see the financial impact of each option and make informed decisions about your career transition.
Key differences:
• Redundancy: Entitled to statutory pay, better for benefits and references
• Resignation: No statutory entitlement, may affect future employment prospects
• Both: May qualify for Jobseeker's Allowance, but redundancy is generally financially better
Negotiating Enhanced Packages
While statutory redundancy pay is your legal minimum, many employers offer enhanced packages. Learn effective strategies for redundancy settlement negotiation to maximize your total package beyond the statutory minimum.
Frequently Asked Questions
Q: Do I get statutory redundancy pay if I've worked for less than 2 years?
A: No, you need at least 2 years of continuous service to qualify for statutory redundancy pay. However, you may still be entitled to notice pay and any enhanced package your employer offers.
Q: What if my employer offers me another job instead of redundancy pay?
A: Your employer must offer suitable alternative employment. If the job is genuinely suitable and you refuse it unreasonably, you may lose your entitlement to statutory redundancy pay.
Q: Can I claim statutory redundancy pay if I'm self-employed?
A: No, statutory redundancy pay only applies to employees. Self-employed contractors are not entitled to this protection, though they may have other rights under their contract.
Q: How often are the statutory limits updated?
A: The weekly pay limit is usually updated annually in April, along with other employment law changes. The current limit of £719 applies from April 2025 and will be reviewed for April 2026.
Understanding your statutory redundancy pay entitlements is essential for protecting your rights during job loss. This legal minimum provides a financial safety net, but remember that many employers offer enhanced packages that can significantly improve your situation.
If you're facing redundancy, use the calculators and resources available to understand your entitlements, and don't hesitate to seek advice if you believe your employer isn't paying the correct amount.
