The arithmetic

Work Out Redundancy Pay: 3 Steps, Age Bands vs the Cap

Statutory redundancy pay is the one number in a settlement that cannot be argued about. It is arithmetic, it is published, and it takes three inputs. Work it out before you read the offer, because it tells you something the offer will not: how much of what you are being given is money you were owed anyway.

The three inputs

Your age, your complete years of continuous service, and a week’s pay. Nothing else.

Not your seniority. Not your performance. Not how the dismissal was handled, how long you expect to be out of work, or how much the company can afford. Those things matter enormously to the other half of a settlement — they just have no effect whatsoever on this half.

You normally need at least 2 years of continuous service to qualify at all.

What “a week’s pay” means here

Not your gross weekly salary, necessarily. GOV.UK defines it as the average over the 12 weeks before the redundancy notice. If your pay is stable, that is simply your weekly gross. If you are on variable hours, commission or shift premia, the averaging period matters and is worth checking rather than assuming.

What “complete years” means here

Complete. A year and eleven months is one year for this purpose. This is the input people most often get wrong in their own favour, and discovering it at the appointment rather than beforehand wastes the appointment.

The age bands

GOV.UK sets three rates:

The detail almost everyone gets wrong

The band is set by the age you were during each year of service — not by your age now.

You work backwards from the end of the employment, charging each completed year at the rate for the age you were while working it. Someone who turned 41 two years ago gets the higher rate for those two years and the middle rate for the years before, in the same calculation.

Why service is counted backwards

Service counts for a maximum of 20 years, counted backwards from the most recent year. That direction is not arbitrary and it is not neutral: the most recent years are the ones most likely to attract the highest band, so counting backwards is the treatment that favours the worker. A 30-year employee is credited with their last 20 years, not their first 20.

Worked example one: the crossover

Someone aged 43 with 6 complete years of service. Working backwards, they were 42, 41, 40, 39, 38 and 37 during those years.

Seven weeks of pay. Not six, and not nine — the two years spent over 41 are worth half as much again as the four below it. Crossing a band birthday mid-employment is worth real money, and it is invisible unless you do the calculation year by year.

The same person one year earlier

At 42 with 5 years’ service they would have been 41, 40, 39, 38 and 37 during those years: one year at 1.5 and four at 1.0, giving 5.5 weeks. A year of service added 1.5 weeks rather than 1.0, because that year was worked over 41.

Worked example two: why the cap changes everything

Take two people, both 43, both with 6 years’ service, so both entitled to 7 weeks under the table above.

The first earns about £615 a week. Seven weeks at £615 is roughly £4,307.

The second earns about £1,500 a week. But a week’s pay for this purpose is capped at £751 (2026/27). Seven weeks at the capped figure is roughly £5,257.

The second person earns nearly two and a half times as much as the first and receives about 22 per cent more statutory redundancy pay.

The ceiling on the whole calculation

20 years at 1.5 weeks at the capped week gives £22,530. There is no set of facts that produces more. A chief executive of 40 years’ standing and a warehouse supervisor of 20 both hit the same ceiling.

The redundancy pay table for 2026/27

If you would rather look it up than work it out, this is the whole statutory calculation as a table: find your age and your complete years of service, and multiply the number of weeks by your week’s pay, capped at £751.

The table only shows whole years at selected ages; the redundancy pay calculator works for any combination, and the settlement agreement calculator adds notice and an ex gratia sum.

Where the cap bites, and where it does not

Because the cap is a flat national figure, its effect is entirely a function of local earnings. We hold median full-time pay for every city with a page on this site, and the cap does not behave the same way in any two of them:

In roughly half of them, median local pay sits below the cap, so for a typical local worker the statutory formula uses their actual week’s pay untruncated. In London it removes more than a fifth of it before the sum begins. Same statute, same formula, very different amount of quiet subtraction.

Why this matters to a settlement

Because it tells you how to read an offer.

If your employer offers a redundancy package of £26,000 and your statutory entitlement is £5,257, then about a fifth of that offer is money you were entitled to by statute and roughly four fifths is compensation. If the same offer is made to someone whose statutory entitlement is £18,000, the compensation element is under half.

Same headline figure, very different offers. The statutory part is not a concession and should not be treated as one.

Notice pay is fixed too, and separately

Section 86(1) of the Employment Rights Act 1996 gives one week per complete year of service, up to a ceiling of twelve. Your contract may give more but never less. Work out your notice and notice pay.

Notice pay is contractual, taxed in full, and belongs in a completely different half of the settlement from the compensation. Adding it to the statutory redundancy figure and calling the total “what I am owed” is the right instinct; treating the sum as negotiable is not.

The two together give you the floor

Run your own figures through the calculator and it separates the four for you.

If you work for the NHS on an Agenda for Change contract, none of this is the number you will actually receive: the statutory figure sits inside a contractual one that works on a different formula. NHS redundancy pay, and why England and the rest of the UK differ.

The figures change every April

Every statutory money figure in this area is uprated on 6 April. The cap and the maximum quoted above are the 2026/27 figures.

A previous year’s figure applied to a current dismissal is simply wrong, and it is the most common error in this subject — including on sites that should know better, some of which publish one year’s figure in their page text and a different year’s in their structured data on the same page.

How to check any figure, including ours

If you are reading a number anywhere, ask which tax year it belongs to. If the page does not say, treat it as unusable until you have checked it against GOV.UK yourself. Every figure on this site carries its year and its source for exactly this reason.

Where the argument actually is

Not here. The statutory calculation is a floor and it is not negotiable, because it is arithmetic applied to facts neither side controls.

What actually moves the other half

The negotiation is entirely in the compensation above the floor, which is priced against what the claim you are giving up would cost the employer to defend. What moves that figure is a different list entirely — a grievance already on file, a process that looks decided in advance, a live tribunal claim — and none of it has anything to do with your age or your length of service.

One item on that list outranks the rest. Where a discrimination claim is in play there is no qualifying service requirement, no statutory cap on compensation, and injury to feelings on top — which is why a short-service employee with a discrimination element can be in a stronger position than a long-service one without.

And the question before all of it

Is it actually a redundancy? Section 139(1) of the Employment Rights Act 1996 defines the word, and the definition is narrower than the way employers use it. If the work is still there and somebody else is doing it, the requirement for employees to do work of that kind has not diminished — and a dismissal that is not a genuine redundancy is still a dismissal, just an unfair one. That question is worth settling before you spend any time on the arithmetic on this page.

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