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Statutory redundancy pay, explained

Why your age during each year of service — not just your total years — decides the payout.

Statutory redundancy pay follows a formula, not a guess — but the formula weights your age during each year of service, which surprises a lot of people the first time they work it out by hand.

The three age bands

For each complete year of service, you're owed a number of weeks' pay based on how old you were during that year, not your current age:

• Half a week's pay for each full year worked while under 22.
• One week's pay for each full year worked between 22 and 40.
• One and a half weeks' pay for each full year worked at 41 or older.

This means someone who worked from 38 to 45 doesn't get a flat rate for all seven years — the years at 38–40 count at one week each, and the years at 41–45 count at one and a half weeks each.

The two caps that limit the payout

Two separate caps apply, and both matter:

• Length of service is capped at 20 years — anything beyond that doesn't add further weeks.
• Weekly pay is capped at a government-set maximum (£751 for 2026/27), even if your actual weekly pay is higher. If you earn more than the cap, your redundancy pay is calculated as though you earn exactly the cap.

The two-year qualifying rule

You normally need at least two years of continuous service with the same employer to qualify for statutory redundancy pay at all. Under two years, you may still be entitled to notice pay and other contractual terms, but not the statutory redundancy formula.

Tax-free up to £30,000

Statutory redundancy pay — and most non-contractual termination payments up to £30,000 in total — is paid tax-free. Anything genuinely contractual (like pay in lieu of notice specified in your contract, or accrued holiday pay) is usually taxed as normal income, separate from the £30,000 exemption.