Facing redundancy is stressful, and understanding what you are legally entitled to can make a real difference to your financial planning. This guide explains statutory redundancy pay in plain English — how it is calculated, who qualifies, and what to do next. It is general guidance only, not legal advice; always verify current figures on GOV.UK and seek advice from Acas if you have concerns about your specific situation.
What Is Statutory Redundancy Pay?
When an employer needs to reduce their workforce — whether because a role has disappeared, a business is restructuring, or a location is closing — affected employees may be made redundant. Statutory redundancy pay is the minimum cash payment the law requires employers to make in these circumstances. It is set out in the Employment Rights Act 1996 and applies across England, Wales, and Scotland (Northern Ireland has its own separate legislation with equivalent provisions).
Statutory redundancy pay is a floor, not a ceiling. Many employers — particularly those in sectors with strong union agreements or generous HR policies — offer enhanced contractual redundancy pay on top of the statutory minimum. Your employment contract, staff handbook, or collective agreement is the first place to check whether your employer offers anything above the statutory amount. If your contract is silent, you are entitled to the statutory minimum provided you meet the eligibility criteria.
It is also worth noting that redundancy pay is distinct from other payments you may receive when leaving a role, such as payment in lieu of notice (PILON), holiday pay owed, or any ex-gratia payment. Each element is treated differently for tax purposes.
Who Is Eligible?
To qualify for statutory redundancy pay, you must meet all three of the following conditions:
- You are classed as an employee (workers and the self-employed are not entitled to statutory redundancy pay, though some employment status cases are fact-specific and worth exploring with Acas).
- You have been continuously employed by the same employer for at least two years. This two-year qualifying period is calculated up to and including the date your notice expires, not the date notice is given.
- You have been genuinely made redundant — meaning the job itself has ceased to exist or the requirement for employees to do that kind of work has diminished or ended. If you resigned, were dismissed for misconduct, or accepted voluntary redundancy under a settlement, different rules may apply.
Certain groups are excluded, including employees who unreasonably refuse suitable alternative employment offered by the same employer, and those who are dismissed on or after their 65th birthday in some legacy cases. If you are unsure whether your departure qualifies, Acas runs a free helpline and can advise before you sign any settlement agreement.
How Statutory Redundancy Pay Is Calculated
The statutory formula is age-banded and capped at a maximum of 20 years of service. For each complete year of continuous service, you receive:
- Half a week's pay for each full year worked while you were under 22
- One week's pay for each full year worked while you were aged 22 to 40
- One and a half weeks' pay for each full year worked while you were aged 41 or over
The number of qualifying years is capped at 20, so even if you have worked for the same employer for 30 years, only the most recent 20 count. The government also applies a statutory weekly pay cap — your actual weekly pay is only counted up to this ceiling when calculating the amount owed. This cap is reviewed each April, so the current figure may differ from anything you read outside GOV.UK. Check the latest cap on GOV.UK before relying on any number you find elsewhere.
GOV.UK also provides a free redundancy pay calculator that does the arithmetic for you — you simply enter your age, length of service, and weekly pay.
Notice Pay, Consultation Rights, and Tax Treatment
Redundancy pay is just one part of what you may be owed when your role ends. Two other rights matter enormously in practice.
Notice pay: You are entitled to a statutory minimum notice period based on your length of service — one week per year of continuous employment, up to a maximum of twelve weeks after twelve years. Your contract may provide a longer notice period, and that contractual right takes precedence. If your employer wants you to leave immediately, they can pay you in lieu of notice (PILON), which is taxable as earnings. For a full breakdown of how notice periods work, see our guide on notice period UK explained.
Collective consultation: If 20 or more employees are being made redundant at one establishment within a 90-day period, the employer must collectively consult employee representatives and notify the government (via HR1 form) at least 30 days in advance (45 days if 100 or more redundancies are proposed). Failure to follow this process can result in a protective award of up to 90 days' pay per affected employee.
Tax treatment: Statutory redundancy pay itself is generally tax-free up to a threshold. Payments above this threshold — including enhanced contractual redundancy pay and certain ex-gratia payments — are taxable. This threshold is also subject to periodic review; always check GOV.UK for the current figure rather than relying on a fixed number from a third-party source. Notice pay and PILON are always treated as earnings and taxed in full regardless of how they are described.
Contractual vs Statutory Redundancy Pay
Many employees receive more than the statutory minimum because their employer has a contractual or negotiated enhanced scheme. This is common in financial services, the public sector, manufacturing, and unionised workplaces, but can appear in any industry. Enhanced schemes might:
- Use your actual weekly pay rather than the statutory capped figure
- Apply a multiplier — for example, two weeks' pay per year of service rather than one
- Remove or extend the 20-year service cap
- Include a lump sum regardless of service length
If you were offered an enhanced redundancy package during negotiations, check that the figure in your settlement agreement matches what was promised. Never sign a settlement agreement without understanding exactly what you are receiving and what rights you are waiving — an independent legal adviser (often paid for by the employer as a condition of a valid settlement) should review it with you.
It is also worth understanding your right-to-work status if your employment has changed, particularly if you are on a sponsored visa. Redundancy can affect your immigration status and the clock starts from your leaving date. Our guide on right to work check UK has more detail on this.
Practical Next Steps After Redundancy
Being made redundant, even with fair pay and proper process, is a significant life event. Here are the practical steps to prioritise in roughly chronological order.
1. Request written confirmation. Ask your employer for a written redundancy notice that states the reason for redundancy, your last working day, the redundancy pay amount, and details of any other payments owed. This forms part of your records if there is a dispute later.
2. Check your payslip and P45 carefully. Ensure redundancy pay, notice pay, and any accrued holiday pay are shown correctly and taxed appropriately. If anything looks wrong, raise it with payroll or HMRC.
3. Claim Universal Credit or check benefit entitlement. If you will be without income while you job-hunt, report your redundancy to the DWP as quickly as possible — there can be waiting periods, and your redundancy pay may affect means-tested benefit calculations.
4. Update your CV immediately. The longer you wait, the harder it becomes to recall recent achievements. Strike while the detail is fresh. If you are planning to pivot industries or roles, see our guide on AI job search for career changers UK for practical strategies.
5. Start your job search across the right boards. Do not limit yourself to one sector or one platform. Roles equivalent to your skills often appear under different job titles across generalist boards such as Reed, Indeed, Totaljobs, and Adzuna. Atlas searches thousands of UK vacancies daily across every industry, helping you surface relevant roles without spending hours trawling multiple sites.
6. Contact Acas or a Citizens Advice Bureau if you believe the redundancy was unfair — for example, if selection criteria were discriminatory, proper consultation was skipped, or you were targeted for a protected reason such as pregnancy or whistleblowing. Time limits for employment tribunal claims are strict (usually three months less one day from the act complained of), so do not delay seeking advice.
FAQ
- Can my employer refuse to pay me statutory redundancy pay?
- No. If you meet the eligibility criteria — at least two years of continuous employment as an employee, and a genuine redundancy situation — your employer is legally required to pay you the statutory minimum. If they refuse or the business has become insolvent, you can claim directly from the government's National Insurance Fund via the Redundancy Payments Service.
- Does redundancy pay affect Universal Credit or other benefits?
- Yes, it can. Redundancy pay counts as capital for Universal Credit purposes. If the total of your savings and any redundancy lump sum exceeds the lower capital threshold, your Universal Credit will be reduced; above the upper threshold it is not payable at all. Report any change in circumstances to the DWP promptly and check the current thresholds on GOV.UK, as they are not always uprated in line with redundancy pay caps.
- What if I am on a fixed-term contract — can I still claim redundancy pay?
- Possibly. Fixed-term employees are entitled to statutory redundancy pay if they have at least two years of continuous service with the same employer and their contract is not renewed because the work has ended. However, if you signed a waiver of redundancy rights when accepting a fixed-term contract, the position may be more complex; seek Acas advice for your specific circumstances.
- How long does an employer have to pay redundancy pay?
- There is no fixed statutory deadline, but your employer should pay redundancy pay on or shortly after your last day of employment. If they fail to pay within a reasonable time you can make a written request, and if still unpaid you have the right to take the matter to an employment tribunal. You generally have six months from the date your redundancy pay was due to bring a claim, so act promptly.
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