How To Calculate Statutory Redundancy Pay: 5 Steps for UK Workers

Losing your job to redundancy can be daunting, but knowing how to do a statutory redundancy pay calculation ensures you receive every penny you’re owed under UK law.

Understanding Your Right to Statutory Redundancy Pay

When facing redundancy, one key entitlement is statutory redundancy pay, governed by section 162 of the Employment Rights Act 1996 (ERA 1996). The statutory redundancy pay calculation depends on your age, length of service, and weekly pay. This guide breaks it down into 5 simple steps to help UK workers like you assert your redundancy entitlements confidently.

Not every dismissal qualifies; eligibility requires at least two years of continuous employment. Employers must pay this as a legal minimum, but if they refuse or underpay, you can pursue a worker redundancy claim through an employment tribunal. We’ll cover the basics, formula, and practical tips.

Always verify current rates on official sources like GOV.UK, as weekly pay caps update annually each April.

Step 1: Confirm Your Eligibility

To qualify for statutory redundancy pay, you generally need two years’ continuous service with the employer by the relevant date of dismissal. This applies to employees aged between 18 and under state pension age, excluding apprentices in their first year or those on fixed-term contracts completing before redundancy.

Continuous employment means no significant breaks, like over a week for certain reasons, but gaps for maternity or illness often don’t count against you. If your employer claims you’re ineligible, review your contract and payslips for proof. Real-world example: Sarah, employed since 2018, was made redundant in 2024 after 6 years—fully eligible.

Step 2: Identify the Relevant Date and Calculate Service

The relevant date is when your employment ends or the last day of your notice period (statutory minimum or contractual, whichever is later). Use this to calculate continuous service backwards.

Count complete years and days in the 20-year period ending on the relevant date, prioritising higher multipliers (more on that next). For instance, if redundant after 25 years, only the last 20 count. John, aged 50 with 15 years service, uses all 15 years ending on his termination date.

• Relevant date: Termination or end of notice.
• Service cap: 20 years maximum.
• Ignore incomplete year unless beneficial.

Step 3: Work Out Your Week’s Pay

A week’s pay is your average gross pay (before tax) over the 12 complete weeks ending the week before the calculation date (often the relevant date). Include salary, overtime, bonuses if regular.

Crucially, it’s capped at the government limit—historically around £525 in 2019, but check GOV.UK for the current figure (updates April each year). If your average exceeds it, use the cap. Example: Average £600 but cap £700, use £700? No, use actual if under cap.

1. Select 12-week period ending before relevant date.
2. Total gross pay 12 = week’s pay.
3. Apply cap if higher.

Step 4: Apply the Age and Service Multipliers

For each complete year of service (up to 20), assign weeks’ pay multiplier by your age at that year’s end. Count backwards from relevant date, assigning highest possible multipliers first.

Example: 5 years service at age 45: likely 1.5 x 5 = 7.5 weeks. For mixed ages, e.g., 10 years ending age 45: last 5 years 1.5 (7.5 weeks), prior 5 at 1 (5 weeks), total 12.5 weeks.

• Under 22: 0.5 weeks per year
• 22-40: 1 week per year
• 41+: 1.5 weeks per year

Step 5: Total Your Payment and Know Your Next Steps

Final statutory redundancy pay = total weeks x capped week’s pay. E.g., 12 weeks x £500 = £6,000. This forms the redundancy basic award in unfair dismissal claims too.

Employer pays on termination. If not, claim from them or via Insolvency Service if bankrupt. Tribunal for disputes within time limits.

1. Total weeks x week’s pay = amount.
2. Request in writing if unpaid.
3. ACAS conciliation, then tribunal.

Wrapping Up Your Statutory Redundancy Pay Calculation

Mastering the statutory redundancy pay calculation empowers you to protect your UK redundancy rights. Follow these 5 steps diligently, using accurate dates and current caps for a precise figure.

If disputed, evidence strengthens employment tribunal redundancy claims under ERA 1996. Always consult official calculators for personalised statutory redundancy pay.

Stay informed on redundancy entitlements to navigate dismissal confidently.