How Do I Calculate Redundancy Payments?

When faced with redundancy, one of the most pressing concerns for employees is understanding their entitlement to redundancy pay. At Solidaire Solicitors, we’re here to help demystify the process so that you can be fully informed of your rights and what you may be owed.

💡 Official Guidance

For official details and tools, visit the UK Government’s redundancy calculator:
🔗 Calculate your redundancy pay – GOV.UK

Statutory vs Enhanced Redundancy Pay

Statutory Redundancy Pay

This is the legal minimum an eligible employee is entitled to. To qualify, you must:

Be an employee (not freelance or self-employed),
Have at least two years’ continuous service,
Be dismissed due to redundancy (not misconduct or resignation).

It’s calculated based on:

Your age,
Years of service (up to 20 years),
Weekly gross pay (capped at £719 as of 6 April 2025).

Enhanced Redundancy Pay

This is any additional amount your employer may choose (or be contractually obliged) to offer beyond the statutory minimum.

Enhanced packages may:

Use a higher multiplier per year of service,
Ignore or increase the statutory pay cap,
Include longer service periods, or
Add bonus compensation or other benefits.

Always check your employment contract or company redundancy policy.

📌 Important: You’re always entitled to the statutory minimum, regardless of enhanced terms.

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How Is Statutory Redundancy Pay Calculated?

Here’s how it breaks down:

0.5 week’s pay for each full year you were under 22,
1 week’s pay for each full year you were 22 to 40,
1.5 weeks’ pay for each full year you were 41 or older.

🧮 Maximum weekly pay cap: £719 (from 6 April 2025)

Example:

Let’s say:

You are 45 years old,
Have worked for your employer for 10 years,
Earn £700 per week.

Then:

4 years (age 41+): 4 × 1.5 = 6 weeks
6 years (age 22–40): 6 × 1 = 6 weeks
Total = 12 weeks’ pay × £700 = £8,400

(Note: Even if your weekly pay is more than £719, the statutory cap applies unless your employer offers enhanced redundancy.)

Is Redundancy Pay Taxed?

The first £30,000 of redundancy pay is usually tax-free.
Any amount over that may be subject to income tax and National Insurance.

What to Do If You’re Made Redundant

Ask for a written explanation of how your redundancy pay has been calculated.
Review your employment contract for any enhanced terms.
Check you’ve been given the correct notice period and holiday pay.
Contact a solicitor if the process feels unfair or unclear.

How Solidaire Solicitors Can Help

At Solidaire Solicitors, we’re committed to protecting your employment rights. Whether you’re unsure about how your redundancy pay has been calculated, concerned about discrimination, or negotiating an exit package, we’re here to support you.

Frequently Asked Questions

1. Who qualifies for statutory redundancy pay?

To be eligible, you must:

Be an employee (not self-employed or a contractor),
Have worked continuously for your employer for at least 2 years, and
Be dismissed specifically because of redundancy.

2. How is statutory redundancy pay calculated?

It’s based on:

Your age,
Years of service (up to 20 years), and
Your weekly pay, capped at £719 per week from 6 April 2025.

Formula:

0.5 week’s pay for each year under 22
1 week’s pay for each year aged 22–40
1.5 weeks’ pay for each year aged 41+

3. What is the maximum redundancy pay I can receive?

Statutory redundancy is capped:

Maximum years of service: 20 years
Maximum weekly pay: £719 (from 6 April 2025)

So the maximum statutory redundancy payment is currently:
20 years × 1.5 weeks × £719 = £21,570

4. Is redundancy pay taxed?

The first £30,000 of redundancy pay is tax-free. Any amount above that may be subject to income tax and National Insurance depending on how it’s structured.

5. What is the difference between statutory and enhanced redundancy pay?

Statutory pay is the legal minimum set by the government.
Enhanced pay is anything above this, offered voluntarily or contractually by the employer. It could involve a more generous formula or ignore the weekly cap.

6. Can I use a calculator to check my redundancy pay?

Yes. Use the UK Government’s official redundancy calculator:
🔗 Calculate your redundancy pay – GOV.UK

7. What if my employer refuses to pay redundancy?

If you’re eligible and your employer refuses to pay or underpays, you can:

Raise a formal grievance,
Contact Acas for early conciliation, or
Seek legal advice and potentially claim through an employment tribunal.

Solidaire Solicitors can help assess your claim and represent you if needed.

8. Do I still get redundancy pay if I’m offered another job?

If your employer offers you a suitable alternative role and you unreasonably refuse it, you may lose your right to redundancy pay. Always seek advice before declining an offer.

9. What if I’ve worked part-time?

Part-time employees are entitled to redundancy pay on the same basis as full-time employees. The calculation uses your actual weekly pay and years of service.

10. Should I get legal advice before accepting a redundancy package?

Absolutely. Especially if:

You’re being offered an enhanced package,
You’re asked to sign a settlement agreement, or
You’re unsure about the fairness or legality of the redundancy process.

Solidaire Solicitors can help you review your rights and negotiate the best possible outcome.

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