Redundancy pay calculator UK 2026: How to work out exactly what you are owed
The first question anyone asks when redundancy is mentioned is the simplest: what am I owed? The answer has two parts. There is a legal minimum, called statutory redundancy pay, which is set by a formula and is usually far smaller than people expect. And there is whatever your employer chooses to add on top, which varies from nothing to many months of salary. This post shows you how to work out the first part exactly, using the figures that apply from 6 April 2026, and how to read the second.
Three worked examples follow, so you can see the maths at different ages and salaries. GOV.UK has an official calculator for the statutory element, and I would use it to confirm your own figure. But the formula is short enough to do on paper, and understanding it is worth ten minutes, because it tells you instantly how much of any package you are offered is the law and how much is the employer.
The complete picture
Get the free 31-page redundancy guide as a PDF
Statutory pay, tax, settlement agreements, a decision formula and your plan B.
Do you qualify?
You are entitled to statutory redundancy pay if you are an employee, as opposed to a contractor or worker, and you have at least two years of continuous service with the employer on the date your employment ends. Two years is a hard line: someone with 23 months of service is entitled to nothing under the statutory scheme, however unfair that feels. Voluntary redundancy counts, because it is still a dismissal by reason of redundancy rather than a resignation.
The three inputs
The 2026/27 statutory figures
Worked example one: 29, five years, £28,000
Salary of £28,000 is about £538 a week, which is under the cap, so the real figure is used. All five years were worked between the ages of 24 and 29, so each counts as one week.
5 weeks × £538 = £2,690, tax-free.
Worked example two: 45, twelve years, £52,000
Salary of £52,000 is about £1,000 a week, so the cap of £751 applies. Service ran from 33 to 45. Four of those years were worked at 41 or over, counting at 1.5 weeks each, which gives six weeks. The other eight years count at one week each. That is 14 weeks in total.
14 weeks × £751 = £10,514, tax-free.
Worked example three: 58, twenty-five years, £65,000
Only the most recent 20 years count, from age 38 to 58, and the cap of £751 applies. Three years were worked at 38, 39 and 40, counting as one week each. Seventeen years were worked at 41 or over, counting as 1.5 weeks each, which gives 25.5 weeks. That is 28.5 weeks in total.
28.5 weeks × £751 = £21,404, tax-free.
This is close to the £22,530 maximum, which only someone with 20 years of service all worked at 41 or over would receive.
Notice what the three examples have in common: the statutory figure is modest at every level. A professional on £52,000 with twelve years' service has a legal entitlement of less than three months' salary. This is the reason enhanced packages matter so much, and why the gap between a voluntary offer and a later compulsory round on statutory terms can run to tens of thousands of pounds. It is also why the terms in a programme like JLR's current voluntary round deserve careful reading before the window closes.
"The statutory figure is the floor. If an employer's offer is only a little above it, you are being offered almost nothing for volunteering."
What sits on top of the statutory figure
A redundancy package usually contains more than the statutory element, and each part is treated differently. Understanding the parts is how you read an offer letter properly.
| Element | What it is | Tax treatment |
|---|---|---|
| Statutory redundancy pay | The legal minimum, from the formula above | Tax-free, counts towards the £30,000 |
| Enhanced or ex gratia payment | The employer's addition, often a multiple of salary per year of service | Tax-free up to the £30,000 total, then taxed as income |
| Pay in lieu of notice | Your notice period paid rather than worked | Taxed and NI in full, like salary |
| Accrued holiday | Leave you have earned but not taken | Taxed and NI in full |
| Bonus or commission | Amounts earned under your contract | Taxed and NI in full |
Your notice is separate from redundancy pay and is owed as well. The statutory minimum is one week for each complete year of service, up to 12 weeks, and your contract may give you more. Someone with twelve years' service is entitled to at least twelve weeks' notice, or twelve weeks' pay in lieu, on top of the £10,514 in the second example.
Keep the formula and the figures to hand
The free PDF guide has the statutory rules, the tax treatment of every element, the questions to ask HR, and a six-input formula for deciding whether to take an offer.
Download the PDF →Four things that change the answer
The formula is simple, but a few details catch people out. The date your employment ends decides which year's cap applies, so a leaving date on 5 April rather than 6 April can mean the older, lower figure. Weekly pay is gross and includes regular overtime and shift allowances if they are contractual, but not discretionary bonuses. A break in continuous service, such as a period on a different contract, can reset the clock. And if you unreasonably refuse a suitable alternative role, you can lose the statutory payment entirely, which is covered in the main guide.
When you have your figure, the next question is whether the package as a whole is enough to say yes. That depends on your monthly floor, your runway and how quickly you could replace the income, which is a different calculation, and the one the full redundancy guide is built around.
Related reading
Voluntary redundancy in the UK: Your rights, the decision formula, and what to do next
JLR redundancies explained: The numbers, the timeline and what happens after 4 October
Tata Sons vs Tata Trusts: What the boardroom battle means for JLR and its staff
What £30k, £50k and £80k actually leave you: UK take-home pay, broken down
The tax basics every UK professional should understand
This is general information, not legal or financial advice. The figures are correct for dismissals on or after 6 April 2026 and change every April; confirm yours with the GOV.UK calculator and take advice on any agreement before you sign it.
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