UK Redundancy Pay Calculator
Calculate Your Statutory Redundancy Pay in the UK and Plan Your Financial Future with Confidence
Being told you are at risk of redundancy can be one of the most stressful experiences of your working life. The uncertainty about your job and your future income can be overwhelming.
However, knowledge is power. Understanding exactly what you are legally entitled to is the first step towards taking back control.
This is where our free Statutory Redundancy Pay Calculator comes in. It cuts through the confusion and gives you a clear, reliable figure in seconds. By knowing your statutory minimum, you can budget effectively, negotiate with confidence, and start planning your next steps.
What is Statutory Redundancy Pay?
Statutory Redundancy Pay is the legal minimum amount of money your employer must pay you if you are made redundant. It's a safety net designed to support you while you look for a new job.
To be eligible for statutory redundancy pay, you must:
- Be an employee working under a contract of employment.
- Have at least two years of continuous service with your employer.
- Be made redundant because your job no longer exists (for example, due to the business closing down, new technology, or restructuring).
It's important to note that some employers offer a more generous redundancy package, known as 'contractual' or 'enhanced' redundancy pay. Our calculator provides your statutory entitlement – the legal baseline. Always check your employment contract to see if you are entitled to more.
How to Use Our Statutory Redundancy Pay Calculator
Our calculator is designed to be simple and quick. You only need three pieces of information to get your result.
Step 1: Enter Your Inputs
- Your age on leaving: Enter your age at the end of your employment. Your age is a key factor in the calculation.
- Your weekly pay (before tax): This is your gross weekly pay. Include regular overtime, bonuses, or commission if they are part of your contract. There is a government cap on the maximum weekly pay that can be used for this calculation (currently £700 per week, but this is reviewed annually). Our calculator is always up-to-date with the latest figures.
- Full years of service: Enter the number of complete years you have worked for your employer. Part-years do not count. The calculation is capped at a maximum of 20 years of service.
Step 2: See Your Results
Once you enter your details, the calculator will instantly show you:
- Your Estimated Statutory Redundancy Pay: A clear, final figure that represents your minimum legal entitlement.
- A Full Calculation Breakdown: We show you exactly how we arrived at the figure, so you can see the workings for yourself.
How Statutory Redundancy Pay is Calculated (Worked Example)
The official formula can look complicated, but it's based on three simple factors: your age, your pay, and how long you've worked there.
The rules are:
- For years you worked under age 22: You get 0.5 week's pay for each full year.
- For years you worked between ages 22 and 40: You get 1 week's pay for each full year.
- For years you worked aged 41 and over: You get 1.5 week's pay for each full year.
Let's look at an example:
Meet David:
- Age: 50
- Years of Service: 15 years
- Weekly Pay: £600 (which is below the current cap)
Here's how his redundancy pay is calculated:
| Age Bracket | Years of Service | Multiplier | Weekly Pay | Total |
|---|---|---|---|---|
| Ages 41-50 | 9 years | 1.5 | £600 | £8,100 |
| Ages 35-40 | 6 years | 1.0 | £600 | £3,600 |
| Total | 15 years | £11,700 |
David is entitled to £11,700 in statutory redundancy pay. The Statutory Redundancy Pay Calculator handles all these calculations instantly, saving you the time and stress.
Common Mistakes to Avoid
When trying to work this out yourself, it's easy to make a small error that gives you the wrong figure. Here are some common pitfalls:
- Including part-years: The calculation only uses full, complete years of service.
- Forgetting the weekly pay cap: You cannot use a weekly pay figure higher than the government's statutory limit.
- Forgetting the 20-year service cap: Only the most recent 20 years of your service count towards the calculation.
- Using your take-home (net) pay: Always use your gross weekly pay before tax and other deductions.
- Confusing statutory and contractual pay: Our calculator gives you the legal minimum. Your contract might offer you a better deal.
What to Do After You Get Your Result
Your redundancy pay figure is the starting point for your financial plan. Here are the essential next steps:
- Check Your Contract: Read your employment contract and company handbook carefully. You may be entitled to a more generous contractual redundancy package.
- Create a Redundancy Budget: List all your incoming money (redundancy pay, final salary, notice pay, holiday pay) and your essential monthly outgoings (mortgage/rent, bills, food, travel). This will show you how long your funds will last.
- Understand Your Other Entitlements: You are also entitled to notice pay, either statutory or contractual. Your employer should also pay you for any unused holiday entitlement.
- Factor in Tax: The good news is that the first £30,000 of your statutory redundancy payment is completely tax-free. However, any amount above £30,000, along with your notice pay and holiday pay, will be taxed as normal income.
Protecting Your Finances After Redundancy
Losing your job often means losing valuable employee benefits, such as private medical cover or death-in-service benefits. This can leave you and your family financially exposed at a very vulnerable time.
As expert brokers, we at WeCovr help people bridge this gap and secure their financial well-being.
- Private Medical Insurance (PMI): If you've lost your company health plan, PMI can give you peace of mind. It provides fast access to diagnosis and treatment for new health problems, helping you skip long NHS waiting lists. It's important to know that UK private medical insurance is designed to cover acute conditions that arise after your policy begins. It does not cover pre-existing or chronic conditions.
- Life Insurance: This is a crucial safety net for your family. It pays out a lump sum if you pass away, helping your loved ones manage mortgage payments, household bills, and future living costs without your income.
Replacing lost benefits is often more affordable than you think. WeCovr can compare policies from leading UK insurers to find the right fit for your budget. Better still, if you buy PMI or life insurance through us, we can often offer discounts on other types of cover. As a thank you, all our customers also get complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app to support their wellness goals.
Frequently Asked Questions (FAQ)
Is my redundancy pay tax-free? The first £30,000 of your statutory and contractual redundancy payment is tax-free. Any amount you receive over this threshold, as well as other payments like notice pay or holiday pay, will be subject to Income Tax and National Insurance.
What is the difference between statutory and contractual redundancy pay? Statutory redundancy pay is the legal minimum your employer must pay you, as set out by UK law. Contractual redundancy pay is a more generous package that may be offered by your employer as part of your employment contract. You are entitled to whichever is higher.
Do I get redundancy pay if I have worked for less than two years? No, you are not legally entitled to statutory redundancy pay unless you have two years of continuous service. However, some employers may offer a contractual payment, so you should always check your contract.
What happens if my employer can't afford to pay my redundancy? If your employer becomes insolvent and cannot make the payment, you can apply to the government's Redundancy Payments Service (RPS) to claim your statutory entitlement.
Now is the time to get clarity and take control. Use the simple Statutory Redundancy Pay Calculator to find out exactly where you stand.
Once you have your figure, speak to the friendly experts at WeCovr to discuss how you can protect your family's financial future with affordable life insurance or private medical insurance.
