How to Calculate Statutory Redundancy Pay (2026/27 Rates)

What statutory redundancy pay is and who qualifies

Statutory redundancy pay is the minimum redundancy payment an eligible employee may be entitled to under UK law when their role is no longer needed. It is separate from notice pay and any enhanced redundancy package you may choose to offer.

Not every employee qualifies. In general, an employee must be classed as an employee, have at least two years’ continuous service, and be made redundant rather than dismissed for another reason. Agency workers and contractors usually do not qualify for statutory redundancy pay in the same way, although their position can be more complex depending on the working arrangement.

Before you calculate anything, check the employee’s status, start date, and whether the role change genuinely falls within the redundancy definition. If you are unsure, it is worth getting advice early rather than trying to correct the process later. Flora HR helps small businesses manage redundancy steps, documentation, and employee communication with less stress and less guesswork.

The 2026/27 weekly cap and maximum payment

For 2026/27, the statutory redundancy pay weekly cap is £751. That means even if an employee earns more than this, the calculation uses £751 as the maximum weekly figure for statutory redundancy pay.

The maximum statutory payment is £22,530 for 2026/27. In practice, that maximum is reached when someone has enough service and qualifying weeks for the calculation to hit the cap.

The cap changes periodically, so it is important to use the current year’s figure rather than relying on last year’s numbers. A simple look at upcoming employment law changes affecting flexible working patterns is a useful reminder that rates and rights can shift year by year, even when the process feels familiar.

For employers, this matters because undercalculating or overpromising redundancy pay can create avoidable disputes. If you want a second pair of hands, you can also explore Flora HR’s HR services for practical support with calculations, letters, and process management.

• Weekly pay cap for 2026/27: £751
• Maximum statutory redundancy payment: £22,530
• Use the employee’s gross weekly pay, capped at £751, for the statutory calculation

How the calculation works step by step

The calculation is based on three things: the employee’s age during each year of service, the number of full years worked, and the capped weekly pay figure. You do not calculate redundancy pay on salary alone; you apply age-based multipliers to the qualifying years.

First, work out how many full years of service the employee has that count for redundancy purposes. Then split those years into the age bands below and multiply each year by the relevant factor. Finally, multiply by the weekly pay figure, using the cap if the employee earns more than £751 a week.

If part of a year falls into different age bands, it may need to be split across those bands. Keep the records clear, because a tidy audit trail makes it much easier to explain the calculation if the employee asks for a breakdown. This is one area where careful HR operations and documentation really matter.

• 0.5 week’s pay for each full year of service where the employee was under 22
• 1 week’s pay for each full year of service where the employee was aged 22 to 40
• 1.5 weeks’ pay for each full year of service where the employee was 41 or over

Statutory redundancy pay vs redundancy notice pay

Statutory redundancy pay and redundancy notice pay are different. Redundancy pay compensates the employee for losing their job due to redundancy. Notice pay covers the notice period they are entitled to, whether they work it, are placed on garden leave, or are paid in lieu of notice where permitted.

An employee can be entitled to both. They may also be entitled to accrued but untaken holiday pay, contractual bonuses, commission, or enhanced redundancy pay if your contract or policy says so. The correct total depends on the employment contract, your policies, and the facts of the redundancy.

Because the labels are often used loosely, it is worth being precise. If you need a wider view of risk, process, and communications, Flora HR can support you with employee relations and compliant exit planning through outsourced HR help. For businesses building or refreshing people processes, our services page is the quickest way to see where support fits.

• Redundancy pay = statutory or enhanced payment linked to job loss
• Notice pay = pay for the notice period
• Holiday pay and other contract items may be separate again

Worked example: calculating redundancy pay in practice

Here is a simple example. Imagine an employee is 45 years old, has 10 full years of service, and earns £900 a week. Because the weekly pay cap is £751, you use £751 rather than £900 for the calculation.

Now apply the age bands. In this example, all 10 years fall into the 41-or-over band, so each year counts as 1.5 weeks’ pay. The calculation is 10 × 1.5 × £751 = £11,265.

If the employee had older service that crossed age bands, you would split the service by age and apply the right multiplier to each part. That is why a statutory redundancy pay calculator uk search is often really a search for certainty: the formula is straightforward, but the details depend on the employee’s exact history.

If you are planning a redundancy round rather than a single exit, it can help to review related employment changes at the same time. For example, read Flora HR’s guide to how the six-month unfair dismissal change may affect your people decisions so your wider process stays consistent.

• Example weekly pay used: £751 cap
• Age at redundancy: 45
• Service counted: 10 years
• Result: £11,265 statutory redundancy pay

What employers should check before making a redundancy payment

Before you pay redundancy money, make sure the process behind it is sound. Check that the redundancy is genuine, that consultation has taken place, that selection criteria are fair and documented, and that the notice period is handled correctly.

You should also confirm the employee’s continuous service, contractual entitlements, and whether any discretionary or enhanced redundancy terms apply. Keep notes of the calculation and the assumptions you used, especially if the payment is near the maximum statutory amount.

This is also the point to review related employee records and exit paperwork. Good HR administration saves time later and reduces the risk of confusion if the employee queries their final payment or notice entitlement.

If you want support getting the process right first time, Flora HR can help with redundancy consultations, employee communications, and final documentation. You can also contact Flora HR directly to discuss the situation and get practical next steps.

• Check continuous service and eligibility
• Confirm consultation and selection records
• Review contractual notice, holiday, and bonus terms
• Document the redundancy calculation clearly