Finance⏱ 5 min read
How to Calculate Your Statutory Redundancy Pay
Statutory redundancy pay is calculated using a formula based on age, years of service, and weekly pay. Here is the exact method, the current weekly pay cap, and what enhanced pay means.
Statutory Redundancy Pay (SRP) is the legal minimum your employer must pay if you are made redundant with two or more years of continuous employment. The formula is fixed by law and changed periodically by the government.
The Statutory Redundancy Formula
Pay = Years of service x Weekly pay x Age multiplier
Age multipliers:
Under 22: 0.5 week's pay per year of service
22-40: 1.0 week's pay per year of service
41+: 1.5 weeks' pay per year of service
Weekly pay cap (April 2024/25): £643/week
(Even if you earn more, this is the maximum used in the calculation)
Maximum years of service counted: 20 years
Maximum statutory redundancy pay: 20 x 1.5 x £643 = £19,290
Worked Example
Employee: age 45, 12 years' service, earns £800/week
Weekly pay for calculation: capped at £643
Breaking down by age band (must use age at redundancy):
Years worked age 41-45: 4 years x 1.5 x £643 = £3,858
Years worked age 33-41: 8 years x 1.0 x £643 = £5,144
(No years below age 22 in this example)
Total statutory redundancy pay: £3,858 + £5,144 = £9,002
Tax treatment: first £30,000 of redundancy pay is tax-free
(SRP always tax-free as it is below £30,000 for most)
Enhanced Redundancy Pay
Many employers offer more than the statutory minimum.
Common enhancements:
- Using actual weekly pay (not capped at £643)
- Higher multipliers (e.g. 2x or 3x weeks per year)
- Including notice pay in the lump sum
Example: employer paying 2x statutory, uncapped:
Age 45, 12 years, £800/week actual pay
Years 41-45: 4 x 1.5 x 2 x £800 = £9,600
Years 33-41: 8 x 1.0 x 2 x £800 = £12,800
Total enhanced: £22,400
Tax treatment of enhanced pay:
First £30,000 total (statutory + contractual): tax-free
Amounts above £30,000: taxable as income in that tax year
What Counts as Continuous Service
- Employment must be continuous — significant gaps break the chain
- Maternity, paternity, and shared parental leave count as continuous service
- If your company is acquired (TUPE transfer), service with the previous employer continues to count
- Part-time workers have the same redundancy rights as full-time (pro-rata service counts)
Redundancy Pay Calculator Check
Use the government's online calculator to verify:
gov.uk/calculate-your-redundancy-pay
Before accepting an offer, check:
1. Your actual start date vs what employer claims
2. Whether you qualify (2+ years continuous service)
3. Whether the weekly pay cap has been applied
4. Whether any settlement agreement waives future claims
(if so, get independent legal advice before signing)