How-to
UK statutory redundancy formula in detail
Sum over years of (age_multiplier × weekly_pay), capped at 20 years + £700/wk (FY26-27). Tax-free up to £30k. Calculator runs automatically when reason=redundancy.
2 min readLast updated 25 May 2026
Jump to section
When statutory redundancy applies
- Employee has 2+ years continuous service
- Termination reason = redundancy (genuine — role no longer needed)
- Employee is being dismissed (not resigning)
The formula
For each year of service, calculate the weekly-pay multiplier based on the employee's age IN THAT YEAR:
| Age in that year | Multiplier per year |
|---|---|
| Under 22 | 0.5 |
| 22 to 40 | 1.0 |
| 41 and over | 1.5 |
Statutory redundancy = Σ (multiplier × weekly_pay) across years of service.
Where:
- weekly_pay = capped at the statutory weekly cap (£700/wk FY26-27 — index-linked, updated each April)
- years of service = capped at 20 (so even 30 years of service only counts the last 20)
Worked example
- Employee aged 50 at termination, started age 38, weekly pay £900
- 12 years of service
- Years aged 41-50 (10 years) × 1.5 × min(£900, £700) = 10 × 1.5 × £700 = £10,500
- Years aged 38-40 (2 years) × 1.0 × £700 = £1,400
- Total: £11,900
Tax treatment
- First £30,000 is tax-free (UK statutory exemption)
- Anything above £30k (e.g. enhanced redundancy or PILON pay-in-lieu-of-notice) is taxable in the normal way
- The engine handles the statutory portion only; enhanced redundancy is entered as a separate payroll line with full tax + NI applied
Notice pay (PILON)
Statutory redundancy is separate from notice pay. If you're paying in lieu of notice (PILON), that's a separate calculation:
- Statutory minimum notice: 1 week per year of service (1–12 years), capped at 12 weeks
- Contractual notice may be higher
- PILON is always taxable (since 2018) — no tax-free portion
Where it shows
Employee detail > Offboarding tab > Redundancy section. Only displayed when termination reason is set to redundancy AND continuous service ≥ 2 years. Updates live as you change the termination date.