Redundancy pay in 2026/27: how it's worked out

Who qualifies

You're usually entitled to statutory redundancy pay if you're an employee, you've worked for your employer continuously for at least 2 years, and your job has gone because the work has stopped or reduced. Time with a previous employer only counts if your service carried over, for example under TUPE.

You may lose the right if you unreasonably turn down suitable alternative work. If you're offered a different role, you're entitled to a 4-week trial period without losing your redundancy pay if it doesn't work out.

The formula

Statutory redundancy pay is based on your age, your length of service and your weekly pay:

• half a week's pay for each full year you were under 22
• one week's pay for each full year you were 22 to 40
• one and a half weeks' pay for each full year you were 41 or older

Service is capped at 20 years, counting back from the date you leave. A week's pay is capped at £751 for redundancies on or after 6 April 2026, so the most anyone can get is £22,530.

Enhanced redundancy pay

Many employers pay more than the statutory minimum, for example using your actual salary instead of the cap, or a multiple of the statutory amount. Check your contract, handbook or any collective agreement. If your employer has paid more in the past, it's worth asking whether the same applies now.

Tax

Statutory and enhanced redundancy pay are tax free up to £30,000 in total, and there's no National Insurance on them. Anything above £30,000 is taxed as income.

Notice pay, holiday pay and normal salary are taxed in the usual way, even if they're paid in the same final payslip. If something is paid after your P45 is issued, payroll has to use tax code 0T, so more tax comes off. You can usually claim it back.

What else you should be paid

• Notice: worked, or paid in lieu. Statutory notice is one week after a month's service, then one week per complete year once you reach two years, up to 12 weeks, or more if your contract says so.
• Holiday: any holiday you've built up and not taken.
• Salary up to your last day, and any bonus or commission you've earned under your contract.
• Time off to look for work or arrange training during your notice, if you have 2 years' service.

Claims for unpaid statutory redundancy pay must usually be made within 6 months of your leaving date.