Employer redundancy cost calculator

You must pay statutory redundancy pay when you dismiss an employee by reason of redundancy (Employment Rights Act 1996 s.135) and they have 2 or more years of continuous employment. The qualifying period runs from their start date to the effective date of termination (not the date notice is given). Failure to pay is unlawful — the employee can bring a tribunal claim within 6 months.

Statutory redundancy pay = complete years of service (up to 20) × weekly pay (capped at £751 from 6 April 2026) × age multiplier. The multiplier is 0.5 per year worked under age 22, 1 per year aged 22–40, and 1.5 per year aged 41 or over. The maximum payment is £22,530.

Yes. You can pay more than the statutory minimum — using the employee's actual salary, a higher multiplier, or uncapped years of service. Any payment above the statutory minimum is described as enhanced redundancy pay. The tax treatment is the same: the first £30,000 of total termination payments (statutory + enhanced + ex gratia) is tax-free. Amounts above £30,000 are subject to income tax (but not employee National Insurance).

Statutory redundancy pay is a separate entitlement from notice pay. You must also pay: the employee's notice period (or pay in lieu at their full contractual rate), any accrued but untaken annual leave, outstanding wages, and any contractual bonus or commission that has accrued. PILON (pay in lieu of notice) is always fully taxable — it does not benefit from the £30,000 exemption.

If you offer a suitable alternative role before the redundancy takes effect and the employee unreasonably refuses it, they lose their right to statutory redundancy pay. The employee is entitled to a 4-week trial period in the alternative role before deciding. Whether a role is 'suitable' depends on factors including pay, location, seniority, and working hours. Always document the offer in writing.