Employer redundancy cost calculator
Calculate what you owe an employee you're making redundant: statutory redundancy pay, notice pay, and accrued holiday. For UK employers. This is an educational estimate, not legal advice.
What if you stayed longer?
Assumes same weekly pay and continuous service. Statutory cap of 20 counted years applies.
Employer email template
Subject: Request for final pay review
I am writing to ask you to review my final pay. Based on the information available to me, I believe the amount or deadline may not match the applicable rule. Please confirm the calculation, the pay period covered, any deductions, and the expected payment date.
Wage claim checklist
- OK Final payslip or pay statement
- OK Employment contract or handbook policy
- OK Dates worked and termination/resignation date
- OK Written request sent to employer
- OK Official state or country claim link
What you must pay when making someone redundant
When you make an employee redundant with 2 or more years' continuous service, you are legally required to pay statutory redundancy pay under the Employment Rights Act 1996. This calculator applies the statutory formula: service years (up to 20) × weekly pay (capped at £751 from 6 April 2026) × age multiplier. The maximum statutory payment is £22,530.
Redundancy pay is separate from and in addition to notice pay. You must also pay the employee their full notice period (or pay in lieu), plus any accrued holiday pay. Use the notice period calculator to determine the notice obligation separately.
Tax treatment — the £30,000 threshold
The first £30,000 of total qualifying termination payments — statutory redundancy pay, enhanced redundancy, and ex gratia amounts combined — is free of income tax and National Insurance for both employer and employee. Amounts above £30,000 attract income tax at the employee's marginal rate. Note that notice pay (PILON) is always fully taxable and does not count toward the £30,000 threshold.
Collective redundancy obligations (45-day consultation)
If you are proposing to dismiss 100 or more employees at the same establishment within 90 days, you must begin collective consultation at least 45 days before the first dismissal takes effect and notify the Insolvency Service (via HR1 form). For 20–99 redundancies, the minimum is 30 days. Failure to collectively consult entitles each affected employee to a protective award of up to 90 days' pay.
Frequently asked questions
When am I legally required to pay statutory redundancy pay?+−
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.
What is the statutory formula for redundancy pay?+−
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.
Can I offer enhanced redundancy pay instead?+−
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).
What else do I owe in addition to redundancy pay?+−
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.
What if the employee refuses a suitable alternative role?+−
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.
Legal basis and primary sources
All statutory figures are sourced directly from official government legislation and guidance. See our methodology →