How is a week's pay calculated for redundancy purposes?

For employees with fixed hours and fixed pay, a week's pay is straightforward: it is your gross weekly wage — but capped at £751 for the tax year 2026/27. The cap is reviewed by the government each April in line with inflation. If you earn £800 per week, only £751 is used in the calculation.

For employees with variable pay — where pay varies depending on hours worked, commission, or other variable elements — a week's pay is calculated as the average of the 12 weeks' pay actually paid in the 12 weeks before the notice was given (or the effective date of termination if no notice was given). Weeks in which no pay was received (for example, unpaid leave) are ignored and an earlier week is substituted to make up the 12-week period.

For employees with no fixed working hours (zero-hours or irregular hours), the average is taken over the 12 weeks before the calculation date. Overtime and commission that are guaranteed and regularly paid may be included; purely discretionary bonuses that are not regular are generally excluded. For part-time workers, a week's pay reflects actual part-time earnings, not a full-time equivalent.