If you're being made redundant, UK law entitles you to statutory redundancy pay — but many employees don't know how to calculate it or what else they're owed. Here's the full picture.
Being made redundant is stressful enough without having to work out whether you're being paid correctly. Redundancy pay is one area where employees frequently receive less than they're legally entitled to — sometimes through employer error, sometimes through deliberate underpayment.
Here's exactly what you're owed and how to calculate it.
If you've been continuously employed for at least two years, you have a legal right to statutory redundancy pay (SRP) under the Employment Rights Act 1996. This applies regardless of how many hours you work — full-time, part-time, or any contract.
SRP is a minimum floor. Your employer may offer enhanced redundancy pay on top of the statutory minimum — check your contract and any redundancy policy.
SRP is calculated using a formula based on three factors:
The formula is:
Example: You're 45, have worked for your employer for 8 years, and earn £800/week (above the cap, so £643 applies).
You can use the Government's official redundancy pay calculator at gov.uk/calculate-your-redundancy-pay.
In addition to redundancy pay, you're entitled to your notice period — either your contractual notice (whichever is longer) or statutory minimum notice:
If your employer dismisses you without working your notice period, they must pay you in lieu of notice (PILON). This is separate from redundancy pay and is fully taxable.
Any unused annual leave accrued up to your termination date must be paid out. Employers sometimes try to avoid this — don't let it be overlooked.
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If your employer disputes your entitlement, delays payment, or the company is insolvent:
Employment Tribunal: Claims for unpaid redundancy pay must be made within six months of your dismissal date. The process is free and you don't need a solicitor for smaller claims.
Insolvent employer: If your employer can't pay because they've gone into administration or liquidation, the Government's Redundancy Payments Service will pay your statutory entitlement directly. Contact the Insolvency Service at gov.uk/government/organisations/insolvency-service.
Not every dismissal is a genuine redundancy. Your employer cannot use "redundancy" as a cover for dismissal for other reasons. A redundancy is only genuine if:
If you suspect your redundancy is not genuine — for example, if your role was filled by a new employee shortly after — you may have an unfair dismissal claim.
Even in a genuine redundancy situation, the process must be fair. Your employer must:
If you were selected using criteria that were discriminatory (e.g. part-time workers targeted, or those who had taken maternity leave), the dismissal may be automatically unfair.
Statutory redundancy pay up to £30,000 is tax-free. Payments above this threshold are taxable as income. PILON (pay in lieu of notice) is taxable in full, regardless of amount.
Disclaimer: This article is for general information only and does not constitute legal advice. For advice on your specific situation, contact ACAS (acas.org.uk), Citizens Advice, or an employment solicitor. ACAS provides a free helpline at 0300 123 1100.
Upload any UK legal document and get an instant AI breakdown — clause by clause, risk by risk, in plain English.
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