Redundancy Calculator

What does your result mean?

The figures you see above are a calculation of the maximum amount you can expect to pay under statutory and uncapped redundancy rules.

However, keep in mind that the total payments owed to the employee might vary slightly. For example, the total cost to the business could change if you owe any holiday pay in lieu (for untaken annual leave), or if there are specific deductions from notice pay or wages laid out in the contract — like outstanding loans or expenses for a company credit card.

What is statutory redundancy pay?

You’ll hear the term ‘statutory redundancy pay’ a lot. This is the minimum payment that any eligible employee is entitled to receive by law when they’re made redundant.

Think of it as a safety net that the government requires, intended to provide a universal level of financial support to employees who are losing their jobs through no fault of their own.

So, who’s eligible for statutory redundancy pay? There are three key criteria in the UK that employees need to meet to qualify for redundancy pay.

Who’s eligible for statutory redundancy?

Statutory redundancy pay requirements

So, who actually gets statutory pay? In the UK, there are three main boxes an employee needs to tick to qualify:

1. Contract of employment

They need to be working under a valid contract of employment. This doesn’t always have to be a document in a filing cabinet — an employment contract can be written or verbal.

If you need a hand getting your paperwork in order, our HR consultants can create bespoke employment contracts to protect your business.

2. Continuous service

Employees need to have continuously worked for you for two years or more.

It’s worth noting that “continuous” doesn’t necessarily mean “without a single day off”. There are certain breaks that don’t stop the clock on their service, such as:

• Breaks of less than one week (Sunday to Saturday)
• Temporary stoppages of work
• Breaks between contracts by arrangement or custom
• Breaks between contracts of less than six months due to sickness or injury

3. By reason of redundancy

This might sound obvious, but the dismissal has to be due to redundancy. This includes situations where you need fewer employees to do a particular type of work, or if you’ve laid people off or put them on short-time working for four consecutive weeks (or six non-consecutive weeks in a 13-week period).

What is uncapped redundancy pay?

While statutory pay is the legal minimum, uncapped redundancy pay is a more generous, optional arrangement.

Essentially, this means the employer offers a severance package that’s not limited by the government’s statutory caps on weekly earnings or length of service. It’s often based on the employee’s actual salary rather than the statutory limit, and is used to reward loyalty or encourage people to accept voluntary redundancy.

Who’s eligible for uncapped redundancy?

Unlike statutory pay, nobody’s automatically entitled to uncapped pay unless it’s been agreed between the employer and the employee. 

Staff are usually only eligible if:

• It’s in the contract — Their contract explicitly lays out a more generous redundancy pay structure (e.g., more weeks’ pay per year of service).
• It’s custom and practice — Even if it’s not written down, if your business has a long history of paying enhanced redundancy, it might be argued as an “implied term” of their contract.

It’s a voluntary incentive — You might decide to offer enhanced terms to encourage voluntary redundancies, helping avoid the difficult process of choosing who to dismiss.