Facing redundancy can be one of the most stressful times in anyone’s career. Whether you see it coming or it hits unexpectedly, the financial uncertainty can leave you worried about what happens next. Fortunately, UK employment law offers protection through statutory redundancy pay. It’s a legal right that ensures employees aren’t left entirely stranded after losing their jobs through no fault of their own.
In this guide, we’ll explain what statutory redundancy pay is, how it’s calculated, who is eligible, common misconceptions, and how to claim it if your employer refuses to pay. We’ll also cover why this is such an important topic in the UK job market today.
What is Statutory Redundancy Pay?
Statutory redundancy pay is a legal entitlement for employees in the UK who are dismissed from their job because their position is no longer required. It acts as a financial cushion to help people manage their expenses while they search for a new role or consider retraining.
When a business is restructuring, downsizing, or closing, some roles may become redundant. In such cases, the affected employees (who meet the eligibility criteria) are entitled to receive statutory redundancy pay based on the number of years they’ve worked and their age at the time of redundancy.
The purpose of statutory redundancy pay is to provide fair compensation, recognising an employee’s service and offering some financial support during the transition to new employment.
Statutory Redundancy Pay UK: Why It Matters
The term “Statutory Redundancy Pay UK” is commonly searched by employees who are either at risk of redundancy or have recently been notified of job loss. In the UK, redundancy rules are strictly governed to ensure fairness, and understanding your statutory rights is essential to avoid being underpaid or missing out entirely.
Unlike enhanced redundancy packages offered by some larger companies, statutory redundancy pay is the minimum amount employers are legally required to pay. Employers cannot offer less than this figure unless the employee is not eligible.
Many UK employees mistakenly believe they are not entitled to redundancy pay or are unaware of how to check the calculation. This can result in missed payments or accepting a lower sum than they legally deserve. Knowing the ins and outs of statutory redundancy pay UK-wide helps protect employees and ensures that businesses remain compliant.
How is Statutory Redundancy Pay Calculated?
The calculation for statutory redundancy pay in the UK is based on three key factors:
- Your age at the time of redundancy
- How many full years have you worked for your employer
- Your gross weekly pay (before tax), subject to a legal maximum
Calculation Breakdown:
- 0.5 week’s pay for each full year of service under the age of 22
- 1 week’s pay for each full year of service between the ages of 22 and 40
- 1.5 weeks’ pay for each full year of service, aged 41 and above
There is a cap on the weekly pay that can be used for the calculation. As of April 2025, the maximum weekly pay is £700.
Example:
If you are 45 years old and have worked for the same company for 10 years:
- 4 years (ages 35-39) x 1 week’s pay
- 6 years (ages 40-45) x 1.5 weeks’ pay
Your total redundancy pay = (4 x 1) + (6 x 1.5) = 4 + 9 = 13 weeks’ pay
This calculation ensures that older employees and those with longer service receive higher redundancy payments.
Who is Eligible for Statutory Redundancy Pay in the UK?
Not every employee automatically qualifies for statutory redundancy pay. To be eligible, you must:
- Be legally classed as an employee (not self-employed or a contractor)
- Have worked for your employer continuously for at least two years
- Have been made redundant due to the role no longer being required (this includes company closures, department shutdowns, and relocations where the employee cannot reasonably move)
Situations Where You Are Not Eligible:
- If you’ve worked for less than two years
- If you are dismissed for reasons such as misconduct
- If you refuse a suitable alternative role offered by your employer without a valid reason
- If you are self-employed, agency staff, or freelance
Understanding eligibility is crucial because some employees wrongly assume redundancy pay applies to all terminations of employment.
Common Misconceptions About Statutory Redundancy Pay
Many employees in the UK misunderstand how redundancy pay works. Here are a few myths and the truths behind them:
Misconception 1: Redundancy Pay Is Optional
Truth: Statutory redundancy pay is a legal obligation for eligible employees. It’s not something an employer can choose to skip.
Misconception 2: You Must Work Full-Time to Qualify
Truth: Part-time employees are just as entitled to statutory redundancy pay, calculated on their part-time weekly wage.
Misconception 3: You Lose Your Right If You Don’t Claim Immediately
Truth: You have up to six months to request redundancy pay after your job ends, and up to six more months to take legal action if your employer does not pay.
Misconception 4: You Only Get Redundancy Pay If the Company Goes Bankrupt
Truth: Redundancy pay applies whether the company is thriving, struggling, or closing. If the company cannot afford to pay, you can claim through the UK Government’s Redundancy Payments Service.
How to Claim Statutory Redundancy Pay?
In most cases, your employer should automatically calculate and pay your statutory redundancy pay along with your final salary and any outstanding holiday pay.
However, if you believe you haven’t been paid correctly, follow these steps:
- Request the payment in writing: Contact your employer formally to request redundancy pay, stating the amount you believe is owed.
- Wait for a response: Employers typically have 14 days to reply.
- Contact ACAS (Advisory, Conciliation and Arbitration Service): They can help mediate disputes.
- Make a claim to an Employment Tribunal: This must usually be done within six months of your redundancy date.
If your employer is insolvent, you can apply directly to the Redundancy Payments Service (RPS) for your statutory payment.
What Happens If Your Employer Refuses to Pay?
Unfortunately, some employees are left in difficult situations where their employer does not provide the redundancy pay they are owed.
If this happens, you are not without options:
- First, write to your employer to request payment.
- If they refuse or do not respond, you can contact ACAS for free advice.
- If necessary, you can take the matter to an Employment Tribunal to enforce your statutory right.
In cases where the company is closing or cannot pay due to insolvency, the Redundancy Payments Service (RPS) can cover the statutory payment and other owed sums, like unpaid wages and holiday entitlement.
Understanding this process helps prevent you from missing out on what you are legally due.
Why Statutory Redundancy Pay Matters in Today’s UK Job Market
The UK job market has seen considerable shifts over the past few years, from company closures to large-scale restructurings. With economic uncertainty, redundancy has become more common, making it even more critical for employees to understand their rights.
Statutory redundancy pay provides a safety net that can make a significant difference in how someone copes with unexpected job loss. It allows employees time to plan their next steps, retrain, or manage financial commitments while looking for new work.
For employers, adhering to redundancy laws is essential to avoid legal action, protect their reputation, and maintain ethical practices in the workplace.
Final Thoughts
Redundancy can feel overwhelming, but knowledge is power. Understanding what statutory redundancy pay is, how it’s calculated, who is eligible, and how to claim it can help you navigate the process confidently.
Remember, you are legally entitled to this payment if you meet the requirements. Never assume you’re not eligible and don’t hesitate to ask questions if you think there has been a mistake in your payment.
If you’re going through redundancy, take the time to explore your rights, check your employment contract, and ensure you receive the correct payment.
