Redundancy Cost Calculator
Work out what a redundancy actually costs: statutory redundancy pay, notice, untaken holiday and any enhanced payment, for one person or a whole team.
Using 2026/27 UK tax rates
Advanced options
Either way the notice is taxable as earnings. Worked notice also keeps the salary cost running.
Total annual cost of the roles removed, including employer National Insurance and pension.
Legal advice, outplacement support or settlement costs.
Total redundancy cost
£13,800.00
- Statutory redundancy pay
- £7,200.00
- Notice pay
- £6,000.00
- Untaken holiday
- £600.00
- Treated as tax free
- £7,200.00
- Taxable as earnings
- £6,600.00
- Employee 1: £13,800.00. 10 complete years of service meets the 2 year requirement.
Statutory limits from From 6 April 2026. This is a cost estimate, not employment law advice: take advice on selection, consultation and process before acting.
What this means
Making this role redundant costs £13,800.00 in total: £7,200.00 of statutory redundancy pay, £6,000.00 of notice and £600.00 of untaken holiday. Cost is only part of the picture: a redundancy must be genuine and the process must be fair.
Quick answers
- How is statutory redundancy pay calculated?
- Half a week's pay for each year worked under 22, one week for each year from 22 to 40, and one and a half weeks for each year from 41. Service counts up to 20 years and a week's pay is capped at £751.00.
- What is the maximum statutory redundancy payment?
- £22,530.00 for redundancies on or after 6 April 2026, which is 20 years at one and a half weeks capped at £751.00 a week.
- Is redundancy pay taxable?
- Genuine redundancy payments are tax free up to £30,000.00. Notice pay and untaken holiday are always taxable as earnings, whatever the total.
- Who qualifies for statutory redundancy pay?
- Employees with at least 2 years of continuous service whose role is genuinely redundant. Below that, notice and untaken holiday are still due.
Budget for the process, not only the payment
Consultation time, notice periods, holiday accrued and possible settlement or legal costs all sit alongside statutory redundancy pay.
Following a fair process matters as much as the figures. Acas guidance sets out the steps expected of employers.
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How we calculated it
Statutory redundancy pay uses the age banded multipliers applied year by year, counting back from the most recent year of service. A week's pay is capped at £751.00 and the total is capped at £22,530.00.
Notice is the greater of the statutory minimum, one week per complete year up to twelve, and any longer contractual notice you enter. Untaken holiday is valued from weekly pay and the working pattern.
The tax split follows the treatment of each element: redundancy and enhanced payments sit within the £30,000.00 exemption, while notice and holiday pay are taxed as earnings.
Assumptions
Redundancies taking effect under the rules from 6 April 2026, continuous service in Great Britain, a consistent weekly pay figure, and no collective consultation costs, settlement agreements, tribunal risk or outplacement fees beyond any one-off amount you enter. Northern Ireland has its own limits.
How this calculator works
A redundancy cost has four parts. Statutory redundancy pay depends on age, service and a capped week's pay. Notice pay depends on the contract or the statutory minimum, whichever is longer. Untaken holiday must be paid in full. An enhanced or ex gratia payment is whatever you choose to add above the statutory amount.
The saving side matters too, which is why the calculator shows payback. The ongoing cost of the role is more than salary, so work the saving out with the employee cost calculator and check the effect on cash with the cash flow runway calculator.
Employees with at least two years of service have the right not to be unfairly dismissed, so selection must be objective and consultation genuine. Twenty or more proposed redundancies at one establishment trigger collective consultation duties.
Worked examples
One employee, aged 45 with 10 years
Statutory pay is 12 weeks at the capped rate, giving £7,200.00. Adding £6,000.00 of notice and £600.00 of holiday brings the total to £13,800.00, of which £6,600.00 is taxable as earnings.
Long service with pay above the cap
An employee aged 58 with 22 years on £1,100 a week has service counted to 20 years and a week's pay capped at £751.00, so statutory pay is £21,403.50 rather than the figure real pay would suggest. Notice of 12 weeks is paid at actual pay, adding £13,200.00.
A team of three
Three roles cost £19,670.00 in total. Against an annual saving of £84,000, the payback period is about 2.8 months, so the decision is a cash timing question as well as a cost question.
Key terms explained
- A week's pay
- Normal weekly pay used for statutory calculations, capped at £751.00 for redundancy pay but uncapped for notice and holiday.
- Payment in lieu of notice
- Paying the notice period instead of the employee working it. It is taxable as earnings, whether or not the contract allows it.
- Continuous service
- Unbroken employment with the same employer, which determines both qualification and the number of years counted.
Common mistakes
Using actual pay above the weekly cap
Statutory redundancy pay uses a week's pay capped at £751.00, even when the employee earns considerably more.Treating notice pay as tax free
Only genuine redundancy and enhanced termination payments use the £30,000.00 exemption. Notice and holiday pay are taxed as earnings.Budgeting for redundancy pay only
Notice, holiday, pension on notice pay and any consultation time are real costs that often exceed the statutory payment itself.
Common questions
Do I have to pay redundancy pay after less than two years?
No statutory redundancy pay is due below 2 years of continuous service, but notice pay and accrued untaken holiday still are.
How many weeks of notice must I give?
At least one week for each complete year of service up to a maximum of twelve, or the contractual notice period if it is longer.
Is untaken holiday paid on top of redundancy pay?
Yes. Accrued but untaken statutory holiday must be paid on termination and is separate from redundancy pay.
Can I offer more than the statutory amount?
Yes. An enhanced payment is common and is usually covered by the £30,000.00 exemption together with the statutory element, with any excess taxed as earnings.
When must redundancy pay be paid?
On or soon after the termination date. Late payment can lead to a tribunal claim, so the cash timing matters as much as the amount.
Does this apply in Northern Ireland?
The structure is similar but the statutory limits are set separately, so check the Northern Ireland figures before relying on this calculation there.
Does making a role redundant remove all of its cost?
Not immediately. Notice, holiday and any enhanced payment fall due first, so the saving typically begins only after the payback period shown.
Sources
Last reviewed: 12 September 2026 · Statutory rates: 2026/27. This calculator is information only and is not tax, accounting or financial advice.