How to Use the Redundancy Pay Calculator

When your employer tells you what your redundancy package is worth, most people take that number at face value. They shouldn’t. Redundancy pay isn’t one figure — it’s three separate calculations, each with its own rules, its own cap, and its own room for error. Getting any one of them wrong means walking away with less than the law entitles you to.

The redundancy pay calculator estimates all three in under 60 seconds. This guide walks you through exactly how to use it and what each figure means.

The Three Components of a Redundancy Package

Most employees think redundancy pay means one lump sum. In reality, a full redundancy package contains three separate elements:

Statutory redundancy pay — calculated using your age, length of service, and weekly pay, capped at the current legal maximum

Notice period pay — what you’re owed for your notice period, whether you work it, are paid in lieu, or are placed on garden leave

Unused holiday pay — any accrued holiday you haven’t taken at the point your employment ends

Each is calculated differently. Each has different tax treatment. And each is an amount your employer is legally required to pay.

“I just took what they offered me. I had no idea I was owed an extra six weeks of holiday pay on top. That alone was over £1,400.”

— Reader, manufacturing sector, 14 years’ service

Step-by-Step: How to Use the Calculator

Step 1 — Select your location

The calculator applies different rules for England, Wales and Scotland versus Northern Ireland. Northern Ireland has a separate weekly pay cap and maximum statutory payment. Select the correct region before entering any other details.

Step 2 — Enter your date of birth

Your age at the time of redundancy directly affects your statutory pay calculation. The multiplier is:

Half a week’s pay for each full year of service under age 22

One week’s pay for each year aged 22 to 40

One and a half weeks’ pay for each year aged 41 and over

Getting this right matters most if you are in your early 20s or over 41.

Step 3 — Enter your annual salary

The calculator divides your salary by 52 to estimate your weekly pay. If your pay varies — commission, overtime, irregular hours — the legal calculation normally uses the average of your 12 highest paid weeks in the relevant reference period. For a precise figure, use the 12-week average rather than annual salary divided by 52.

Step 4 — Enter your employment start and end dates

Only complete years of service count. If you have worked for 6 years and 11 months, the calculation uses 6 years. The start date should be the date your continuous employment began — not a contract renewal date, not a probation end date.

Step 5 — Contract type

Select full-time. Part-time employees are entitled to the same statutory redundancy pay on the same basis — part-time status does not reduce the entitlement.

Step 6 — Notice period

Select whether your notice period has been worked or paid in full, or whether your employer is paying you in lieu. PILON — Payment in Lieu of Notice — is treated differently for tax purposes. The first £30,000 of a redundancy package is tax-free; PILON does not fall within that exemption and is subject to income tax and National Insurance in the normal way.

Step 7 — Remaining holiday days

Enter any accrued holiday you have not taken. This is owed in full and should be paid at your normal daily rate. It is one of the most commonly underpaid elements of a redundancy settlement.

Step 8 — Enhanced redundancy pay

If your contract or company policy offers enhanced redundancy pay above the statutory minimum, select Yes. The calculator will factor this in. If you are unsure whether your contract contains an enhanced scheme, check your contract of employment, your staff handbook, or any collective agreement that applies to your workplace.

What the 2026/27 Weekly Pay Cap Means

For redundancies ending between 6 April 2026 and 5 April 2027, the weekly pay used in the statutory calculation is capped at the current legal maximum regardless of your actual salary. If you earn above the cap, your statutory redundancy pay is calculated on the cap figure, not your real weekly wage. This is why statutory redundancy pay frequently underestimates what higher earners feel they are owed — and why checking whether your contract or company policy provides enhanced pay is so important.

Why the Calculator Matters

Research consistently shows that a significant proportion of redundant employees accept packages without checking whether they are accurate. Errors are common — particularly around:

Using the wrong start date, losing complete years of service

Failing to include unused holiday in the total

Treating PILON as tax-free when it is not

Not accounting for enhanced terms in the contract

The calculator gives you an independent estimate to check your employer’s figure against before you sign anything.

What To Do After You’ve Used the Calculator

Compare the calculator result with the figure your employer has given you in writing — if they differ, ask your employer to explain their calculation in detail

Check your contract of employment for any enhanced redundancy clause — this is separate from statutory entitlement and must be honoured

Count your remaining holiday days and confirm they are included in your settlement figure

If your employer is paying PILON, confirm this is not being treated as part of the tax-free £30,000 allowance