This example demonstrates near-maximum statutory redundancy entitlement — a long-serving employee aged 55 whose weekly pay exceeds the statutory cap. It illustrates how the pay cap and mixed age bands affect the final amount.
Profile Summary
| Age at redundancy | 55 |
| Years of service | 20 years (maximum counted) |
| Weekly gross pay | £700 |
| Pay cap applies? | Yes (£700 > £643 cap, calculation uses £643) |
| Eligible? | Yes (20 years ≥ 2 years minimum) |
Step-by-Step Calculation
This employee started at age 35, so their 20 years of service span two age bands. Ages 36–40 fall in the 22–40 band (1.0× multiplier), and ages 41–55 fall in the 41+ band (1.5× multiplier). Because the pay of £700/week exceeds the £643 cap, the statutory calculation uses £643 throughout.
Year-by-Year Breakdown
| Year | Age | Band | Multiplier | Amount |
|---|---|---|---|---|
| 1 | 36 | 22–40 | 1× | £643.00 |
| 2 | 37 | 22–40 | 1× | £643.00 |
| 3 | 38 | 22–40 | 1× | £643.00 |
| 4 | 39 | 22–40 | 1× | £643.00 |
| 5 | 40 | 22–40 | 1× | £643.00 |
| 6 | 41 | 41+ | 1.5× | £964.50 |
| 7 | 42 | 41+ | 1.5× | £964.50 |
| 8 | 43 | 41+ | 1.5× | £964.50 |
| 9 | 44 | 41+ | 1.5× | £964.50 |
| 10 | 45 | 41+ | 1.5× | £964.50 |
| 11 | 46 | 41+ | 1.5× | £964.50 |
| 12 | 47 | 41+ | 1.5× | £964.50 |
| 13 | 48 | 41+ | 1.5× | £964.50 |
| 14 | 49 | 41+ | 1.5× | £964.50 |
| 15 | 50 | 41+ | 1.5× | £964.50 |
| 16 | 51 | 41+ | 1.5× | £964.50 |
| 17 | 52 | 41+ | 1.5× | £964.50 |
| 18 | 53 | 41+ | 1.5× | £964.50 |
| 19 | 54 | 41+ | 1.5× | £964.50 |
| 20 | 55 | 41+ | 1.5× | £964.50 |
| Total (27.5 weeks × £643) | £17,682.50 | |||
Tax Treatment
The total of £17,682.50 is below the £30,000 tax-free threshold, meaning the entire statutory amount is received tax-free. The statutory notice period for 20 years of service is the maximum of 12 weeks. Check your contract — many senior employees have longer contractual notice periods.
The Pay Cap Impact
Without the pay cap, this employee's redundancy pay would be 27.5 weeks × £700 = £19,250.00. The cap reduces the statutory amount by £1,567.50. This is where enhanced redundancy packages become particularly valuable for higher earners — an employer using the actual salary could offer significantly more. Use our enhanced calculator mode to compare.
Key Takeaways
- Maximum statutory pay requires 20 years of service — additional years don't increase the entitlement.
- Even at maximum, statutory pay (£17,682.50) is below the £30,000 tax-free limit.
- The weekly pay cap significantly reduces entitlement for higher earners.
- Mixed age bands (22–40 and 41+) mean different years contribute different amounts.
- Consider negotiating an enhanced package based on actual salary, especially if you're above the cap.
Frequently Asked Questions
What if I've worked for more than 20 years?
Only the most recent 20 years count for statutory redundancy. Earlier years of service are not included in the calculation, though your employer might include them in an enhanced package.
Would retiring instead of being made redundant affect my pay?
If you're being made redundant, you should receive your redundancy pay regardless of your proximity to retirement age. Refusing redundancy pay because someone is "about to retire anyway" would be age discrimination.