Redundancy Calculator

The statutory weekly pay cap for redundancy calculations in the 2026/27 tax year is set at £755. This cap limits the amount of weekly pay used to calculate the statutory redundancy entitlement, regardless of the employee's actual salary. Any earnings above this threshold are disregarded for the statutory calculation.

Employees aged 22 to 40 receive one week's pay for each full year of service, while those 41 and over receive one and a half weeks. Employees under 22 receive half a week's pay for each full year of service in that age bracket. The total is capped at 20 years of service, meaning the maximum statutory payment is 30 weeks' pay.

For the 2026/27 tax year, employers must pay Class 1 National Insurance contributions at 15% on earnings above £5,000 per employee. This rate applies to the portion of the salary exceeding the secondary threshold, which remains aligned with the primary threshold for this calculation. Earnings below this threshold are exempt from employer NI contributions.

A tribunal claim may arise if an employer fails to follow a fair procedure, such as consulting with employees or considering suitable alternative employment. Claims must typically be lodged within three months less one day of the dismissal date to be valid. Failure to adhere to the ACAS Code of Practice can result in a 25% increase in any compensation awarded by the tribunal.

The VAT registration threshold remains at £90,000 in turnover for the 2026/27 tax year, requiring businesses to register once they exceed this limit. While this does not directly calculate redundancy pay, it impacts cash flow and budgeting for potential staff reductions. Businesses approaching this threshold must ensure they have sufficient reserves to cover both VAT liabilities and statutory redundancy costs.