Sophia HamiltonIf you are facing redundancy in 2026, you have clearly defined legal rights under the Employment Rights Act 1996 (ERA 1996). With at least two years' continuous employment, you are entitled to statutory redundancy pay calculated on your age, length of service, and weekly pay. Beyond the payment itself, you have the right to a fair selection process, meaningful consultation, and — critically — the right to challenge any decision you believe was made on discriminatory or procedurally flawed grounds. This guide explains how statutory pay is calculated, what makes selection unfair, and the exact steps to escalate a challenge through Acas Early Conciliation to an Employment Tribunal.
Who Qualifies for Statutory Redundancy Pay?
Statutory redundancy pay applies to employees — not self-employed contractors or workers — who have at least two years of continuous employment with the same employer. The two-year threshold counts from your start date to the date your notice period begins, not when employment ends.
To qualify, the dismissal must constitute a genuine redundancy under s.139 ERA 1996. Three situations trigger redundancy: the business closes entirely, the particular workplace where you were employed closes, or the employer has a reduced need for employees doing your specific kind of work. Redundancy used as a pretext for other reasons — poor performance handled informally, a personality clash, or a protected disclosure — does not qualify as genuine redundancy and may constitute unfair dismissal.
Exclusions apply in limited circumstances: employees who reach contractual retirement age, those who unreasonably refuse a suitable offer of alternative employment, or those who resign without taking up a new role without good cause may lose their entitlement. Fixed-term employees are generally entitled to statutory redundancy pay unless they have waived it in writing before October 2002 (that waiver right was abolished by the ERA 2002).
Workers on zero-hours contracts can qualify if they meet the continuous employment test — courts assess regularity and mutual obligation across the working relationship, not just whether a formal contract names them as "employee".
Calculating Your Statutory Redundancy Pay in 2026
Statutory redundancy pay is calculated using three variables: your age band during each year of service, your length of continuous service (capped at 20 years), and your weekly pay (capped at the statutory maximum).
The Age-Tier Formula
| Age during each year of service | Entitlement per year |
|---|---|
| Under 22 | Half a week's pay |
| 22 to 40 | One week's pay |
| 41 and over | One and a half weeks' pay |
The formula applies year by year, working backwards. If you were different ages during different years, each year attracts the rate applicable for your age during that year.
The Weekly Pay Cap and Maximum Award
The statutory weekly pay cap is reviewed each April. For 2024/25 it stood at £643 per week [gov.uk, Employment Rights Act 1996 s.227]. The cap for the 2025/26 and 2026/27 tax years is published at gov.uk/calculate-your-redundancy-pay — check there for the current figure before calculating your entitlement.
Example Calculation
Sarah is 44 years old and has 9 years of continuous service, 5 of which were spent aged 41 or over and 4 between ages 22 and 40. Her actual weekly pay is £900, but the cap applies, so calculations use £643 for 2024/25 rates.
- 5 years aged 41+: 5 × 1.5 × £643 = £4,822.50
- 4 years aged 22–40: 4 × 1 × £643 = £2,572
Total statutory redundancy pay: £7,394.50
The first £30,000 of any redundancy payment (including any enhanced pay) is free from income tax and National Insurance contributions under the Income Tax (Earnings and Pensions) Act (ITEPA) 2003, s.403. Amounts above £30,000 are taxable at your marginal rate.
What Makes Redundancy Selection Unfair?
An employer may have a genuine redundancy situation yet still select employees unfairly. Unfair selection occurs when the process used to decide who goes is flawed or discriminatory — and this is a separate ground of challenge from the question of whether redundancy was genuine at all.
Protected Characteristic Discrimination
Selection that is directly or indirectly linked to a protected characteristic under the Equality Act 2010 is automatically unfair. Protected characteristics include age, disability, sex, race, religion or belief, sexual orientation, gender reassignment, pregnancy and maternity. For example, selecting employees with the shortest service disproportionately disadvantages younger workers, which may constitute indirect age discrimination unless objectively justified.
Employees on maternity or shared parental leave have additional statutory protection: under Regulation 10 of the Maternity and Parental Leave Regulations 1999, they must be offered any suitable available vacancy before any other redundant employee if one exists in the business. Failing to do so makes the dismissal automatically unfair, regardless of how fair the rest of the process was.
Procedural Failures
Beyond discrimination, selection can be unfair on procedural grounds. Courts and tribunals have found unfair selection where employers:
- Failed to define a fair pool of comparable employees for selection
- Used purely subjective criteria with no documented scoring
- Applied criteria inconsistently between employees in the same pool
- Did not consult individually with each at-risk employee about the criteria or their scores
- Used "last in, first out" as the sole criterion without considering protected characteristics
When collective redundancies affect 20 or more employees at one establishment within 90 days, the Trade Union and Labour Relations (Consolidation) Act (TULRCA) 1992 s.188 requires a minimum 30-day consultation period (45 days if 100 or more are affected). Failure to collectively consult can trigger a protective award of up to 90 days' gross pay per affected employee.
High-profile redundancy situations — like those seen in the Jaguar Land Rover job cuts affecting thousands of UK workers — illustrate how complex collective redundancy selection can become, particularly when selection pools span multiple sites and roles.
How to Challenge Unfair Redundancy Selection: Five Steps
Acting quickly is essential — the timeline to bring a claim is strict. Here is the practical sequence:
Request your selection criteria and scores in writing. Ask your employer to explain in writing exactly what selection pool was used, what criteria applied, and how you scored against each criterion and compared to retained employees. Employers are not required by statute to disclose other employees' scores, but a tribunal will take a dim view of an employer who refuses to explain the basis for selection at all.
Appeal the decision internally. You have the contractual or implied right to appeal any redundancy decision. Submit your appeal in writing within the timeframe your employer specifies (typically 5–10 working days). Clearly state the grounds: discriminatory criterion, procedural failure, or failure to consider suitable alternative employment. An internal appeal also gives the employer the chance to correct an error before external proceedings begin.
Raise a formal grievance if the appeal is denied. If your employer dismisses the appeal without engaging with the substance, raise a formal grievance under the Acas Code of Practice on Disciplinary and Grievance Procedures. Failure to follow the Code does not automatically make a dismissal unfair, but an employment tribunal can increase any award by up to 25% if the employer unreasonably failed to follow it.
Start Acas Early Conciliation before the clock runs out. You must notify Acas of your intention to bring an employment tribunal claim before the claim is lodged — this is a mandatory pre-claim step under the Enterprise and Regulatory Reform Act (ERRA) 2013, s.18. The Acas conciliation period lasts one month (extendable by a further 14 days by agreement). Crucially, the standard three-month tribunal limitation period is paused while Early Conciliation is ongoing — the clock starts again when Acas issues an EC certificate.
Lodge your Employment Tribunal claim within the limitation period. You generally have three months less one day from your effective date of termination (EDT) to start your tribunal claim — adjusted to account for the period of Acas Early Conciliation. Late claims are refused except in very limited exceptional circumstances.
When larger-scale job losses create sector-wide uncertainty — as seen in UK refinery closures affecting workers' redundancy rights — the challenge process follows exactly the same steps, but collective consultation failures may warrant a separate protective award claim alongside individual unfair dismissal.
What Happens at Employment Tribunal?
An Employment Tribunal hearing for unfair dismissal typically lasts one to three days and involves witness statements, documents, and cross-examination. You do not need a lawyer but many claimants find legal representation — or at least a paid McKenzie Friend — useful for presenting complex selection evidence.
Potential Outcomes
If the tribunal finds dismissal unfair, it can order one of three remedies:
- Reinstatement — you return to the exact same job on the same terms. Ordered infrequently in practice.
- Re-engagement — you return to a comparable role, possibly on different terms. Also uncommon.
- Compensation — the most common outcome, comprising a basic award (calculated the same way as statutory redundancy pay) and a compensatory award reflecting actual financial loss. The compensatory award is capped at the lesser of one year's gross pay or £115,115 (2024/25 annual cap, reviewed each April) [Employment Rights Act 1996 s.124, gov.uk].
The tribunal may also reduce compensation if it finds you contributed to the unfair treatment — for example, if your conduct during the process was unreasonable — or uplift it by up to 25% if your employer failed to follow the Acas Code.
Employees whose redundancies resulted from sudden retail and e-commerce closures have used exactly this tribunal route to recover both unpaid wages and unfair dismissal compensation when insolvency was involved, though the National Insurance Fund step-in rules (ERA 1996, s.182) apply differently where the employer is insolvent.
À retenir — Key Takeaway:
You qualify for statutory redundancy pay after two years of continuous employment. Pay is calculated on age-tiered weeks multiplied by your capped weekly pay (up to the current statutory limit). Selection is unfair if it uses discriminatory criteria or bypasses proper consultation. Challenge via internal appeal → Acas Early Conciliation → Employment Tribunal within three months less one day. The first £30,000 of any redundancy payment is tax-free.
Frequently Asked Questions
Does redundancy pay count as taxable income?
The first £30,000 of a redundancy payment — including both statutory and any enhanced amount — is free of income tax and National Insurance contributions [ITEPA 2003, s.403]. Any amount above £30,000 is taxed as employment income in the tax year you receive it. This threshold has remained unchanged since 1988; factor it into your calculations if your payment is large.
Can I be made redundant while pregnant or on maternity leave?
Your position can be made redundant while you are pregnant or on maternity leave — the genuine redundancy situation may be real — but your selection for that redundancy cannot be because of your pregnancy or maternity leave (automatic unfair dismissal under ERA 1996 s.99). Additionally, if a suitable alternative vacancy exists anywhere in the business, you must be offered it first before any other redundant employee, as set out in Regulation 10 of the Maternity and Parental Leave Regulations 1999.
What if my employer refuses to give me my redundancy pay?
If your employer refuses or is insolvent, you can apply to the Redundancy Payments Service (RPS) at the Insolvency Service to claim statutory redundancy pay directly from the National Insurance Fund [ERA 1996 s.182]. You must first apply to your employer in writing; if payment is not made within six months, you can apply to the RPS. The government will pay out the statutory amount and then pursue the debt against the employer (or insolvent estate).
How long do I have to claim unfair dismissal?
You have three months less one day from your effective date of termination (EDT) to notify Acas of your intention to bring an Employment Tribunal claim. The Acas Early Conciliation period pauses this clock. If Acas Early Conciliation fails and you receive an EC certificate, the limitation period resumes from where it stopped, giving you the remaining time (minimum of one month after the certificate) to lodge the claim.
Legal disclaimer: The information in this article is provided for general informational purposes only and does not constitute legal advice. Redundancy law is complex and fact-specific. Consult a qualified employment solicitor or contact Acas (0300 123 1100) for advice tailored to your individual situation.
