What Counts as Weekly Pay for Redundancy?

The starting point — your gross weekly pay

Your statutory redundancy pay is calculated using your gross weekly pay — the amount you earn before tax and National Insurance deductions. This is not the same as your net pay (what hits your bank account).

For employees on a fixed salary, this is usually calculated as your annual salary divided by 52. For hourly or variable-rate workers, it is typically an average of earnings over a reference period.

What is included in your weekly pay

The following count as weekly pay for statutory redundancy purposes:

• Base salary or wages — your regular fixed pay
• Regular overtime — if worked consistently as part of your contract
• Commission — if it forms a regular part of your earnings
• Bonus payments — where they are contractual and consistent
• Holiday pay — accrued or rolled-up holiday pay that forms part of regular pay
• Shift allowances and regular premiums — if worked as a pattern rather than ad hoc
• Statutory sick pay — during the reference period
• State benefits — certain benefits may be factored in for some workers

What is excluded

The following are not included in the weekly pay calculation:

• One-off or irregular overtime — occasional overtime that is not contractual or consistent does not count
• Expenses and allowances — travel, meals, equipment, mileage
• Non-cash benefits and perks — company car, private healthcare, gym membership
• Tips and gratuities — unless guaranteed and contractually part of pay
• Redundancy payments — any payment you receive as a result of being made redundant
• Pension contributions — not deducted from gross pay for this calculation
• Discretionary bonuses — one-off non-contractual bonuses are generally excluded

The reference period — how far back is used

When calculating your average weekly pay, the formula uses the 12 weeks before the calculation date. For employees who work regular hours, this 12-week window gives a reliable average of regular earnings.

If your pay varies significantly week to week — for example due to seasonal work, irregular overtime, or commission cycles — your employer should use the 12-week reference period to establish a fair average.

If you have been employed for fewer than 12 weeks, the calculation should use the full period of your employment.

Part-time workers

Part-time workers are entitled to statutory redundancy pay on the same basis as full-time workers. Your weekly pay is calculated from your actual earnings over the reference period — not a notional full-time equivalent.

The weekly cap still applies (£751/week in England, Scotland, and Wales — £783 in Northern Ireland). If you work part-time and earn below the cap, your full actual pay is used in the calculation.

Salary sacrifice and deductions

If you have a salary sacrifice arrangement in place — for example, a cycle-to-work scheme, childcare vouchers, or a pension AVC — your gross weekly pay for redundancy purposes is calculated on the reduced salary before the sacrifice as long as the arrangement is a genuine salary reduction scheme.

HMRC has specific rules about what qualifies as a salary sacrifice arrangement for this purpose. If you are unsure, ask your employer to explain how they have calculated your gross weekly figure.

What to do if your calculation seems wrong

Your employer is required to provide you with a written statement explaining how your redundancy pay has been calculated. You have the right to request this before payment is made.

If you believe your weekly pay has been calculated incorrectly — for example, if regular overtime or commission has been excluded — you can:

• Ask your employer to show their calculation
• Contact ACAS for free advice
• Use our calculator to check your own estimate
• Seek legal advice if the amount is significantly short of what you believe you are owed