Years of Service and Redundancy Pay

How service is calculated

Your total years of service is calculated from your start date to your effective date of termination — the day your employment ends. Each complete year of service counts towards your redundancy entitlement.

The calculation includes the full duration regardless of whether the period includes part-time work, overtime, or periods of no work due to illness — as long as the contract remained open. Service is calculated in complete years — partial years are rounded down.

Continuous service and what counts

UK employment law protects continuous service — meaning periods when you were continuously employed, even if your role, pay, or location changed. The following generally do not break continuous service:

• Reorganisation or role change — if you stayed with the same employer under a new contract
• Sickness absence — including signed-off sick leave of any duration
• Holiday — any period of annual leave
• Maternity, paternity, or adoption leave — these are protected and do not break service
• Industrial action — short periods of strike action (up to certain limits) do not break service
• Military service — if you returned to employment after reserve forces training or deployment

What breaks continuous service

Continuous service is broken when:

• You resign and then are re-employed later
• Your employment is terminated and a new contract is issued
• There is a clear gap between employment ending and new employment starting
• The employer explicitly breaks the contract (not through redundancy)
• You work under a transferred business and TUPE applies — service actually continues

It is worth noting that a genuine redundancy dismissal itself does not reset service — it is the endpoint, not a break.

TUPE transfers — your service transfers too

If your company is sold or transferred to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), your length of service transfers with you. Your new employer inherits your full service history for statutory redundancy purposes.

This means if you were made redundant 6 months after a TUPE transfer, your new employer must count all your years with the previous employer as well. You do not start from zero.

Read our guide on redundancy during a business sale or merger →

Job changes within the same group

If you moved between companies within the same corporate group — for example, from a parent company to a subsidiary — your service may still be continuous depending on the structure. HM Revenue & Customs and employment tribunals look at the economic reality of the employment relationship, not just the legal entity.

If you are unsure whether your service counts, ask your employer for a written statement of your start date and employment history. You are entitled to this.

Maximum service counted

Even though there is no maximum years of service you can build up, the maximum number of weeks counted in a redundancy calculation is 20 years. This means:

• If you have 25 years of service, only 20 years are used in the formula
• The cap is on weeks counted, not total entitlement
• At the 1.5× multiplier band (age 41+), 20 years × 1.5 weeks = 30 weeks maximum
• The maximum payout (£22,530 UK / £23,490 NI) reflects this 30-week ceiling at the capped weekly rate

This is why the maximum payout is fixed — it represents the maximum weeks achievable at the maximum multiplier applied to the capped weekly rate.

Breaks in service — the 4-week rule

If you left an employer and returned within 4 weeks, your original start date may still count for some employment rights, including redundancy. This is known as the continuous service break and applies when:

• The break was less than 4 weeks
• The new contract was with the same employer
• The original contract was not explicitly terminated as a dismissal

If more than 4 weeks passed between leaving and returning, the period of employment before the break is generally not counted for statutory purposes, and a new period of service begins.