# Redundancy pay for a trades firm: 2 years' service, a £751 weekly cap and a £22,530 ceiling, worked at £560 and £900 a week

> GOV.UK: statutory redundancy pay from 2 years' service, weekly pay capped at £751 from 6 April 2026, maximum £22,530. Worked for a labourer and a foreman.

- Page to cite: https://aeolookup.com/trades/redundancy-pay-trades-firm-2-years-service-751-weekly-cap-22530-maximum-worked/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Trades and building firms, Rules and paperwork
- Published 26 October 2026
- Key fact: At £560 a week, 2 years' service at age 30 gives 2 weeks = £1,120, 5 years gives 5 weeks = £2,800 and 10 years gives 10 weeks = £5,600. A foreman on £900 a week is capped at £751, so 10 years gives £7,510, not £9,000: £1,490 less. The ceiling of £22,530 is 30 weeks x £751.
- Sources: GOV.UK, Redundancy pay (https://www.gov.uk/redundancy-your-rights/redundancy-pay): an employee normally qualifies after 2 years' service; half a week's pay for each full year under 22, one week's for each full year aged 22 to under 41, one and a half weeks' for each full year aged 41 or older; service capped at 20 years; weekly pay is the 12-week average before notice, capped at £751 for redundancies on or after 6 April 2026; maximum £22,530. Read 26 October 2026.

The Hendon job has finished and the next contract is not signed. You have a labourer with five years and a foreman with ten. Notice is one cost. Does the law also make you pay a redundancy payment, and how much?

## What GOV.UK says

The GOV.UK page on redundancy pay gives these rules:

| Point | Rule |
|---|---|
| Who qualifies | An employee who has worked for you for 2 years or more |
| Under 22 | Half a week's pay for each full year |
| Aged 22 to under 41 | One week's pay for each full year |
| Aged 41 or older | One and a half weeks' pay for each full year |
| Longest service counted | 20 years |
| Weekly pay used | The average over the 12 weeks before notice, capped at £751 (redundancies on or after 6 April 2026) |
| Maximum total | £22,530 |

Check the ceiling: 20 years x 1.5 weeks = 30 weeks, and 30 x £751 = £22,530. The page's maximum is therefore the top of the table, reached only by someone with 20 years counted, all at 41 or older.

## What it costs at £560 and £900 a week

A labourer on £14 an hour for 40 hours earns £560 a week (14 x 40 = 560), under the cap. Take someone who started at 25, so every year is in the one-week band.

| Service | Weeks | Working | Redundancy pay |
|---|---|---|---|
| 1 year 11 months | none (under 2 years) | not normally entitled | £0 |
| 2 years | 2 | 2 x £560 | £1,120 |
| 5 years | 5 | 5 x £560 | £2,800 |
| 10 years | 10 | 10 x £560 | £5,600 |

A foreman on £900 a week is over the cap, so £751 is used. For 10 years in the one-week band:

- Uncapped: 10 x £900 = £9,000
- Capped: 10 x £751 = £7,510
- Difference: £9,000 - £7,510 = £1,490

The five-year labourer in the opening is owed £2,800 of redundancy pay in addition to the notice weeks, which are a separate cost: see [the minimum notice a trades firm must give](https://aeolookup.com/trades/notice-period-letting-a-worker-go-trades-firm-1-week-per-year-12-weeks-cost-worked/). On the notice page's figures, his notice is 5 weeks, £2,800, so the two together come to £5,600 (2,800 + 2,800).

## What to put in place

- **Keep each worker's date of birth and start date** in one place, so the age bands and full years are a count, not a memory.
- **Keep the last 12 weeks of pay** for each person; the page uses that average.
- **Price it into a contract** before you take on a long-serving crew, as you would [holiday](https://aeolookup.com/trades/holiday-entitlement-5-6-weeks-28-days-first-employee-trades-firm-part-time-worked/) or [sick pay](https://aeolookup.com/trades/statutory-sick-pay-day-one-small-trades-firm/).

## What I did not read

I read the one GOV.UK page. I did not read how a part year, overtime, or pay that varies week to week is averaged beyond the 12-week sentence, how a gap in service is treated, which of the age bands applies when a birthday falls inside a year of service, whether the payment is taxed, or what the earlier, lower caps were. I did not read the legislation or what makes a dismissal a redundancy at all. Ask your adviser before you act on a real case.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join your trades team and keep each worker's start date, birth date and recent pay, work out the redundancy figure and the notice cost when a contract ends, and put both in front of the office manager, who decides what to do.

This is general information, not tax or legal advice. Check the GOV.UK page and your adviser for your own firm.

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General information for UK small firms, not legal, tax or financial advice.