Statutory redundancy pay when your role goes to automation in Great Britain

When an employer brings in AI or automation and needs fewer people for a kind of work, some employees may be dismissed as redundant. In England, Wales and Scotland the Employment Rights Act 1996 gives qualifying employees a minimum redundancy payment. This page sets out who qualifies, how the amount is worked out, what happens if you are offered a new role, and the time limit, as the law stood on 31 October 2026. Contracts can give more than the statutory minimum, never less.

The short answer: an employee dismissed by reason of redundancy after at least 2 years of continuous employment is entitled to a statutory redundancy payment. It is half a week's, one week's or one and a half weeks' pay for each full year of service depending on age, counting up to 20 years, with a week's pay capped at £751 from 6 April 2026. Unreasonably refusing an offer of suitable alternative work, such as a new role working alongside the system, can cost you the payment.

Who is entitled

• The right: an employer must pay a redundancy payment to an employee dismissed by reason of redundancy, or eligible because of lay-off or short-time working (section 135).
• Redundancy: includes a dismissal wholly or mainly attributable to the business needing fewer employees to carry out work of a particular kind (section 139). Work moving to an AI system can fall within that. For how people are chosen, see AI and redundancy selection in Great Britain.
• Two years' service: there is no right to a statutory redundancy payment unless the employee has been continuously employed for at least 2 years ending with the relevant date (section 155). This is separate from the qualifying period for unfair dismissal; see unfair dismissal when AI data is behind the decision.

How the amount is worked out

Count back from the relevant date the number of complete years of continuous employment, and allow for each year (section 162):

• one and a half weeks' pay for each year in which the employee was aged 41 or over;
• one week's pay for each year in which the employee was aged 22 or over but under 41;
• half a week's pay for each other year.

Only the last 20 years count (section 162(3)). For a redundancy payment, a week's pay cannot exceed £751 (section 227(1)), the figure set from 6 April 2026 by the Employment Rights (Increase of Limits) Order 2026 (S.I. 2026/310), which has its own transitional rule. The limit is normally reviewed each April, so check the current figure. On those figures the highest possible statutory payment is 20 years at one and a half weeks, or 30 weeks, times £751: £22,530.

Worked example: an employee aged 45 with 6 complete years of service, all after turning 39. Two of those years were at ages 39 and 40 (one week each) and four at 41 and over (one and a half weeks each): 2 + 6 = 8 weeks' pay. If their week's pay is above the cap, that is 8 times £751, £6,008.

Offers of a new role

Automation often removes some tasks and creates others, so employers may offer a different job. The statute deals with this directly:

• No dismissal if you take it up quickly: if the contract is renewed or you are re-engaged under a new one, following an offer made before your employment ends, starting immediately or within four weeks, you are not treated as dismissed by reason of the old job ending (section 138(1)).
• Trial period: where the new terms differ, there is a trial period of four weeks from starting the new work, or a longer period agreed for retraining (section 138(3)). If you leave during it, or the employer ends it for a reason connected with the change, you are treated as dismissed on the date the old employment ended (section 138(4)).
• Refusing suitable work: you lose the right to a payment if you unreasonably refuse an offer of the same terms, or of suitable employment, or unreasonably end a suitable new job during the trial period (section 141). Whether the offer was suitable and whether a refusal was unreasonable depends on the facts, such as pay, status, skills required, hours and location.

If a new role depends on working with AI tools you have not used, ask what training comes with it and whether the trial period will be extended to cover it, and get the answer in writing.

Time limit

You lose the right unless, within 6 months beginning with the relevant date, the payment has been agreed and paid, you have claimed it in writing from the employer, you have referred the question to an employment tribunal, or you have brought an unfair dismissal complaint (section 164(1)). A tribunal can still award it if you take one of those steps in the following 6 months and it considers that just and equitable (section 164(2)). A short written claim to the employer is the simplest way to protect the right.

Practical points

• Employees: check your continuous service, your age in each year and your contract or staff handbook for enhanced terms. Claim in writing if the payment is not confirmed. If the employer is insolvent, see what you can claim when an employer goes bust. Ask about alternative roles, including new work around the system. If you are sent home with no work before any dismissal, you may be owed guarantee pay, and after weeks of it you can claim redundancy pay through the lay-off and short-time rules.
• Employers: calculate statutory pay from the statute and the current cap, set out any enhanced terms, put offers of alternative work in writing with the differences and any training, and record the trial period. Where 20 or more are proposed at one establishment, collective consultation applies; see AI and layoffs: consultation and notice rules, and the employer must also notify the Secretary of State. Notice itself must meet the statutory minimum notice periods. During notice, staff with two years' service can take paid time off to look for work. If an exit payment is offered in return for giving up claims, see UK settlement agreements.

This page covers the statutory minimum in England, Wales and Scotland. Northern Ireland has separate legislation. It is general information, not legal or financial advice.