Guide
Redundancy Pay Cap Explained
Two caps limit your statutory redundancy pay — a weekly pay cap and a maximum total payout. Here is how they work, who they affect, and what they mean for your actual entitlement.
Why the government caps redundancy pay
Statutory redundancy pay is a floor, not a ceiling — a minimum legal entitlement that all eligible employees can claim. To keep the cost to employers manageable and the scheme sustainable, parliament has set two upper limits under the Employment Rights Act 1996 (s.162–166):
- A weekly pay cap — your weekly pay is used in the formula only up to this limit, even if you earn more
- A total payout cap — the maximum amount the government will calculate as your entitlement
These caps are reviewed annually every April in line with national average earnings. The current 2026 rates are shown below.
2026 statutory redundancy caps
Calculate your exact entitlement
The caps are applied automatically in our calculator based on your age, weekly pay and years of service. Try it now to see whether the cap affects your figure.
How the weekly pay cap works
Your statutory redundancy pay is calculated as: number of qualifying weeks × weekly pay. "Weekly pay" is your gross pay before tax and deductions, as shown on your last payslip.
The weekly pay cap means that if your actual weekly pay exceeds the limit, the cap is used instead. The cap does not reduce any contractual redundancy payment your employer may have agreed to — it only sets the floor for the statutory minimum.
This matters most for higher earners. Someone earning £900 per week does not receive redundancy pay calculated on £900 — it is calculated on £751 (the cap), reducing their maximum statutory entitlement compared to what their raw salary might suggest.
Worked example 1 — High earner
Sarah: hitting the weekly pay cap
Sarah is 47, earns £900 per week gross, and has worked for her employer for 9 complete years. She is being made redundant.
Step 1 — Cap the weekly pay
Step 2 — Count qualifying years × age bands
Result
Without the cap, Sarah might have expected £900 × 16.5 weeks = £14,850. The weekly cap reduces her statutory entitlement to £6,759. She would still receive this in full — it is the statutory minimum. Her employer may offer more as an enhanced (contractual) payment.
The first £30,000 is tax-free. In Sarah's case, all £6,759 would be tax-free.
Worked example 2 — Long service
David: hitting the 20-year service cap
David is 58, earns £620 per week gross, and has worked for his employer for 24 complete years. He is being made redundant.
Step 1 — Cap years of service
Step 2 — Apply age bands (counting back from age 58)
Result
Despite working 24 years, only 20 are counted. David's 4 extra years of service do not increase his statutory entitlement. At £620/week (below the cap), his weekly pay is not capped — but the 20-year ceiling is the binding constraint here. His statutory redundancy pay is £17,670. The first £30,000 remains tax-free, so all £17,670 is tax-free.
What employers pay above the statutory cap
The statutory redundancy cap sets the minimum legal requirement. Many employers offer an enhanced or contractual redundancy scheme that pays above the statutory floor. This is entirely voluntary — there is no legal requirement to exceed the cap.
Enhanced schemes typically:
- Remove or raise the weekly pay cap
- Count more than 20 years of service
- Apply a higher multiplier to the age bands (e.g. 2 weeks per year at all ages)
Check your employment contract or staff handbook — look for a "contractual redundancy pay" or "enhanced redundancy scheme" clause. If your employer has such a scheme, the contractual payment is treated as earnings for tax purposes (unlike the statutory minimum, which benefits from the £30,000 tax-free threshold).
The £30,000 tax-free threshold
Whether or not the cap affects your payout, the first £30,000 of statutory redundancy pay is always tax-free under the Income Tax Act 2003 s.306. This applies to the statutory minimum entitlement only — any enhanced or contractual payment above the statutory floor is taxed as earnings.
Using Sarah's example from above: all £6,759 of her statutory entitlement falls within the £30,000 threshold and is therefore tax-free. David receives £17,670 — also entirely within the threshold. Employees with very high final payouts may exceed the £30,000 limit, at which point the excess becomes taxable income.
Use our statutory redundancy calculator to see a full breakdown of your gross, tax-free, and taxable portions.
Northern Ireland rates
Northern Ireland sets its own statutory redundancy rates, which are typically slightly higher than Great Britain. The 2026 figures are:
- Weekly pay cap: £783 per week (vs £751 in GB)
- Maximum total payout: £23,490 (vs £22,530 in GB)
Both calculators on this site allow you to switch between "England, Scotland & Wales" and "Northern Ireland" so you get the correct figures for your location.
Frequently Asked Questions
What is the weekly redundancy pay cap in 2026?
The weekly pay cap for statutory redundancy pay in 2026 is £751 per week for employees in England, Scotland and Wales, and £783 per week in Northern Ireland. Your actual weekly pay is used in the calculation up to this cap.
Does the weekly cap apply if I earn more than £751 per week?
Yes. If your gross weekly pay exceeds the cap, only the capped amount (£751 for UK employees) is used in the redundancy calculation. You do not lose your entitlement — it is calculated on the capped figure rather than your full salary.
What is the maximum total statutory redundancy payout?
The maximum total statutory redundancy pay is £22,530 in England, Scotland and Wales (and £23,490 in Northern Ireland). This is derived from the 30-week cap multiplied by the weekly pay cap.
Is there a cap on years of service for statutory redundancy?
Yes. Only the first 20 complete years of service are counted, regardless of how long you have actually worked for your employer. Years of service beyond 20 do not increase your statutory redundancy pay.