What is the statutory redundancy pay cap for 2026/27?

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Statutory redundancy pay is the legal minimum a qualifying employee must receive when made redundant, calculated using a formula that combines length of service, age, and weekly pay -- but all three inputs are subject to caps that limit the maximum payout, regardless of how high the employee's actual salary or length of service might be. **The three inputs to the formula** Statutory redundancy pay is calculated as a number of weeks' pay for each year of service, with the multiplier depending on the employee's age during each year worked: 0.5 weeks' pay for each full year worked under age 22; 1 week's pay for each full year worked aged 22 to 40; and 1.5 weeks' pay for each full year worked aged 41 and over. **The weekly pay cap** Critically, the "week's pay" figure used in this calculation is capped at a maximum amount set by the government and reviewed each April -- even if your actual weekly pay is significantly higher than this cap, the calculation uses the capped figure, not your real earnings. This cap is separate from (and shouldn't be confused with) any enhanced, non-statutory redundancy scheme your employer might offer, which can be more generous and isn't bound by this cap. **The 20-year service cap** Separately, only a maximum of 20 years of service counts towards the calculation, even if you've worked for the employer for longer -- so someone with 25 years' service has their redundancy pay calculated as though they only had 20 years, using whichever of the 20 most advantageous years (typically the most recent, given the higher multiplier for older ages) the formula naturally selects by counting backward from the redundancy date. **Worked example** For an employee aged 45 with 20 years of qualifying service, all of it accrued at the 1.5 weeks' multiplier (since all counted years were at age 41 or older, in this simplified example), and whose actual weekly pay exceeds the current cap: the calculation would be 20 years × 1.5 weeks × the CAPPED weekly pay figure (not their actual higher salary) -- this produces the current maximum possible statutory redundancy payment, since both the years cap and the weekly pay cap are simultaneously maxed out. **Who qualifies for statutory redundancy pay** To qualify, an employee generally needs at least two years of continuous service with the employer, and must be made redundant in the legal sense (the role genuinely ceasing to exist, or the business closing or relocating, rather than being dismissed for another reason) -- employees with less than two years' service are not entitled to statutory redundancy pay, regardless of age or salary. **Tax treatment of redundancy pay** Statutory (and most enhanced) redundancy payments benefit from a specific tax exemption on the first £30,000, meaning this portion is generally free of Income Tax and National Insurance -- any amount above £30,000 (which would typically only arise from an enhanced, employer-funded scheme on top of the statutory minimum, given how modest the statutory cap itself is) is subject to Income Tax (though notably still exempt from employee National Insurance, even above £30,000, subject to specific rules). **Enhanced (contractual) redundancy schemes are different** Many employers, particularly larger organisations, offer enhanced redundancy terms significantly more generous than the statutory minimum, often calculated without the same weekly pay or years-of-service caps -- always check your employment contract or staff handbook for any enhanced scheme, since relying only on the statutory calculation could significantly understate what you're actually entitled to receive. **Practical tip** Use a redundancy pay calculator with the CURRENT tax year's weekly pay cap (since this is reviewed and can change every April) to estimate your statutory minimum entitlement, and separately check your contract or staff handbook for any enhanced scheme your specific employer offers, since many employees are entitled to considerably more than the bare statutory minimum.

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