Statutory Redundancy Pay Cap 2026/27 — The Numbers That Actually Cap Your Payout
How the statutory redundancy pay calculation and its weekly pay cap work for 2026/27, with worked examples showing where the cap starts to bite.
The Three Building Blocks
Statutory redundancy pay is calculated from three inputs, each of which is itself capped or limited:
| Input | Cap or limit |
|---|---|
| Length of service | Capped at 20 years, even if you worked longer |
| Age | Determines the weekly multiplier (0.5x, 1x or 1.5x per year) |
| Weekly pay | Capped at the statutory maximum weekly pay figure for the relevant year |
Where the Weekly Pay Cap Starts to Bite
The statutory weekly pay cap matters most for higher earners, because the formula uses the lower of your actual weekly pay or the statutory cap. An employee earning well above the cap on a weekly basis gets exactly the same statutory redundancy pay as a colleague at the same age and length of service earning right at the cap — the statutory scheme does not scale further for higher earners, though many employers offer enhanced contractual redundancy schemes that do scale with actual salary above the statutory minimum.
A Worked Example
Consider an employee aged 45 with 10 years of continuous service, whose actual weekly pay is above the statutory cap for the relevant year. Their statutory redundancy calculation is:
- Years of service counted: 10 (under the 20-year cap)
- Age multiplier: 1.5 weeks per year (aged 41+)
- Total weeks: 10 × 1.5 = 15 weeks
- Statutory redundancy pay: 15 × capped weekly pay figure
If the same employee's actual weekly pay were below the statutory cap, the calculation would use their real weekly pay instead, since the cap only limits pay above that threshold — it never increases the figure used.
Statutory vs Contractual Redundancy Pay
| Statutory redundancy pay | Contractual/enhanced redundancy pay | |
|---|---|---|
| Minimum required by law | Yes | No — employer discretion or contract term |
| Uses capped weekly pay | Yes, always | Often uses actual salary, uncapped |
| Common for | The legal minimum for most employees | Larger employers, senior roles, or where contractually agreed |
Many employers, particularly larger organisations, offer redundancy terms significantly more generous than the statutory minimum — always check your specific contract or staff handbook rather than assuming only the statutory figure applies.
Tax Treatment Reminder
The combined total of statutory redundancy pay and any additional payment (notice pay in lieu is often treated separately and is normally taxable in full, which is a distinct point worth checking) benefits from the first £30,000 being free of Income Tax and National Insurance. Anything genuinely classified as redundancy pay above £30,000 is subject to Income Tax but, in most circumstances, still not National Insurance — a distinction that can matter for larger payouts.
Use the calculator below to work out your specific statutory redundancy entitlement based on your age, length of service and weekly pay.
Frequently asked questions
How is statutory redundancy pay calculated?
Statutory redundancy pay is based on age, length of continuous service (capped at 20 years) and weekly pay (capped at the statutory maximum for the relevant year). You get half a week's pay for each full year worked while under 22, one week's pay for each full year worked aged 22 to 40, and one and a half weeks' pay for each full year worked aged 41 or over — always using the capped weekly pay figure, not your actual weekly pay if it is higher than the cap.
What is the statutory weekly pay cap used for redundancy calculations?
The cap on a week's pay for statutory redundancy purposes is reviewed and typically uprated annually, usually each April. It is a separate figure from your actual gross weekly pay — if your real weekly pay is above the statutory cap, the calculation still uses the capped figure, meaning higher earners get proportionately less protection from the statutory minimum scheme relative to their actual salary.
Is statutory redundancy pay taxable?
The first £30,000 of a genuine redundancy payment (including statutory redundancy pay plus any additional contractual or ex-gratia payment, combined) is generally free of Income Tax and National Insurance. Amounts above £30,000 are subject to Income Tax (though notably still not National Insurance, in most circumstances) — this is a distinct tax treatment from normal salary.
Do I get statutory redundancy pay if I've worked somewhere less than two years?
Generally, no — statutory redundancy pay requires at least two years of continuous service with the employer. Employees with less than two years' service are not entitled to statutory redundancy pay, though they may still have other rights, such as notice pay, depending on their contract and the circumstances of the redundancy.
Try the calculators
Redundancy Pay Calculator
Calculate your statutory redundancy pay based on age, length of service and weekly pay.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Notice Period Calculator
Calculate UK statutory and contractual notice period plus PILON or garden leave pay.
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