The Statutory Redundancy Pay Cap 2026/27: £751/Week and £22,530 Maximum
The statutory redundancy pay cap limits both the weekly pay used in the calculation and the effective maximum payout. Here's exactly why higher earners are affected and when enhanced schemes fill the gap.
Why there's a cap at all
Statutory redundancy pay is designed as a safety net minimum, not a full compensation scheme reflecting an individual's actual salary. To keep the scheme's cost predictable for employers (and the Insolvency Service's Redundancy Payments Service, which steps in when an employer can't pay), the calculation uses a capped week's pay figure rather than actual earnings.
Redundancy Pay Calculator
Calculate your statutory redundancy pay based on age, length of service and weekly pay.
Open Redundancy Pay calculatorThe 2026/27 cap in numbers
| Figure | 2026/27 amount |
|---|---|
| Capped week's pay | £751 |
| Maximum age-band multiplier (41+) | 1.5 weeks per year |
| Maximum qualifying years of service | 20 years |
| Maximum possible statutory redundancy payment | £22,530 |
The £22,530 maximum is reached only by an employee aged 41 or over throughout all 20 qualifying years of service — anyone younger, or with less service, receives proportionately less.
How the cap affects earners differently
| Actual weekly salary | Weekly pay used in calculation | Effect |
|---|---|---|
| £500/week | £500 (below cap — full salary used) | No effect from the cap |
| £751/week | £751 (exactly at cap) | No effect from the cap |
| £1,200/week | £751 (capped — real salary not used) | Redundancy pay calculated at 63% of actual pay |
| £2,000/week | £751 (capped — real salary not used) | Redundancy pay calculated at just 38% of actual pay |
Full worked example at the cap
An employee aged 50 with 15 years of continuous service, earning £1,500/week:
| Element | Calculation |
|---|---|
| Years in 22-40 band | None in this example (started at 35, all years in 41+ band) |
| Years in 41+ band | 15 years x 1.5 = 22.5 weeks |
| Weekly pay used | £751 (capped, not £1,500 actual) |
| Statutory redundancy pay | 22.5 x £751 = £16,897.50 |
Without the cap, using their actual £1,500/week salary, the same calculation would produce £33,750 — more than double the capped statutory figure.
Why enhanced redundancy schemes exist
Because the statutory cap is modest relative to typical salaries, particularly for professional and senior roles, many employers voluntarily offer enhanced (contractual) redundancy schemes, which might:
- Use actual uncapped salary instead of the £751 cap.
- Apply a more generous multiplier (e.g. 2 or 3 weeks per year of service, rather than the statutory 0.5/1/1.5 bands).
- Remove the 20-year service cap entirely.
- Combine several of these enhancements.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Open Take-Home Pay calculatorThe cap is separate from the £30,000 tax exemption
It's easy to confuse two different limits that both apply around redundancy:
| Limit | What it caps | Amount |
|---|---|---|
| Weekly pay cap | The salary figure used in the statutory redundancy calculation | £751/week (2026/27) |
| Tax-free termination exemption | How much of the total termination payment (statutory + enhanced ex-gratia) escapes income tax | £30,000 |
A statutory redundancy payment on its own (up to £22,530 maximum) will always fall within the £30,000 tax-free band. It's only once an enhanced ex-gratia element pushes the total termination payment above £30,000 that income tax (though still not employee NI) starts to apply to the excess.
How the cap is reviewed
The weekly pay cap, along with the statutory redundancy pay maximum, is typically reviewed and uprated every April, alongside other statutory rate changes such as the National Minimum Wage and statutory family pay rates, usually reflecting movements in the Retail Prices Index or a similar inflation measure.
Practical tips
- Check your contract, staff handbook, or any collective agreement for an enhanced redundancy scheme before assuming the statutory cap is your final entitlement.
- If your actual salary is well above £751/week, expect your statutory redundancy pay to represent a much smaller proportion of your real income than for lower earners.
- Remember the £30,000 tax exemption is separate — don't confuse the two caps when estimating your net redundancy payment.
Use the redundancy pay calculator to see exactly how the 2026/27 cap affects your specific statutory entitlement.
Frequently asked questions
What is the weekly pay cap for statutory redundancy in 2026/27?
A week's pay is capped at £751 for statutory redundancy purposes from 6 April 2026, regardless of your actual weekly earnings — this cap is reviewed and typically uprated each April.
What is the maximum statutory redundancy payment in 2026/27?
The maximum is £22,530 for 2026/27, calculated as 20 years of service x 1.5 weeks' pay (the maximum age-band multiplier) x £751 (the capped week's pay), for someone aged 41 or over throughout their 20 qualifying years.
Does the cap mean high earners get less redundancy pay relative to their salary?
Yes. Because the calculation uses the capped figure, not actual salary, higher earners receive a much smaller percentage of their real income in statutory redundancy pay than lower earners with the same length of service.
Can my employer pay more than the statutory cap?
Yes, many employers offer enhanced (contractual) redundancy schemes that use actual uncapped salary, more generous multipliers, or remove the 20-year service limit — always check your contract, staff handbook, or any collective agreement for enhanced terms.
Is the £30,000 tax-free exemption affected by the redundancy pay cap?
No, they're separate. The £751 weekly pay cap limits how much statutory redundancy pay you receive; the £30,000 tax-free exemption is a separate rule about how much of your total termination payment (statutory plus any enhanced ex-gratia element) can be paid without income tax.
How often is the weekly pay cap reviewed?
It's typically reviewed and uprated every April, in line with the Retail Prices Index or a similar measure, alongside other statutory employment rate changes such as the National Minimum Wage and statutory family pay rates.
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