Statutory Redundancy Guide
The redundancy weekly pay cap is £751 in 2026. Here is exactly how it limits your statutory entitlement and what to do if your employer gets it wrong.
From 6 April 2026, statutory redundancy pay is calculated using a maximum weekly pay figure of £751 in Great Britain (SI 2026/310, ERA 1996 s.227). If your actual salary is higher, the formula uses £751 regardless. This guide explains how that cap works, shows worked examples with the numbers, and tells you how to check whether your employer has applied it correctly.
Key facts for 2026
- The weekly pay cap is £751 (Great Britain) and £783 (Northern Ireland) from 6 April 2026.
- The maximum statutory redundancy pay is £22,530, reached only at 20 years service with the highest age multiplier.
- The cap limits the statutory formula only. It does not cap what your employer can offer in a settlement agreement.
What the redundancy pay cap is and why it exists
The redundancy pay cap is a statutory maximum. It limits the weekly pay figure used in the redundancy calculation, regardless of what you actually earn. If you earn £1,200 per week, the formula uses £751. If you earn £500 per week, the formula uses £500. The cap only bites when your pay exceeds it.
The cap applies in England, Scotland, and Wales. Northern Ireland has its own separate cap, currently £783 per week (SR 2026/57). The figures are set by the Employment Rights Act 1996 s.227 and change every April by government order (Statutory Instrument). The 2026 cap is set by SI 2026/310, which came into force on 6 April 2026.
The cap increases annually, typically in April, in line with average earnings growth. The 2026 increase of 4.4% (from £719 to £751) reflects wage growth since April 2025. Future changes are usually published in late March for the April implementation date.
How the redundancy pay cap affects your calculation
Statutory redundancy is calculated using a three-part formula. The cap applies to the weekly pay component. Your age and length of service determine the multiplier.
The statutory redundancy formula
- 1Establish your weekly pay (annual salary divided by 52), capped at £751 from 6 April 2026.
- 2Apply the age multiplier: 0.5 weeks per year (under 22), 1 week per year (22 to 40), 1.5 weeks per year (41 and over).
- 3Multiply by your complete years of qualifying service, up to a maximum of 20 years (ERA 1996 s.162).
Example 1: salary below the cap
The cap does not affect this calculation because your salary is already below it.
Example 2: salary above the cap
The cap reduces your payment by £3,192 compared to an uncapped calculation.
Example 3: longer service, higher age factor
Even with the age multiplier working in your favour, the cap still reduces your payment compared to an uncapped figure of £22,500.
The redundancy pay cap year by year
The cap increases most years in line with earnings growth. Here are the figures for the last three years in Great Britain.
| Effective date | Weekly cap | Maximum redundancy | Change |
|---|---|---|---|
| 6 April 2024 | £643 | £19,290 | +3.4% |
| 6 April 2025 | £719 | £21,570 | +11.8% |
| 6 April 2026 | £751 | £22,530 | +4.4% |
Great Britain figures. Northern Ireland caps: £661 (2024), £749 (2025), £783 (2026). Source: SI 2026/310 and preceding orders.
What counts as "a week's pay" under the cap
The cap limits the weekly pay figure, but what is included in "weekly pay" is frequently misunderstood. Employers sometimes get this wrong.
Gross weekly pay
Take your annual salary and divide by 52. Use gross pay before tax and National Insurance, not take-home.
Guaranteed overtime
Include overtime only if it is contractually guaranteed. Voluntary or occasional overtime is excluded.
Contractual bonuses and commission
Include if the bonus or commission is contractual and regular. A discretionary annual bonus is excluded; a guaranteed quarterly commission is included.
Variable hours
If your pay or hours fluctuate, use the average weekly pay over the 12 weeks before redundancy (ERA 1996 ss.221-224).
Employer pension contributions
What your employer pays into your pension does not count. Only salary is used.
Benefits in kind
Company car, private health insurance, gym membership, and other non-cash benefits are excluded.
What the cap does not cover
The weekly pay cap applies only to the statutory redundancy formula. It does not limit what your employer can offer in a settlement agreement, and it does not affect notice pay or holiday pay.
A settlement agreement typically has three financial components: statutory redundancy pay (capped by the formula), notice pay or PILON (always taxed as earnings under ITEPA 2003 s.402D), and accrued holiday pay. These are separate. The cap touches only the first.
Your employer may also offer an ex-gratia payment on top of the statutory entitlement to secure a settlement. If your statutory figure is £8,000, the employer might offer £14,000 total. The cap does not prevent this. Any ex-gratia amount combined with statutory redundancy is tax-free up to £30,000 under ITEPA 2003 s.403 (PILON excluded).
If your employer's settlement offer is lower than your capped statutory entitlement, that offer is unlawful, not just unfair. The statutory minimum is not negotiable. Use the calculator below to confirm your baseline before evaluating any offer.
What to do if your employer has applied the cap incorrectly
Errors happen. Common mistakes include miscounting years of service, misapplying the age multiplier, or using net pay instead of gross pay. Here is what to do.
- 1
Calculate your correct figure
Apply the formula: (weekly pay capped at £751) x (age multiplier) x (years of service, max 20). Use your gross pay. Write it down.
- 2
Check your payslip
Verify the redundancy payment shown on your final payslip against your calculation. If the number is lower, proceed.
- 3
Raise it formally in writing
Email your employer's HR or payroll team with your calculation, the correct figure, and a citation to ERA 1996 s.227. Request correction within 7 days.
- 4
Bring a tribunal claim if they refuse
If the employer does not respond or refuses, you can bring a claim in the Employment Tribunal for unlawful deduction of wages. The time limit is 3 months from the date of underpayment. A tribunal can award the unpaid amount plus interest.
How the cap interacts with your settlement offer
If your employer offers a settlement agreement rather than proceeding with statutory redundancy alone, the cap still sets your legal floor. A settlement that pays less than the capped statutory figure for redundancy is unlawful.
For example: your statutory redundancy is £8,000 under the capped formula. A settlement totalling £6,000 is unlawful, even if it claims to include notice pay and holiday within that figure. The statutory redundancy component alone must reach £8,000.
The cap protects you. Use it as your baseline. Any settlement negotiation starts from the capped statutory figure and works upward based on your bargaining position, length of service, and any additional employment claims you may have.
Calculate your redundancy entitlement now
Enter your age, salary, and years of service. The calculator applies the April 2026 statutory rates and shows your capped statutory figure instantly.
Calculate my redundancy payFrequently asked questions
Does the redundancy pay cap apply to everyone?
Yes, in Great Britain (England, Scotland, Wales), the £751 cap applies to all statutory redundancy calculations from 6 April 2026, regardless of your salary. Northern Ireland has a separate cap of £783 (SR 2026/57).
What is the maximum statutory redundancy pay in 2026?
The maximum is £22,530. This is reached with 20 qualifying years of service at the highest age multiplier (1.5 weeks per year, for ages 41 and above) and the full £751 weekly cap. Most employees will not reach this maximum.
Can I be paid more than the statutory cap?
Yes. The cap limits the statutory redundancy formula, not what your employer agrees to pay in a settlement agreement. Many employees negotiate ex-gratia payments significantly above the statutory amount.
Is statutory redundancy pay taxable?
Statutory redundancy pay is tax-free up to the £30,000 combined threshold under ITEPA 2003 s.403. If your total termination payment (redundancy plus other compensation, excluding PILON) exceeds £30,000, the excess is taxable.