Redundancy pay: the 2026/27 rates and how it is worked out

The 2026/27 figures

The figures below apply to dismissals on or after 6 April 2026. They come from the Employment Rights (Increase of Limits) Order 2026, SI 2026/310, which uprates the limits each year. The weekly pay cap itself is set under section 227 of the Employment Rights Act 1996 and uprated under section 34 of the Employment Relations Act 1999. If you are checking a number against a letter or a payslip, these are the figures to use for a termination on or after 6 April 2026.

For dismissals between 6 April 2025 and 5 April 2026 the previous figures were a cap of 719 pounds a week and a maximum payment of 21,570 pounds. Those older figures still matter if your employment ended in that window, because the cap is fixed by the date the employment ends. The maximum of 22,530 pounds is reached at 20 years of service at one and a half weeks a year with weekly pay at or above the cap, which is 20 multiplied by 1.5 multiplied by 751.

How the calculation works

The formula in plain terms is this. You count your complete years of service with the same employer, but only the most recent 20 complete years. You then multiply each of those years by a number of weeks of pay that depends on your age during that year. For each full year of service while you were under the age of 22, you get half a week's pay. For each full year aged 22 to 40, you get one week's pay. For each full year aged 41 or over, you get one and a half weeks' pay. The calculation itself is set out in section 162 of the Employment Rights Act 1996, with entitlement in sections 155 to 162.

Your weekly pay for this purpose is the lower of your actual gross weekly pay and the cap, which is 751 pounds for dismissals on or after 6 April 2026. So if you earn 900 pounds a week, the calculation uses 751 pounds. If you earn 500 pounds a week, it uses 500 pounds. Only complete years count, so a period of 11 months does not add a year. Here is a worked example with round numbers. Suppose you are 45, you have 10 complete years of service, and your gross weekly pay is 600 pounds. All 10 years were worked at age 22 or over, so each year is worth one week's pay. The arithmetic is 10 years multiplied by 1 week multiplied by 600 pounds, which equals 6,000 pounds. If instead you were 45 with 10 complete years and weekly pay of 900 pounds, the weekly figure is capped at 751 pounds, so the arithmetic is 10 multiplied by 1 multiplied by 751, which equals 7,510 pounds. You can follow the same steps with your own age, complete years and weekly pay.

Which cap applies to you

This is the point people get wrong. The cap is fixed by the date your employment ends, not the date the money arrives in your bank account. A termination on 5 April 2026 uses the 719 pound cap. A termination on 6 April 2026 or later uses the 751 pound cap. The relevant date is the effective date of termination, which is the date your employment actually ends, not the date you are told about it and not the date a final payment is made.

This matters most where a notice period straddles early April. If you are given notice in March and your employment ends on 10 April 2026, the 751 pound cap applies, because the effective date of termination falls on or after 6 April 2026. If your employment ends on 3 April 2026, the 719 pound cap applies. The difference is not trivial at the top end. At 20 years of service at one and a half weeks a year, the older cap produces 21,570 pounds and the newer cap produces 22,530 pounds. If you are checking a figure in a letter, check the effective date of termination first, then apply the cap that matches that date.

Tax, and what else you may be owed

The first 30,000 pounds of a genuine redundancy payment is free of income tax and National Insurance. Above that threshold, income tax applies to the excess. This is why a total settlement figure is not the same as a tax free figure. A settlement can include several different elements, and they are taxed in different ways. Payment in lieu of notice is treated as earnings and is taxable. Holiday pay owed and unpaid wages are taxed as normal earnings. So if you are offered a total sum, only the part that is a genuine redundancy payment benefits from the 30,000 pound threshold.

It is also worth being clear that statutory redundancy pay is a legal minimum. A contract of employment or an enhanced scheme may provide more, and many employers do pay more than the statutory floor. The statutory figures are a floor, not a ceiling. If your contract or staff handbook sets out a redundancy scheme, that scheme may produce a higher figure than the statutory calculation. This page does not tell you whether to accept an offer or sign a settlement agreement, and it is not legal advice. If you are weighing up an offer, free specialist help is available from Acas and Citizens Advice, and in some cases from a trade union or a solicitor offering a free initial consultation.

If your employer will not pay

The routes run in order. First, raise it with the employer in writing, setting out your complete years of service, your age during each year, your gross weekly pay and the figure you calculate is due. Keep a copy. If the employer refuses to pay what is owed, a claim can be made to an employment tribunal. Strict time limits apply to tribunal claims, so check them early rather than waiting. The time limit is short and it runs from the effective date of termination, so it is worth checking the deadline as soon as a problem appears.

Where the employer is insolvent, statutory redundancy pay can be claimed from the Redundancy Payments Service through GOV.UK. That route exists precisely for the situation where the employer cannot or will not pay. For free advice on redundancy and on the tribunal process, Acas provides free advice and operates early conciliation before an employment tribunal claim. Citizens Advice can also help. Early conciliation is a step that must be completed before most tribunal claims can proceed, and Acas can explain how it works. This page does not give legal advice and does not tell anyone whether to accept an offer or sign a settlement agreement. Free specialist help is the right place for a decision of that kind.

Where to check the numbers

GOV.UK publishes a statutory redundancy pay calculator, which is the quickest way to check a figure. The limits are set out in the annual Increase of Limits Order, and the calculation itself sits in section 162 of the Employment Rights Act 1996, with entitlement in sections 155 to 162. If you want to check the source rather than a calculator, those are the places to look. The 2026/27 limits were set by the Employment Rights (Increase of Limits) Order 2026, SI 2026/310.

Northern Ireland sets separate limits. From April 2026 the Northern Ireland limit is 783 pounds a week, with a maximum payment of 23,490 pounds, and it is administered through nidirect rather than GOV.UK. If your employment is in Northern Ireland, use those figures rather than the ones in the table above. For free advice on your own situation, Acas and Citizens Advice both provide help at no cost, and a trade union or a solicitor can advise on a contract or an enhanced scheme that pays more than the statutory minimum.

Source: GOV.UK: redundancy, your rights.

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Frequently asked questions

What is the maximum statutory redundancy payment from 6 April 2026?

The maximum is 22,530 pounds. It is reached at 20 years of service at one and a half weeks a year with weekly pay at or above the cap of 751 pounds, which is 20 multiplied by 1.5 multiplied by 751.

What was the cap before 6 April 2026?

For employment ending between 6 April 2025 and 5 April 2026 the cap on a week's pay was 719 pounds, giving a maximum statutory payment of 21,570 pounds.

How many years of service count towards statutory redundancy pay?

Only complete years of service count, and service is capped at the most recent 20 years. You also need at least two years of continuous service with the same employer to qualify at all.

How much of a redundancy payment is tax free?

The first 30,000 pounds of a genuine redundancy payment is free of income tax and National Insurance. Above that, income tax applies. Payment in lieu of notice is treated as earnings and is taxable, and holiday pay and unpaid wages are taxed as normal earnings.

Which cap applies if notice straddles early April 2026?

The cap is fixed by the date the employment ends, not the date the money arrives. A termination on 5 April 2026 uses the 719 pound cap, and a termination on 6 April 2026 or later uses the 751 pound cap. The relevant date is the effective date of termination.