UK Redundancy Pay 2026/27: What Changed This Year

What changed for statutory redundancy pay in 2026/27?

The main annual change from 6 April 2026 is the statutory weekly-pay cap: it is now £751. Because the formula can count at most 20 years at the 1.5 multiplier, the maximum statutory payment is now £22,530. These figures matter most to workers whose actual weekly pay exceeds the cap; lower-paid workers still use their actual normal weekly pay. Check the current cap against GOV.UK's statutory redundancy pay guidance before relying on it, because the figure is reviewed every April.

The core rules did not change: employees generally still need two years' continuous service; only 20 years count; years worked under 22, from 22 to 40, and from 41 onward use the 0.5, 1 and 1.5 multipliers. The £30,000 tax exemption for qualifying termination payments also remains separate from taxable notice pay. For a full explanation of those durable rules, use the linked evergreen guide rather than treating this annual update as a substitute.

Who qualifies for redundancy pay?

The entitlement and its conditions sit in Part XI of the Employment Rights Act 1996. To receive statutory redundancy pay in the UK, you must:

• Be an employee (not a worker or self-employed contractor)
• Have at least 2 years of continuous employment with the same employer
• Have been dismissed by reason of redundancy
• Not have unreasonably refused a suitable alternative role offered by your employer

Your employer cannot make you redundant and then immediately hire someone else to do the same job — that is not a genuine redundancy and may be unfair dismissal. A genuine redundancy means the business need for your role has diminished or ceased, or the workplace is closing.

How is statutory redundancy pay calculated?

The formula multiplies three factors:

• Service years under age 22: 0.5 week's pay per complete year
• Service years aged 22–40: 1 week's pay per complete year
• Service years aged 41 or over: 1.5 week's pay per complete year

Only the last 20 years of service count. Weekly pay is capped at £751 (2026/27 — reviewed annually each April 6). The maximum payment is therefore 20 years × 1.5 × £751 = £22,530 for service entirely after age 41.

Is redundancy pay taxable?

The first £30,000 of total qualifying termination payments is free of income tax. Statutory redundancy pay counts toward this threshold, as does any enhanced (ex gratia) redundancy pay. The £30,000 exemption applies to the combined total — if you receive £15,000 statutory pay and £20,000 enhanced pay, £5,000 is taxable.

Importantly, notice pay is excluded from the £30,000 exemption. Pay in lieu of notice (PILON) is always fully taxable as earnings and subject to income tax and National Insurance, regardless of whether it is contractual or non-contractual. HMRC's Employment Income Manual (EIM13876) confirms post-employment notice pay “does not benefit from the £30,000 threshold in section 403 ITEPA 2003”, and the exemption itself sits in s.403 ITEPA 2003.

What if your employer refuses to pay?

If your employer is insolvent or simply refuses to pay, you have options:

• Employment Tribunal: You have 6 months from the effective date of termination (the date your employment ended) to bring a tribunal claim for unpaid redundancy pay.
• Insolvency Service (National Insurance Fund): If your employer is insolvent, you can apply directly to the government to pay your statutory redundancy entitlement via the Redundant Employees Lump Sum Payments Scheme — GOV.UK sets out what you can claim.
• ACAS early conciliation: Before filing a tribunal claim, you must contact Acas to attempt early conciliation — this is mandatory and often resolves disputes faster than formal proceedings.

Collective redundancy: when 20 or more people are affected

If your employer proposes to make 20 or more employees redundant at the same establishment within 90 days, additional rules apply:

• 20–99 redundancies: employer must begin collective consultation at least 30 days before the first dismissal
• 100+ redundancies: minimum 45-day consultation period
• The employer must also notify the Insolvency Service via a HR1 form

Failure to collectively consult entitles each affected employee to a protective award of up to 90 days' pay — awarded by the Employment Tribunal.

Redundancy vs dismissal: what is the difference?

Redundancy is a specific type of dismissal defined in the Employment Rights Act 1996 (s.139). A dismissal is a redundancy only if it is caused by:

• The employer ceasing to carry on the business
• The employer ceasing to carry on the business at the place where the employee was employed
• The requirement for employees to carry out a particular kind of work having diminished or ceased

If your employer dismisses you for conduct or performance while calling it a "redundancy," that is likely unfair dismissal — not a genuine redundancy. The selection process must also be fair: employers must not use discriminatory criteria (age, sex, pregnancy) for selection.

Key checklist before accepting redundancy

• Confirm you have been formally placed at risk and given notice of the proposed redundancy
• Check your contract for any enhanced redundancy provisions
• Calculate your statutory entitlement using the official formula
• Ask for the selection criteria in writing and challenge any that seem unfair
• Explore whether suitable alternative roles exist within the organisation
• Consider consulting an employment solicitor if the package seems low or the process unfair
• Do not sign a settlement agreement without independent legal advice (your employer should pay for this)