What is the redundancy pay cap in the UK?

Statutory redundancy pay in the UK is subject to two caps. First, the weekly pay cap — your actual weekly pay is capped at £751 (for the tax year 2026/27; this figure is reviewed each April). Even if you earn £2,000 per week, only £751 is used in the redundancy pay calculation. Second, the years of service cap — a maximum of 20 years is counted, regardless of how long you have actually worked for the employer.

The formula is: complete years of service (up to 20) × weekly pay (up to £751) × age multiplier (0.5 for under-22 service years, 1 for 22–40, 1.5 for 41 and over). The absolute maximum statutory payment is therefore £22,530: 20 years × £751 × 1.5. This maximum applies to someone who is 61+ with 20 or more years of service all worked aged 41 or over.

Enhanced redundancy schemes paid by employers are not subject to these statutory caps — they can use your actual salary and count more years of service. Enhanced payments above the statutory amount can still benefit from the £30,000 tax-free threshold on total termination payments.