New Statutory Redundancy Pay Rates 2026: What Employers Need to Budget For

New Redundancy Pay Limits for Employers from April 2026

Employers planning redundancies in 2026 should be aware that the statutory redundancy pay limits increased on 6 April 2026.

While the qualifying rules remain unchanged, the increase in the statutory weekly pay cap means redundancy exercises may cost more than they would have during the previous tax year.

Whether you’re making a single role redundant or undertaking a larger restructuring programme, understanding the new limits can help you budget accurately and avoid costly payroll errors.

2026 Statutory Redundancy Pay Rates

The annual increase affects two key figures used when calculating statutory redundancy pay.

The 2026 increase means:

• Weekly pay cap increased by £32
• Maximum statutory redundancy payment increased by £960
• Higher redundancy costs for employees whose weekly earnings exceed the statutory cap

Although the increase appears modest, the additional cost can become significant when multiple employees are affected.

What Has Changed?

Statutory redundancy pay is based on an employee’s:

• Age
• Length of continuous service
• Weekly pay (up to the statutory maximum)

From 6 April 2026, employers must use a maximum weekly wage of £751 when calculating statutory redundancy pay.

For example:

• Employee earns £650 per week – calculate redundancy using £650.
• Employee earns £900 per week – calculate redundancy using the statutory cap of £751.

Using the previous year’s cap could result in underpaying employees and exposing the business to potential employment tribunal claims.

Which Employees Are Affected?

The increased statutory limits apply where employees:

• Have at least two years’ continuous service
• Are employees rather than self-employed contractors
• Are dismissed by reason of redundancy
• Have an effective date of termination on or after 6 April 2026

It is the date employment ends, not when consultation begins, that determines which statutory rates apply.

Budgeting for a Redundancy Programme

When employers are considering organisational change, redundancy costs are often one of the largest direct expenses.

Alongside statutory redundancy pay, employers should also budget for:

• Outstanding holiday pay
• Notice pay
• Enhanced contractual redundancy payments (where applicable)
• Pension contributions
• Payroll and National Insurance implications where relevant
• HR and legal support costs

Calculating these costs early helps businesses make informed financial decisions before beginning consultation.

Avoid Manual Calculation Errors

Redundancy calculations become increasingly complex where employees:

• Have long service
• Cross multiple age bands
• Earn above the statutory cap
• Have varying weekly pay

Manual calculations using spreadsheets increase the risk of mistakes, particularly during larger redundancy exercises.

Our Statutory Redundancy Calculator automatically applies:

• The latest 2026 statutory weekly pay cap
• Age-related multipliers
• Continuous service rules
• The 20-year statutory service limit

Whether you’re budgeting for one redundancy or several, the calculator provides an instant estimate of statutory redundancy costs.

Use our free Redundancy Calculator to estimate your redundancy liabilities before beginning consultation.

Why Accurate Calculations Matter

Employers have a legal obligation to pay eligible employees at least their statutory redundancy entitlement.

Incorrect calculations can lead to:

• Underpayments
• Employee grievances
• Employment Tribunal claims
• Delays to redundancy programmes
• Additional payroll administration

Checking redundancy costs before issuing notices helps ensure compliance and provides greater certainty during organisational change.

Frequently Asked Questions

When do the new redundancy rates apply?

The new statutory redundancy pay limits apply where the employee’s effective date of termination is on or after 6 April 2026.

What is the statutory weekly pay cap for 2026?

The weekly pay cap increased from £719 to £751.

What is the maximum statutory redundancy payment?

The maximum statutory redundancy payment increased from £21,570 to £22,530.

Do employers have to pay enhanced redundancy pay?

No. Employers only have to pay statutory redundancy pay unless an enhanced redundancy scheme is provided through the employment contract, workplace policy or collective agreement.

Can employers use a redundancy calculator before consultation?

Yes. Estimating statutory redundancy costs before consultation helps businesses understand the financial impact of proposed restructures, budget more accurately and plan workforce changes.

Key Takeaways

• Statutory redundancy pay limits increased on 6 April 2026.
• The weekly pay cap is now £751.
• The maximum statutory redundancy payment increased to £22,530.
• The effective date of termination determines which year’s rates apply.
• Employers should update payroll calculations and redundancy templates to reflect the new statutory limits.
• Using a redundancy calculator helps employers estimate costs quickly and reduce the risk of calculation errors during redundancy exercises.