Redundancy Pay If You Earn Over £719 Per Week
If your gross weekly pay exceeds the statutory cap — £719 in England, Scotland and Wales, or £749 in Northern Ireland — the redundancy pay formula does not use your actual earnings. Instead, your pay is capped at the applicable figure for the 2025/26 tax year. This guide explains how the cap works, who it affects, and what options you may have to secure a better package.
Understanding the weekly pay cap
Statutory redundancy pay in the UK is calculated by multiplying a fraction of your weekly pay by the number of qualifying years of service. However, the government imposes a cap on the weekly pay figure used in this calculation. For the 2025/26 tax year, that cap is £719 per week in England, Scotland and Wales, and £749 per week in Northern Ireland.
This means that no matter how much you earn — whether £40,000 or £400,000 per year — your statutory redundancy entitlement is calculated as if you earn the cap amount. The cap applies to the weekly pay figure only; the number of years of service (up to 20) and the age-based multipliers remain the same for everyone.
Northern Ireland: If you work in Northern Ireland, the weekly pay cap is £749 rather than £719. This higher cap means the threshold salary is approximately £38,948 per year. Use our Northern Ireland calculator for NI-specific rates.
What annual salary does the cap represent?
The £719 weekly cap (England, Scotland and Wales) translates to an annual salary of approximately £37,388. The £749 cap in Northern Ireland equates to roughly £38,948. If your annual gross salary is above the applicable figure, you are affected by the cap.
To put this in context, the median full-time salary in the UK is around £34,963 (ONS data for 2024), so the cap affects roughly the upper half of full-time earners. For professionals, managers and those in London and the South East, the cap is particularly likely to bite.
How the cap affects your redundancy pay
The impact of the cap increases with salary. Here are some examples for an employee with 10 years of service, all aged 41 and over (so attracting the 1.5 multiplier for each year):
| Annual salary | Actual weekly pay | Weekly pay used (capped) | Statutory redundancy pay | Shortfall vs uncapped |
|---|---|---|---|---|
| £35,000 | £673.08 | £673.08 (below cap) | £10,096.20 | None |
| £45,000 | £865.38 | £719.00 | £10,785.00 | £2,195.70 |
| £60,000 | £1,153.85 | £719.00 | £10,785.00 | £6,522.75 |
| £80,000 | £1,538.46 | £719.00 | £10,785.00 | £12,291.90 |
| £100,000 | £1,923.08 | £719.00 | £10,785.00 | £18,061.20 |
As you can see, someone earning £100,000 per year receives exactly the same statutory redundancy pay as someone earning £45,000. The shortfall for the higher earner is over £18,000 compared to what they would receive if the cap did not exist.
Why does the cap exist?
The weekly pay cap serves several purposes from the government's perspective:
- Cost control for employers: Without a cap, the statutory redundancy liability for businesses would be significantly higher, particularly for those employing well-paid staff. This could discourage employers from hiring or cause financial hardship during restructuring.
- Proportionality: The view is that higher earners typically have greater savings, more marketable skills and better access to professional networks, so they are considered less reliant on statutory redundancy pay as a financial safety net.
- Simplicity: A fixed cap makes the calculation straightforward and predictable for both employers and employees.
While these arguments have some merit, they are little comfort to an employee whose statutory payment falls far short of their actual financial commitments. This is why many employers — particularly larger organisations — offer enhanced redundancy terms that remove or increase the cap.
How the cap is updated
The weekly pay cap is reviewed annually and typically increases each April. The increase is usually linked to the Retail Prices Index (RPI). For context, recent changes have been:
| Tax year | Weekly pay cap | Annual equivalent |
|---|---|---|
| 2021/22 | £544 | £28,288 |
| 2022/23 | £571 | £29,692 |
| 2023/24 | £643 | £33,436 |
| 2024/25 | £719 | £37,388 |
While the cap has increased over time, it has not kept pace with salary growth at the upper end of the market. The gap between the cap and the actual earnings of higher-paid employees continues to widen in real terms.
What options do higher earners have?
If you earn above the weekly pay cap, you are not necessarily limited to the statutory minimum. There are several ways you may receive more:
1. Contractual redundancy pay
Check your employment contract, staff handbook and any collective agreements. If your employer has committed to an enhanced redundancy scheme that uses your actual salary (without the statutory cap), you are legally entitled to this higher amount. Many large employers, particularly in financial services, the public sector and professional services, operate uncapped schemes.
Read more in our guide to statutory vs contractual redundancy pay.
2. Negotiation
Even where there is no contractual entitlement to enhanced pay, many employers are willing to negotiate. This is especially true if:
- Your employer wants you to leave quickly and without dispute
- You are being asked to sign a settlement agreement (which waives your right to bring tribunal claims)
- You have been with the company a long time and your departure affects team knowledge or client relationships
- The redundancy process has not been handled perfectly and the employer wants to avoid a potential claim
If you are offered a settlement agreement, you will be entitled to take legal advice (your employer must contribute towards the cost). Use this opportunity to discuss whether the financial terms can be improved.
3. Notice pay
Remember that redundancy pay and notice pay are separate entitlements. Your statutory or contractual notice period pay is based on your actual earnings, not the capped amount. If you have a long contractual notice period (for example, three or six months), this can add a significant sum on top of your redundancy payment.
4. Other elements of your package
Beyond the headline redundancy figure, there may be other valuable elements you can negotiate:
- Payment for accrued but untaken holiday
- Extended private medical insurance cover
- Pension contributions during your notice period
- Outplacement support and career coaching
- An agreed reference
- Retention of company equipment (laptop, phone)
Should higher earners take legal advice?
If you are a higher earner facing redundancy, taking specialist employment law advice is strongly recommended. The cost of a brief consultation (often £200–£500) can be well worth it given the sums involved. An employment solicitor can:
- Review your contract for any enhanced redundancy entitlements you may have missed
- Advise whether the redundancy process has been fair and lawful
- Help you negotiate a better exit package
- Review and advise on any settlement agreement
If you are being asked to sign a settlement agreement, you have a legal right to independent advice, and your employer must pay a contribution towards the cost (typically £250–£500 plus VAT).
You can also learn more about the maximum statutory redundancy payment and how the cap interacts with the overall maximum.
Calculate your statutory redundancy pay
Even if the cap affects you, it is useful to know your statutory entitlement as a baseline. Use our free calculator for an instant result.
Go to the Calculator