Getting your redundancy pay right

Redundancy comes with a set of numbers, and knowing how they are worked out helps you check you get what you are owed and plan what comes next. Those numbers follow rules that the government publishes. These notes set out the rules for employees in England, Scotland and Wales. Northern Ireland has its own rules, which nidirect explains.

Statutory redundancy pay

You normally qualify for statutory redundancy pay if you are an employee and have worked for your employer for 2 years or more. The amount depends on your age during each full year of work.

Half a week's pay for each full year you were under 22.
One week's pay for each full year you were 22 or older, but under 41.
One and a half weeks' pay for each full year you were 41 or older.

Length of service is capped at 20 years. A week's pay is your average over the 12 weeks before you got your redundancy notice. For redundancies on or after 6 April 2026, a week's pay is capped at £751. That makes the most statutory redundancy pay anyone can get £22,530. You have 6 months from the date your job ends to claim it. GOV.UK has a calculator for the exact amount.

Notice and notice pay

The law sets a minimum notice period. It is at least one week if you have worked there between one month and 2 years. Between 2 and 12 years, it is one week for each full year. After 12 years it is 12 weeks. Your contract can give you more than this.

Your employer should either pay you through your notice period or pay you in lieu of notice. Payment in lieu means you get all the basic pay you would have earned during the notice period.

Tax on the payment

You do not usually pay tax on the first £30,000 of statutory redundancy pay, enhanced redundancy pay and non-cash benefits, added together. Anything above £30,000 is taxed.

You pay tax and National Insurance on holiday pay, unpaid wages and bonuses. The same goes for pay in lieu of notice. Your employer takes the tax through the payroll, in your final payslip. If the payment comes after your P45, your employer uses a 0T tax code.

Your next job

Your employer may offer you a suitable job elsewhere in the organisation. You have the right to a 4-week trial in it. If you turn down a suitable job without good reason, you may lose your statutory redundancy pay.

Once you have 2 years' service by the end of your notice, you can take a reasonable amount of time off to look for work. The most your employer has to pay you for that time is 40% of one week's pay.

Jobcentre Plus has a Rapid Response Service that helps with job hunting and training, during your notice and for up to 13 weeks after.

Settlement agreements and free help

Some employers offer a settlement agreement alongside a redundancy payment. Acas explains that you must get advice from an independent adviser for the agreement to be legally valid. The adviser must be insured and named in the agreement.

Acas runs a helpline for questions about your own situation.

If the process does not seem fair

Your employer must choose people for redundancy in a fair way. They cannot select you because of your age, sex, disability or pregnancy, or for several other protected reasons.

You are entitled to be consulted about why you are being made redundant and about the alternatives. When 20 to 99 people are being made redundant, consultation must start at least 30 days before the first dismissal. For 100 or more, it must start at least 45 days before. You can claim at an employment tribunal if your employer does not consult properly.

If your employer is insolvent, you can apply through GOV.UK for money you are owed.