A redundancy package contains several separate elements:

• statutory redundancy pay
• enhanced redundancy pay
• salary to termination
• notice pay
• accrued holiday pay
• bonus or commission
• benefits
• additional compensation under a settlement agreement

Ask for an itemised calculation. Employers frequently present the total as though it were all compensation.

Statutory redundancy pay

Eligibility normally requires:

• employee status
• at least two years’ continuous employment
• dismissal by reason of redundancy
• no unreasonable refusal of suitable alternative employment

The formula uses completed years of service (capped at 20), your age during each year, and gross weekly pay subject to the statutory cap:

• half a week’s pay for each completed year under age 22
• one week’s pay for each year aged 22 to 40
• one and a half weeks’ pay for each year aged 41 or over

Figures last reviewed [date]. Applies where the relevant date falls on or after 6 April 2026.

Enhanced redundancy pay

A larger entitlement may arise under:

• your contract
• a redundancy policy
• a collective agreement
• a consistently applied custom and practice
• a discretionary scheme offered in a particular exercise

Check whether the scheme:

• uses actual salary or the capped week’s pay
• recognises more than 20 years’ service
• applies an enhanced multiplier
• requires you to sign a settlement agreement
• excludes employees who take an alternative role
• reserves the employer’s right to withdraw or change it

Common formulas include using actual weekly pay instead of the cap, multiplying the statutory formula, or paying a month’s salary per year of service.

Notice pay

Redundancy carries an entitlement to notice — contractual or statutory minimum, whichever is longer. Statutory minimum is one week for between one month and two years’ service, then one week per completed year up to a maximum of twelve.

You may work notice, be placed on garden leave, or receive payment in lieu.

Check how termination affects pension, private medical insurance, company car, commission, bonus, shares and other benefits during the notice period.

Holiday, bonus and commission

Accrued but untaken statutory holiday must be paid when employment ends.

Bonus and commission entitlement depends on the scheme wording, whether it is contractual or discretionary, whether you must remain employed at the payment date, treatment during notice or garden leave, whether targets were met, and how any discretion was exercised.

Tax

Statutory redundancy pay and qualifying enhanced redundancy compensation fall within the combined £30,000 termination payment exemption. Salary, holiday pay, notice pay and PENP are taxable as earnings in full and do not count towards the threshold. See our settlement agreement tax page.