Redundancy FAQs

The maximum statutory redundancy payment for 2024/25 is £21,570. This applies if you:

• Are aged 41 or over
• Have 20 or more years of service
• Earn at least £719 per week

The calculation is: 20 years multiplied by 1.5 weeks multiplied by £719, which equals £21,570. Many employers offer enhanced packages above this statutory minimum, which can significantly increase your total payout.

You qualify for statutory redundancy pay if you:

• Are an employee (not a contractor or agency worker)
• Have at least two years of continuous service with your employer
• Are being dismissed due to genuine redundancy

Redundancy means your employer needs fewer employees to do work of a particular kind. It does not apply if you are dismissed for performance, conduct, or other non-redundancy reasons. Fixed-term contract employees also qualify if they meet these criteria.

The weekly pay cap for statutory redundancy calculations is £719 for 2024/25. This means even if you earn more than £719 per week, your statutory redundancy pay is calculated using £719 as your weekly amount. The cap typically increases each April.

Note that enhanced redundancy packages offered by your employer may use your actual salary without any cap, giving higher earners a larger payout.

No, you do not qualify for statutory redundancy pay if you have worked for your employer for less than two years. However, your employer may still offer an ex-gratia payment or enhanced redundancy package voluntarily.

Check your employment contract or company policy, as some employers provide payments regardless of service length. You still have other rights, including notice pay, holiday pay for untaken leave, and protection against unfair dismissal in certain circumstances.

Statutory redundancy pay is based on your gross weekly pay before any deductions such as tax, National Insurance, pension contributions, or student loan repayments. However, your gross pay is capped at £719 per week for statutory calculations.

If your employer offers enhanced redundancy, the terms of that scheme will specify whether it uses gross or net pay and whether any cap applies.

Your employer should pay your statutory redundancy payment on or before your last day of employment, or on your normal pay date if that falls after your leaving date.

If your employer fails to pay, you should first raise this with them in writing. If they still do not pay, you can make a claim to an employment tribunal within six months of your employment ending. Your employer cannot withhold redundancy pay even if there are disputes about other matters.

No, your employer cannot pay less than the statutory redundancy amount if you are entitled to it. Statutory redundancy pay is a legal minimum set by the Employment Rights Act 1996. However, your employer can offer more through enhanced redundancy terms in your contract or company policy.

If your employer refuses to pay the statutory minimum, you can bring a tribunal claim to recover the amount owed.

Yes, your employer can make you redundant while you are on sick leave, but only if the redundancy is genuine. Being on sick leave does not protect you from redundancy. However, your employer must still follow a fair process, including proper consultation.

If you are selected for redundancy because of your sickness absence, and your illness is related to a disability, this could amount to disability discrimination. You should not be disadvantaged in selection scoring because of disability-related absences.

If you are on maternity leave and your role is made redundant, you have special protection under UK law. Your employer must offer you any suitable alternative vacancy before offering it to other employees. This is a stronger right than other employees have during redundancy.

If your employer fails to offer you a suitable available role, the dismissal may be automatically unfair. The same protection applies if you are on adoption leave or shared parental leave.

You can request to be considered for alternative roles within the organisation, and your employer should consider this as part of the consultation process. However, you cannot simply refuse redundancy if no suitable alternative exists.

If you unreasonably refuse a suitable alternative role, you may lose your entitlement to statutory redundancy pay. What counts as suitable depends on factors including the work involved, pay, location, and your skills. You have a right to a four-week trial period in any alternative role offered.

If you have two or more years of continuous employment, you have a statutory right to reasonable paid time off during your notice period to look for new work or arrange training (ERA 1996 s.52). The law does not specify exact hours – what is “reasonable” depends on your circumstances.

If your employer unreasonably refuses your request, you can bring a tribunal claim. Important: The maximum compensation a tribunal can award for unreasonable refusal is 40% of one week’s pay (ERA 1996 s.53). This is the maximum tribunal remedy, not a guaranteed entitlement – there is no automatic right to a specific percentage of your pay.

You should give your employer reasonable notice of when you need time off and, if asked, provide evidence of job interviews or training appointments.

Unfair redundancy occurs when your employer fails to follow a fair process or selects you for discriminatory or prohibited reasons. Examples include:

• Being selected because of pregnancy, maternity, trade union membership, whistleblowing, or asserting statutory rights
• Having no meaningful consultation
• Using subjective or inconsistent selection criteria
• Not considering alternative employment
• Not following the company’s own redundancy policy

If you have two years of service, you can claim unfair dismissal. Some reasons are automatically unfair regardless of your length of service.

The first £30,000 of genuine redundancy pay is tax-free. This includes both statutory redundancy pay and any enhanced redundancy payment from your employer. You only pay Income Tax on amounts exceeding £30,000, taxed at your marginal rate (20%, 40%, or 45% depending on your total income).

Importantly, redundancy pay over £30,000 is not subject to employee National Insurance, only Income Tax. Note that other payments like notice pay and holiday pay are taxed separately as normal earnings.

The £30,000 tax-free threshold is a limit set by HMRC for genuine redundancy payments. Any statutory or enhanced redundancy pay up to £30,000 is completely exempt from Income Tax and National Insurance.

Amounts above £30,000 are subject to Income Tax but not employee National Insurance. This threshold applies per redundancy event, not per tax year, so you can claim it again if you are made redundant by a different employer later. The threshold has remained at £30,000 since 1988.

Yes, notice pay is always taxable in full as normal earnings. This applies whether you work your notice period or receive payment in lieu of notice (PILON).

Since April 2018, all notice pay is subject to Income Tax and National Insurance, regardless of what your contract says. This includes contractual PILON, non-contractual PILON, and garden leave payments. Notice pay does not count towards your £30,000 tax-free redundancy allowance. Your employer will deduct tax and NI through PAYE before paying you.

Enhanced redundancy pay is taxed the same way as statutory redundancy pay. The first £30,000 of your combined statutory and enhanced redundancy payment is tax-free. Any amount above £30,000 is subject to Income Tax at your marginal rate but exempt from employee National Insurance.

For example, if you receive £10,000 statutory and £35,000 enhanced redundancy pay, your total is £45,000. The first £30,000 is tax-free, and you pay Income Tax on the remaining £15,000.

The minimum length depends on the scale of redundancies:

• Individual redundancies (under 20 people): No statutory minimum, but your employer must allow adequate time for meaningful consultation
• 20 to 99 redundancies within 90 days: Collective consultation must last at least 30 days
• 100 or more redundancies: Must last at least 45 days

After consultation, your notice period then applies (1 to 12 weeks depending on service). A typical individual redundancy process takes 2 to 6 weeks in total, though complex situations may take longer.

A settlement agreement (formerly called a compromise agreement) is a legally binding contract between you and your employer. In exchange for certain payments or benefits, you agree to waive your right to bring employment tribunal claims.

Settlement agreements are common in redundancy situations, especially when enhanced packages are offered. You must receive independent legal advice before signing, and your employer typically pays for this. A settlement agreement can be beneficial if you receive more than your statutory entitlements, but you should have the terms reviewed carefully before agreeing.

Usually, yes, unless your employer agrees otherwise. Your employer can require you to work your full notice period. However, many employers offer payment in lieu of notice (PILON), allowing you to leave immediately with pay for your notice period.

Some employers place employees on garden leave, where you remain employed but do not attend work. Check your contract to see what it says about notice. If you leave early without agreement, your employer can deduct the unworked notice period from your final pay.

No, your employer must consult with you before making a final redundancy decision. Consultation is a legal requirement under UK employment law.

For individual redundancies, there is no set minimum period, but consultation must be genuine and meaningful. This means discussing why redundancies are needed, considering your suggestions, and exploring alternatives. Failure to consult properly can make the dismissal unfair, entitling you to compensation. For collective redundancies (20 or more employees), specific consultation periods and procedures apply with penalties for non-compliance.

To appeal, submit your grounds in writing to your employer within any deadline stated in your redundancy letter or company policy. Set out clearly why you believe the decision was unfair, such as errors in selection scoring, failure to consider you for alternative roles, or procedural failures.

Your employer should arrange an appeal meeting with someone more senior than the original decision-maker. You can bring a colleague or trade union representative to this meeting. The appeal outcome should be confirmed in writing. If the internal appeal fails and you believe the redundancy was unfair, you may be able to bring an employment tribunal claim.

You must start the ACAS Early Conciliation process within three months less one day of your dismissal date. For example, if your employment ended on 15 January, you must contact ACAS by 14 April at the latest.

Early Conciliation can add time to this deadline. After Early Conciliation, you generally have one month to submit your tribunal claim. Missing these deadlines usually means you cannot bring a claim, so act promptly if you believe your redundancy was unfair. In very limited circumstances, tribunals can extend time limits, but this is not guaranteed.

If an employment tribunal finds your redundancy was unfair, you may receive a basic award and a compensatory award:

• Basic award: Calculated like statutory redundancy pay (based on age, service, and weekly pay up to £719)
• Compensatory award: Covers financial losses caused by the dismissal, including lost earnings, and is capped at the lower of £115,115 or 52 weeks’ pay for most cases

If you were dismissed for certain automatically unfair reasons, higher or unlimited compensation may apply. Tribunals can also order reinstatement or re-engagement, though this is rare.