If you're made redundant, you have legal rights to certain payments and protections. How much you receive depends on your age, length of service, and weekly pay. Many employers offer more than the statutory minimum, but understanding the baseline helps you assess whether any offer is fair.
Statutory redundancy pay
You qualify for statutory redundancy pay if you've been continuously employed for at least two years. The calculation uses your age, length of service, and weekly pay (capped at £643 per week for 2025/26):
Under 22: half a week's pay for each full year of service.
Aged 22-40: one week's pay for each full year of service.
Aged 41 and over: one and a half weeks' pay for each full year of service.
Maximum service counted is 20 years. So the maximum statutory redundancy pay is 30 weeks' pay (if you're over 41 with 20+ years' service), which at the current cap works out to £19,290.
The calculation is based on your age at the date of redundancy and your complete years of service, working backwards from the redundancy date. The GOV.UK redundancy pay calculator does this automatically — it's worth checking even if your employer has done the sums, as mistakes happen.
Enhanced redundancy pay
Many employers offer more than the statutory minimum, particularly larger organisations with established redundancy policies. Enhanced packages might multiply the statutory formula (e.g., double statutory), remove the weekly pay cap, add extra months' pay, or include outplacement support.
If your employer offers an enhanced package, check your contract and any company policies — you may have a contractual right to enhanced pay rather than it being discretionary. This matters because contractual rights are enforceable; discretionary payments are not.
Notice period
Separately from redundancy pay, you're entitled to a notice period (or pay in lieu of notice). Statutory minimum notice is one week per year of service, up to a maximum of 12 weeks. Your contract may specify a longer notice period — the longer of contractual or statutory applies.
During your notice period, you're still employed and should receive your normal pay including any benefits. If your employer asks you to leave immediately and pays you in lieu of notice (PILON), this is taxable as normal earnings.
Consultation requirements
Your employer has legal obligations around the redundancy process. If they're making 20 or more employees redundant at one establishment within 90 days, they must collectively consult with employee representatives for at least 30 days before any dismissals (45 days if 100+ redundancies). Individual consultation should happen regardless of numbers.
The employer must consider alternatives to redundancy, apply fair selection criteria, and offer suitable alternative employment if available. If you believe the process was unfair, you may have grounds for an unfair dismissal claim — seek advice from ACAS or Citizens Advice.
Tax on redundancy pay
Statutory redundancy pay is tax-free. Enhanced redundancy pay is also tax-free up to £30,000. The first £30,000 of any redundancy payment (above statutory) is exempt from income tax and National Insurance. Anything above £30,000 is taxed as normal income.
Pay in lieu of notice is treated differently — it's fully taxable as earnings. Holiday pay for accrued but untaken leave is also taxable. Bonuses and commission payments are taxable too. Make sure your employer separates these elements correctly on your final payslip.
What to do when you're made redundant
Check your contract for notice periods and any enhanced redundancy terms. Use the GOV.UK calculator to verify the statutory amount. Ask your employer to provide a written breakdown of everything included in your redundancy package — statutory pay, enhanced pay, notice pay, holiday pay, and any other elements.
Sign nothing immediately. If you're asked to sign a settlement agreement (which typically waives your right to bring an employment tribunal claim), you're entitled to independent legal advice — your employer usually pays for this. The settlement amount may be negotiable, particularly if you have grounds to argue the process was flawed.
Register with HMRC for any benefits you may be entitled to. Jobseeker's Allowance or Universal Credit may be available depending on your circumstances. You can claim from day one — don't wait until your redundancy money runs out.
Redundancy while on maternity leave
If you're on maternity leave and your role is made redundant, you have enhanced rights. Your employer must offer you a suitable alternative vacancy if one exists, giving you priority over other employees. This protection extends from when your employer notifies you of potential redundancy until 18 months after childbirth. If your employer fails to offer a suitable alternative that exists, the redundancy could be automatically unfair.