❓ Redundancy Pay FAQ

💰 What is statutory redundancy pay?

Statutory redundancy pay is a legal payment you're entitled to if you've been employed continuously for at least 2 years and your employer makes you redundant. The amount depends on your age, length of service (up to 20 years), and weekly pay. As of 2026, the maximum weekly pay used for calculation is capped at £643. This is the minimum you should receive - many employers offer enhanced redundancy packages that exceed the statutory minimum.

✅ Am I eligible for redundancy pay?

To qualify for statutory redundancy pay, you must meet all of these criteria:

• You've been continuously employed for at least 2 complete years
• You're classed as an employee (not a contractor or self-employed)
• You've been dismissed because of redundancy (your job role is no longer needed)
• You haven't been dismissed for misconduct

Part-time employees have the same rights as full-time staff. If you're unsure about your employment status, contact ACAS for free advice.

🧮 How is statutory redundancy pay calculated?

Statutory redundancy pay is calculated based on your age and length of service, using these multipliers:

You can only count a maximum of 20 years' service. Your weekly pay is capped at £643 (2026 rate). For example, if you're 45 years old, earned £500/week, and worked for 10 years, you'd receive: 10 years × 1.5 × £500 = £7,500.

📊 What is the £643 weekly pay cap?

The statutory cap of £643 per week (as of April 2026) is the maximum weekly wage used when calculating statutory redundancy pay. If you earn more than this, your calculation is capped at £643. For example, if your actual weekly pay is £900, the calculation would still use £643. This means the maximum statutory redundancy pay possible is £19,290 (20 years × 1.5 × £643). However, many employers offer enhanced redundancy packages that use your actual salary without a cap.

🆚 What's the difference between statutory and enhanced redundancy pay?

Statutory redundancy pay is the legal minimum your employer must pay if you qualify. It uses the age-based formula with a weekly pay cap of £643. Enhanced (or contractual) redundancy pay is a more generous package offered by some employers, often including:

• Your actual weekly pay without the £643 cap
• Higher multipliers (e.g., 2 weeks' pay per year instead of 1.5)
• Additional payments or benefits
• Payment for employees with less than 2 years' service

Check your employment contract or company handbook to see if you're entitled to enhanced pay.

⏱️ How much notice should I get for redundancy?

Your notice period depends on how long you've worked for your employer. The minimum statutory notice periods are:

Your contract may specify a longer notice period. You should be paid during your notice period. Alternatively, your employer may pay you in lieu of notice (PILON) - a lump sum instead of working your notice.

💷 Is redundancy pay taxed?

The first £30,000 of statutory redundancy pay is tax-free. Any amount over £30,000 is taxed as income. This tax-free allowance applies to your total redundancy package, including any enhanced payments. However, payment in lieu of notice (PILON) and unpaid wages are always taxable. National Insurance is not deducted from redundancy payments. If you receive over £30,000, your employer should explain how the tax will be calculated.

📝 What is a redundancy consultation?

A redundancy consultation is a legal requirement where your employer discusses the redundancy with you before making a final decision. During consultation, your employer should:

• Explain why redundancies are necessary
• Discuss ways to avoid redundancies
• Explain how they'll select employees for redundancy
• Consider alternatives like redeployment to other roles
• Allow you to suggest alternatives

For 20+ redundancies, there are collective consultation rules with minimum timeframes (30-45 days). A fair consultation is crucial - unfair selection can lead to unfair dismissal claims.

🎯 How does my employer select who to make redundant?

Your employer must use a fair, objective selection process. Common selection criteria include:

• Skills, qualifications, and experience
• Performance and attendance records
• Disciplinary records
• Length of service (though this must be balanced with other factors)

It's illegal to select people for redundancy based on protected characteristics (age, gender, race, disability, pregnancy, etc.). If you believe you've been unfairly selected, you may have grounds for an unfair dismissal claim. Get advice from ACAS or a solicitor.

🔄 Can I ask for voluntary redundancy?

Yes! If your employer is planning redundancies, you can request voluntary redundancy. Many employers prefer voluntary redundancies as it's less disruptive and avoids forced job losses. Voluntary redundancy packages are often enhanced (more generous than statutory minimums) to encourage employees to volunteer. However, your employer isn't obliged to accept your request - they might need to keep your specific skills or role. If you're considering volunteering, carefully review the package offered and consider how it affects your future employment prospects and benefits.

⚠️ What if my employer can't afford to pay redundancy?

If your employer becomes insolvent (bankrupt) and can't pay your redundancy, the government's Redundancy Payments Service will pay your statutory entitlement. You can claim up to:

• Statutory redundancy pay
• Up to 8 weeks' unpaid wages (capped at £643/week)
• Outstanding holiday pay
• Notice pay (up to the statutory minimum)

Contact the Insolvency Service or ACAS to make a claim. Unfortunately, enhanced redundancy payments above the statutory amount cannot be claimed from the government.

📞 Where can I get help and advice about redundancy?

Several organizations offer free advice on redundancy:

If you believe you've been unfairly dismissed, you may need to consult an employment solicitor. Many offer free initial consultations.