Redundancy Rights and Money UK — What You're Entitled To

Being made redundant is stressful. Knowing your rights helps you navigate the process.

Redundancy Pay Entitlement

Statutory Redundancy Pay

Age When Made Redundant	Per Year of Service
Under 22	Half a week’s pay
22-40	One week’s pay
41 and over	1.5 weeks’ pay

Weekly Pay Cap

Year	Maximum Weekly Pay
2024-25	£700
Maximum years counted	20
Maximum statutory payout	£21,000

Example Calculations

Scenario	Calculation	Payout
Age 30, 5 years service, £600/week	5 × £600	£3,000
Age 45, 10 years service, £700/week	(5 × £700) + (5 × £1,050)	£8,750
Age 50, 20 years service, £800/week (capped £700)	(10 × £700) + (10 × £1,050)	£17,500

Who Qualifies

Requirement	Details
Employee status	Not self-employed or contractor
Minimum service	2 years continuous employment
Genuine redundancy	Role disappearing, not you being dismissed

Who Doesn’t Qualify

Situation	Redundancy Pay?
Under 2 years service	No statutory entitlement
Turned down suitable alternative	May lose entitlement
Fixed-term contract ended	Depends on circumstances
Dismissed for misconduct	No

Enhanced Redundancy Pay

Contractual vs Statutory

Type	Details
Statutory	The legal minimum
Contractual/enhanced	Employer pays above statutory
Common enhancements	2-4 weeks per year, higher cap

Negotiating Enhanced Terms

Factor	May Increase Package
Long service	Loyalty premium
Senior role	Higher expectations
Specialist skills	Harder to replace
Voluntary redundancy	Often more generous
Good relationship	Goodwill payments

Notice Periods

Statutory Minimum Notice

Length of Service	Minimum Notice
1 month - 2 years	1 week
2-12 years	1 week per year
12+ years	12 weeks

Contractual Notice

Consider	Details
Check your contract	May be longer than statutory
Enhanced notice common	For senior roles
You’re entitled to	Whichever is longer

Notice Options

Option	Details
Work your notice	Keep working, keep getting paid
Garden leave	At home but still employed
PILON	Payment in lieu of notice (paid lump sum)

Tax on Redundancy

Tax-Free Element

Component	Tax Status
First £30,000 redundancy	Tax-free
Above £30,000	Taxed as income
Wages/holiday pay	Fully taxed
Notice pay (worked)	Fully taxed
PILON (if contractual)	Usually fully taxed

What Counts Toward £30,000

Tax-Free	Taxable
Statutory redundancy	Outstanding salary
Enhanced redundancy (up to £30k)	Holiday pay
Ex-gratia payments	Commission
Compensation for loss of office	Benefits in kind

Example: £45,000 Package

Component	Amount	Tax Status
Statutory redundancy	£8,000	Tax-free
Enhanced redundancy	£30,000	£22,000 tax-free, £8,000 taxed
Holiday pay	£2,000	Fully taxed
Notice pay	£5,000	Fully taxed

Your Rights During Redundancy

Consultation

Redundancies	Consultation Period
Under 20	No minimum
20-99	30 days
100+	45 days

What Consultation Should Include

Requirement	Details
Inform and consult	On reasons, numbers, methods
Selection criteria	Must be fair and objective
Alternative employment	Employer must consider
Right to be accompanied	To meetings

Unfair Selection

Unfair Criteria	Legal Protection
Pregnancy/maternity	Protected
Part-time/fixed-term	Protected
Union membership	Protected
Whistleblowing	Protected
Discrimination	Protected

What You Should Receive

Final Pay Package

Component	What to Check
Redundancy pay	Statutory + any enhanced
Notice pay	Worked or PILON
Outstanding wages	Up to leaving date
Holiday pay	Accrued but untaken
Commission/bonus	Check contract for entitlement
Pension	What happens to contributions

Documents to Request

Document	Why You Need It
P45	For next employer/HMRC
Reference	For job applications
Pension statement	Transfer/options
Written redundancy terms	For your records

Financial Steps After Redundancy

Immediate Actions

Step	Action
1	Check final pay is correct
2	Claim benefits if needed
3	Review budget urgently
4	Contact creditors if struggling
5	Update CV and start job search

Benefits You Can Claim

Benefit	Details
Universal Credit	Apply immediately
New-style JSA	If paid enough NI
Council Tax Support	Apply to council
Free prescriptions	If on UC

Redundancy Pay and Benefits

Question	Answer
Does redundancy affect UC?	Savings from redundancy count toward capital
Capital limit	Over £16,000 = no UC
£6,000-£16,000	Assumed tariff income
Under £6,000	No effect

Using Your Redundancy Pay

Priority	What
1	Emergency fund (3-6 months expenses)
2	Clear high-interest debt
3	Job search expenses
4	Retraining if needed
5	Don’t make major purchases immediately

Summary: Redundancy Checklist

When First Told

Action	Done
Get details in writing	☐
Check selection criteria	☐
Check consultation requirements	☐
Ask about alternatives	☐
Consider taking advice	☐

Before Leaving

Action	Done
Calculate redundancy entitlement	☐
Check notice period (statutory vs contract)	☐
Calculate final pay due	☐
Request reference	☐
Check pension options	☐
Understand tax implications	☐

After Leaving

Action	Done
Check final pay received	☐
File P45	☐
Apply for benefits if needed	☐
Budget on reduced income	☐
Start job search	☐

Key Numbers

Figure	Amount
Weekly pay cap	£700
Maximum statutory payout	£21,000
Tax-free threshold	£30,000
Minimum service for redundancy	2 years

Redundancy doesn’t have to mean financial crisis. Know your rights, check your entitlements, and plan your next steps carefully.