Statutory vs enhanced redundancy
At a glance
| Statutory minimum | Typical enhanced | |
|---|---|---|
| Weekly pay | Capped at £751 | Often uncapped (your actual gross) |
| Service ceiling | 20 years | Often uncapped |
| Age-band formula | 0.5 / 1 / 1.5 weeks | Often flat 2-4 weeks per year |
| Maximum payout | £22,530 | No statutory ceiling |
| Tax treatment | Tax-free in full | Stacks with statutory in £30k slice; excess taxable |
| Contractual? | Always | Depends on the scheme document |
| Discretionary? | No | Often yes, unless custom-and-practice has hardened it |
When an enhanced scheme is contractually binding
A scheme written into your contract of employment or staff handbook, applied consistently to a class of employees over time, can become contractually binding through custom and practice. Tribunals look at: how long the scheme has been operated, how consistently, how widely it has been communicated, and whether it has been described as discretionary in writing.
A scheme expressly marked "discretionary" or "subject to change" is harder to enforce. But even discretionary schemes attract challenges where the employer applies them in a way that is irrational, discriminatory or inconsistent.
Tax stacking
Statutory redundancy and any enhanced top-up sit in the same £30,000 tax-free slice under ITEPA 2003 s.401. So an enhanced scheme that takes you from £15,000 statutory to £45,000 total adds £15,000 of taxable income (statutory £15k + enhanced £30k = £45k; £30k tax-free; £15k taxable as employment income with employer Class 1A NIC at 15%).