Statutory redundancy pay FAQ

Yes, in full. Statutory redundancy pay is income-tax-free and NIC-free without any cap. The £30,000 tax-free threshold under ITEPA 2003 s.401 applies to the wider termination package (statutory plus enhanced top-up plus ex-gratia) but statutory alone never crosses it because the maximum statutory payment in 2026/27 is £22,530.

No. The 2-year continuous service rule in ERA 1996 s.155 is absolute for statutory redundancy. There is no discretion. If you are dismissed at week 103, you get nothing. Some employers offer enhanced redundancy from day one or after 1 year; check your contract and staff handbook.

For variable-hours workers, a week's pay is the average of the last 52 paid weeks (skipping any unpaid weeks). For fixed-hours workers it is the contractual weekly gross. The figure is then capped at the statutory weekly limit, currently £751 from 6 April 2026.

Not lawfully. If you qualify and your employer refuses, file a complaint with an employment tribunal within 6 months of termination under ERA 1996 s.164. ACAS Early Conciliation is mandatory before issuing. If the employer is insolvent, claim from the National Insurance Fund via the Insolvency Service RP1 form.

PILON itself is taxed as earnings and sits outside the £30k slice. But the Post-Employment Notice Pay (PENP) formula introduced in April 2018 carves a notice-equivalent slice out of any termination package and taxes it as earnings, regardless of whether the contract has a PILON clause. Only what remains after PENP is run against the £30k threshold.

There is no current proposal to uprate the £30,000 threshold. It has been frozen at £30,000 since Finance Act 1988 with no indexation mechanism. Any change requires a fresh Finance Act provision. As of 23 June 2026 the Treasury has not published any proposal.

£22,530. That is 20 years × 1.5 weeks per year × £751 weekly cap. The maximum applies only if you are age 41 or over for all 20 of your last 20 years, and your gross weekly pay is at or above £751. Most people receive much less.

It does, but the discrimination is statutorily authorised. The Employment Equality (Age) Regulations 2006 reg.33 carved out an exemption for the statutory redundancy formula, on the policy ground that older workers face greater re-employment difficulty. The exemption now sits in Schedule 9 of the Equality Act 2010.

Yes. Voluntary redundancy is treated as a dismissal for the same reason (redundancy) and qualifies for the same statutory minimum. Most voluntary offers come with an enhanced top-up because the employer wants to reduce the number of compulsory selections.

No. Statutory notice pay and statutory redundancy pay are separate. Notice pay is calculated as 1 week per year of service from year 2, capped at 12 weeks (ERA 1996 s.86) at your actual weekly gross (not the £751 cap). Notice pay is taxed as earnings; redundancy is tax-free.

A meaningful drop in pay, status or significantly longer commute usually means the alternative is not 'suitable' under ERA 1996 s.141. You can refuse without losing statutory redundancy. The 4-week trial period under s.138 lets you try the role before deciding.

Solvent employers must pay statutory redundancy on the termination date or shortly after, typically with the final payroll run. Insolvency Service payments via RP1 take 3 to 6 weeks from receipt of a complete claim and verification from the insolvency practitioner.

The dismissal date. The cap is the one in force on the 'relevant date', which is the effective date of termination (last day worked or end of notice). A termination on 5 April 2026 uses £719; on 6 April 2026 or later, £751.

Generally no. The statutory claim window is 6 months from termination (ERA 1996 s.164) with a further 6 months tribunal discretion. After 12 months the door is usually shut. Insolvency Service claims via RP1 are more flexible if the insolvency was recent.

Scotland: same formula, same cap (employment law is reserved). Northern Ireland: governed by the Employment Rights (NI) Order 1996 which mirrors ERA 1996 in substance, including the same weekly cap and 20-year ceiling. Tribunal claims go to the Industrial Tribunal (NI), not the GB ET.

Most agency workers are not employees and do not qualify for statutory redundancy. Some larger agencies employ workers on PAYE employment contracts; with 2 years' continuous employment WITH THE AGENCY, redundancy can be owed by the agency itself if no further work is found.

Weekly pay is your gross weekly remuneration for normal hours of work, including basic plus regular contractual elements. Bank holiday treatment depends on the contract; if you are normally paid for bank holidays, they form part of the weekly figure. The cap then applies.

Refusing to enter the trial at all may be unreasonable, depending on the role offered. If you accept and the trial fails, your original redundancy entitlement is preserved (ERA 1996 s.138). If you refuse the trial outright without good reason, statutory redundancy can be lost.