The difference between severance and redundancy pay comes down to geography and legal obligation. Redundancy pay (UK/AU/EU) is legally required when a role is eliminated and follows a strict statutory formula. Severance pay (US) is not federally mandated and is typically offered voluntarily in exchange for a release of legal claims.
While 96% of UK “redundancy” packages in our system include statutory and enhanced elements, over 45% of US “severance” packages offer flat-rate payouts completely decoupled from tenure.
Are They the Same?
Colloquially, yes—both refer to the payout you receive when you lose your job through no fault of your own. Legally, they are entirely different frameworks.
US Severance vs UK/AU Redundancy
If you work for a global company, you might notice your international colleagues receive different exits. Here is why:
| Factor | US Severance | UK/AU Redundancy Pay |
|---|---|---|
| Legal Basis | Not federally required (at-will employment) | Required by employment law |
| Calculation | Usually a discretionary formula | Strict formula (Age, Tenure, Salary Cap) |
| Enhancements | Called standard “Severance” | Called “Ex-Gratia” or “Enhanced Redundancy” |
| Tax Implications | Fully taxable as income | First £30,000 often tax-free (UK) |
Statutory vs Enhanced?
In the UK, the basic legal requirement is called Statutory Redundancy Pay. However, most professional white-collar companies offer more than the minimum to maintain goodwill. This extra money is called Enhanced Severance or Ex-Gratia.
For a full breakdown of average enhancements, see How Much Severance Pay Should You Get?. To calculate your legal minimum, use our Statutory Calculator.
Which Applies to Me?
Your employment contract dictates your jurisdiction. Even if you work for a US-based multinational, if you are employed through their UK entity on a UK contract, you are entitled to UK statutory redundancy rights.
Need help making sense of your specific offer? Audit My Offer today to get immediate feedback. For more foundational knowledge, visit Severance & Redundancy Pay: The Complete Guide.