Redundancy & Severance Pay: Your Questions Answered

Statutory redundancy pay in the UK is calculated based on age and length of continuous service (2 years minimum): 0.5 week's pay for each full year under 22, 1 week's pay for each full year between 22 and 40, and 1.5 weeks' pay for each full year aged 41 or over. Use our free Statutory Redundancy Calculator tool to compute your exact entitlement instantly.

For redundancies occurring on or after 6 April 2026, statutory weekly pay is capped at £751 per week, with a maximum 20 years of continuous service counted. The absolute maximum statutory redundancy payout is £22,530.

Under UK HMRC tax rules, statutory redundancy pay and enhanced severance payments (ex-gratia) are tax-free up to £30,000. Any portion over £30,000 is subject to standard Income Tax and National Insurance. Payment in lieu of notice (PILON) and holiday pay are taxable as normal earnings.

Enhanced redundancy pay, also known as ex-gratia payment, is any compensation your employer provides above the legal statutory minimum. Employers often offer 2x to 4x statutory pay as an incentive to sign a settlement agreement.

Yes! Severance packages are frequently negotiable. You can negotiate for higher ex-gratia cash payments, longer notice periods, extended health coverage, or outplacement services. Having market benchmark data for your role and industry gives you strong leverage during consultation.

A settlement agreement is a legally binding contract between an employer and employee where the employee waives their right to bring legal claims (such as unfair dismissal) in exchange for an enhanced severance package.

100% anonymous. We do not collect names, emails, or personal details. All benchmark data is strictly aggregated and rounded to protect individual privacy.