Frequently Asked Questions
What is the statutory minimum notice period for redundancy?
The statutory minimum notice period is 1 week per complete year of service, minimum 1 week, maximum 12 weeks. Your contract may provide a longer notice period.
What is Pay in Lieu of Notice (PILON)?
PILON is a lump sum payment instead of working the notice period. Whether PILON is taxable depends on whether your contract includes a PILON clause — contractual PILON is taxable; non-contractual PILON is now also generally taxable under post-2018 rules.
Is statutory redundancy pay taxable?
Statutory redundancy pay is tax-free up to £30,000. The £30,000 exemption applies to the total termination payment, which may include enhanced redundancy pay.
How much is statutory redundancy pay?
Based on age and years of service (max 20 years): under 22 = 0.5 week's pay per year; 22-40 = 1 week per year; 41+ = 1.5 weeks per year. Weekly pay capped at £719 in 2025/26.
Can I be made redundant with less than 2 years' service?
Yes. Notice entitlement starts from day one. However, you need 2 years' continuous employment to qualify for statutory redundancy pay and unfair dismissal protection.
Can my employer give less notice than statutory minimum?
No. Statutory notice is the legal minimum — contracts can provide more but not less. If less notice is given without consent, you can claim wrongful dismissal.
What is a settlement agreement in redundancy?
A settlement agreement (formerly compromise agreement) is a legally binding contract where you waive employment claims in exchange for a financial payment, usually tax-efficiently structured.
Can I negotiate a redundancy package?
Yes. Statutory redundancy is the legal floor. Many employers offer enhanced packages. Negotiation is common, especially for senior employees. Seek legal advice before signing a settlement agreement.
What is garden leave?
Garden leave means you work your notice period but stay at home rather than coming to the office. You remain an employee, retain benefits, and are still paid, but cannot start a new job.
What is a genuine redundancy?
Genuine redundancy occurs when a role is no longer needed — the business closes, work reduces, or the employee's skills are no longer required. Selecting someone for redundancy for other reasons may be unfair dismissal.
How many people must be consulted before collective redundancies?
If 20+ employees are made redundant at one establishment within 90 days, collective redundancy consultation rules apply — minimum 30 days for 20-99 employees, 45 days for 100+ employees.
What is a compromise agreement?
A compromise agreement (now called settlement agreement) is a legally binding contract ending the employment relationship. The employee receives a payment; in exchange, they waive the right to make employment tribunal claims.