Redundancy: your rights, your pay and the first-week checklist

Last updated: 29 October 2026

Being told your job is going is a shock, and the first days are often a blur of meetings and letters. This guide makes the money side clear: what you’re entitled to, what your letter should say, how much is taxed, and what’s worth doing in your first week.

Where Northern Ireland differs, we say so.

What are your rights when you’re made redundant?

Redundancy means your job is no longer needed, because the business or workplace is closing or fewer people are needed for your kind of work. Your employer still has to follow a fair process.

Consultation. You’re entitled to be consulted individually about why your job is at risk and whether there are alternatives. If your employer is making 20 or more redundancies at one establishment within 90 days, the collective rules kick in too: consultation with union or elected employee representatives must start at least 30 days before the first dismissal takes effect, or 45 days if 100 or more jobs are going. If an employer gets collective consultation wrong, a tribunal can make a “protective award”; the government doubled the maximum award from 6 April 2026.

Fair selection. If only some roles are going, your employer should pick people using a fair and objective method, such as skills, appraisals or disciplinary records. Choosing you because of your age, sex, race, disability, pregnancy or maternity leave, union membership or whistleblowing is unfair dismissal. If you think you were unfairly selected, you can appeal by writing to your employer and explaining why.

Suitable alternative work. If there’s another suitable job, your employer should offer it, and if you’re on maternity or other parental leave they must. You get a 4-week trial in any alternative role, and leaving during the trial because it isn’t suitable doesn’t cost you your redundancy pay. Unreasonably turning down a genuinely suitable job can.

Time off to job-hunt. If you’ll have two years’ service by the end of your notice, you can take reasonable paid time off to look for work or arrange training. Your employer only has to pay up to 40% of a week’s pay in total for this, however much time you take.

A change coming in January. At the moment, the right to claim ordinary unfair dismissal needs two years’ service. For dismissals from 1 January 2027, that drops to six months under the Employment Rights Act 2025.

How much statutory redundancy pay will I get?

If you’re an employee with at least two years’ continuous service, you’re entitled to statutory redundancy pay. It’s worked out by counting back your complete years of service from the redundancy date, up to a maximum of 20, and giving you:

• half a week’s pay for each full year you were under 22
• one week’s pay for each full year you were 22 to 40
• one and a half weeks’ pay for each full year you were 41 or older

A “week’s pay” is your average gross weekly pay over the 12 weeks before you got your notice, but it’s capped at £751 in England, Scotland and Wales for redundancies on or after 6 April 2026. In Northern Ireland the cap is £783. So the most anyone can receive is £22,530 (£23,490 in Northern Ireland).

Take Sarah, who’s 45, has worked for her employer for 10 years and earns £600 a week (£31,200 a year). Counting back, she was 41 or over for the last four of those years (4 × 1.5 = 6 weeks) and 35 to 40 for the six before (6 × 1 = 6 weeks). That’s 12 weeks at £600: £7,200.

This is a legal floor. Many employers pay more. If you aren’t paid, you have six months from your last day to claim it.

Is redundancy pay taxed?

This is the bit people most often get wrong, because a package is several payments, each taxed differently.

Tax-free up to £30,000. Statutory redundancy pay, plus any enhanced redundancy pay or ex-gratia sum, is tax-free up to £30,000 in total. Anything over £30,000 is taxed as income. You don’t pay National Insurance on it; your employer does.

Always taxed as pay. Notice pay, holiday pay, unpaid wages, bonuses and commission are taxed exactly like a normal salary, with income tax and National Insurance. That’s true if you work your notice and it’s true if you’re paid in lieu of it (PILON). An employer can’t make notice pay tax-free by folding it into a redundancy lump sum, either: HMRC’s “post-employment notice pay” rules tax the part of any payment that matches what you’d have earned over your unworked notice.

The one thing to know: the £30,000 tax-free amount only ever covers the redundancy pay itself. Notice pay and holiday pay are taxed in full, so a “£40,000 package” that’s £25,000 of redundancy and £15,000 of notice is taxed on £15,000, not £10,000.

Going back to Sarah: alongside her £7,200 she works her 10 weeks’ notice (£6,000) and is owed 5 days’ holiday (£600). Her £7,200 redundancy pay is tax-free. The £6,600 of notice and holiday pay is taxed as normal pay: about £1,320 of income tax at 20% (assuming her salary has already used her personal allowance for the year) and around £334 of National Insurance. Of £13,800 in total, roughly £12,146 reaches her account.

Now Mark, 52, with 18 years’ service, earning £1,200 a week (£62,400) and £45,000 already earned this tax year. His statutory pay uses the £751 cap: 23.5 weeks comes to £17,649. His employer adds £20,000, so his redundancy payment is £37,649: £30,000 tax-free and £7,649 taxed. He’s paid 13 weeks’ notice in lieu (£15,600) and 8 days’ holiday (£1,920). His taxable total is about £25,169, pushing him into the 40% band. Estimated deductions: about £9,000 of income tax and £350 of National Insurance, so roughly £45,800 of a £55,169 package.

The final payment often comes with an emergency tax code, so more may be deducted at first; HMRC refunds the excess through your next job or after the tax year ends. Scottish income tax bands differ from the calculator’s.

How does notice work?

The legal minimum notice is one week if you’ve worked there between one month and two years, then one week per full year of service up to 12 weeks. Your contract can give more, but never less, and you’re entitled to whichever is longer. Notice pay uses your full weekly pay, not the capped figure.

Your employer can ask you to work your notice, or end your job straight away and pay you for the notice period. If they pay in lieu, you should get your basic pay for the notice period plus any contractual extras, such as employer pension contributions.

What can I claim after redundancy?

New Style Jobseeker’s Allowance is based on the National Insurance you’ve paid, not on your savings, so your redundancy pay doesn’t stop you getting it. It pays up to £95.55 a week if you’re 25 or over (£75.65 under 25) for up to 182 days. For claims made up to 2 January 2027 it looks at your NI record for the 2023/24 and 2024/25 tax years. A partner’s earnings don’t affect it, though a private or workplace pension you’re already drawing can reduce it.

Universal Credit is means-tested. You can’t get it if you and your partner have more than £16,000 in money, savings and investments, and redundancy pay sitting in your account counts. You can claim New Style JSA and Universal Credit together. Whichever you claim, you must declare your redundancy pay. Our guide to benefits you might be missing has a full checklist, including council tax reduction.

The Jobcentre Plus Rapid Response Service helps with CVs, job searches, training and costs such as travel to interviews. You can use it from when you first hear your job is at risk until 13 weeks after you’ve left.

Your first-week checklist

1. Get everything in writing. Your notice letter, the last day of employment, and a breakdown of every payment.
2. Check the figures. Use the calculator above. Check your weekly pay figure, your years of service and that your notice is the right length.
3. Ask the questions you need to. How were people selected? Are there other jobs going? Is time off for interviews being paid?
4. Make your claims. Apply for New Style JSA and check Universal Credit. Don’t wait for the money to run low.
5. List your work benefits. Write down anything that ends with your job, such as life cover, health cover or a company car, so you know exactly what stops and when.
6. Draw up a bare-bones budget. Work out what your essentials cost each month, and how many months your money will last.
7. Note the deadlines for any claim (see below) in your calendar now.

Your pension and the cover your job provided

Employer pension contributions stop when your job does, so ask your scheme for a statement and keep it with your records. Payments your employer makes straight into a registered pension scheme as part of your package aren’t taxed, up to your annual allowance, which is why some packages over £30,000 include a pension payment; your employer can tell you whether that’s on offer. If you’re 50 or over and have a defined contribution pension, MoneyHelper offers free, impartial guidance before you make any decisions. This is also a good moment to check your State Pension forecast on GOV.UK.

Life cover, income protection and health cover through work usually end on your last day. Ask HR what you had, and whether any of it can be continued.

If something’s gone wrong: Acas and the time limits

If you think you’ve been unfairly selected, not consulted, or underpaid, raise it with your employer in writing first. If that doesn’t work, you must notify Acas for early conciliation before you can go to an employment tribunal. It’s free, and the time limit is paused while it runs.

The deadlines are strict. In England, Scotland and Wales, for something that happened on or after 1 October 2026, most tribunal claims must be started within six months minus one day; for earlier problems it’s three months minus one day. Claims for unpaid statutory redundancy pay have six months from your last day. In Northern Ireland, claims go through the Labour Relations Agency and the industrial tribunals, with their own rules. Speak to them straight away.

If your employer has gone bust, the government’s Redundancy Payments Service can pay your statutory redundancy pay, statutory notice pay, up to 8 weeks of unpaid wages and up to 6 weeks of holiday pay, each worked out on pay capped at £751 a week. Our guide to your rights when a company goes bust explains how.

Citizens Advice and Acas both give free help.

Making the money last

A lump sum can feel like a cushion, and it is one, but it’s also likely to be the money you live on until the next job. Before you spend any of it, put enough to cover your essentials somewhere separate and easy to reach. Our emergency fund guide shows how to work out the right amount. If you already have debts, or are worried about keeping up with payments, talk to a free service early; our guide to free debt help explains who they are and what they can do.

Frequently asked questions

How much statutory redundancy pay will I get?

With at least two years’ service: half a week’s pay for each full year you were under 22, one week for each year from 22 to 40, and one and a half weeks for each year at 41 or over. Only the last 20 years count, and a week’s pay is capped at £751 (£783 in Northern Ireland). The maximum is £22,530 (£23,490 in Northern Ireland).

Is redundancy pay taxed?

Redundancy pay, statutory and extra, is tax-free up to £30,000 in total. Notice pay (including PILON) and holiday pay are always taxed as normal pay.

What notice period do I get if I’m made redundant?

One week for one month to two years’ service, then a week per full year up to 12. Your contract can give more.

Can I claim benefits if I’ve had redundancy pay?

New Style JSA doesn’t look at savings, so yes: up to £95.55 a week if you’re 25 or over, for up to 182 days. Universal Credit isn’t available if you and your partner have more than £16,000, so redundancy pay can affect it. Always declare it.

How long do I have to make a claim about my redundancy?

In England, Scotland and Wales, most tribunal claims about something on or after 1 October 2026 must be started within six months minus one day, after notifying Acas. Unpaid statutory redundancy pay has six months from your last day. Northern Ireland has its own rules through the Labour Relations Agency.

Want to run the numbers again? The redundancy pay calculator is also on its own page, alongside our other free tools. For more on what’s on your payslip, see how to read your payslip and understanding your tax code.

Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.

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