Redundancy Guide UK (Redundancy Pay, Rights, What to Do 2026)

What Is Redundancy and When Is It Unfair

Redundancy is a fair reason for dismissal under UK employment law when an employer genuinely needs to reduce the workforce. This can happen because the business is closing, the workplace is relocating, or the need for certain roles has reduced or ceased. However, redundancy is unfair if your selection is based on a protected characteristic (age, gender, disability, race, pregnancy, maternity, sexual orientation, religion) or if the employer did not follow a fair selection process. Automatically unfair reasons include redundancy due to whistleblowing, trade union membership, or family-related leave (maternity, paternity, adoption, shared parental leave). If you believe your redundancy is unfair, you can raise a grievance, and if unresolved, take a claim to an Employment Tribunal — usually within 3 months less 1 day of your dismissal. Contact Acas (0300 123 1100) for early conciliation before making a tribunal claim.

Statutory Redundancy Pay — How Much You Get

If you have been employed continuously for 2 years or more, you are entitled to statutory redundancy pay. The amount is based on your age, length of service, and weekly earnings (capped at £643 per week for 2026). You get: 0.5 week's pay for each full year of service when you were under 22; 1 week's pay for each full year aged 22 to 40; 1.5 week's pay for each full year aged 41 and over. Service is capped at 20 years. The maximum statutory redundancy pay in 2026 is £19,290 (20 years x 1.5 x £643). Use the gov.uk redundancy pay calculator to work out your exact entitlement. The first £30,000 of redundancy pay is tax-free. If your contract offers enhanced redundancy pay (e.g. 2 weeks' pay per year), you receive that higher amount. Your employer must give you a written statement showing how your redundancy pay was calculated.

Notice Periods and Garden Leave

You are entitled to a statutory notice period based on your length of service: 1 week if employed between 1 month and 2 years; 1 week per year of service if employed between 2 and 12 years (capped at 12 weeks); 12 weeks if employed 12 years or more. Your contract may provide a longer notice period. During your notice period, you must be paid your normal salary including benefits in kind. Your employer may ask you to work your notice, stay at home on garden leave (still paid), or make a payment in lieu of notice (PILON) if your contract allows it. Garden leave means you remain employed and paid but do not work — common when your role involves sensitive information. If you are paid in lieu, you receive a lump sum equivalent to your notice period pay, subject to normal tax and NI deductions. Statutory notice continues to count for pension and holiday accrual.

Redundancy Consultation and Selection Criteria

Employers must follow a fair consultation process before making anyone redundant. If 20 or more employees are being made redundant at one establishment within 90 days, the employer must conduct collective consultation with trade union or elected employee representatives. This must start at least 30 days before the first dismissal (or 45 days if 100+ employees). Individual consultation is required regardless of numbers — your employer must discuss the redundancy situation, why you were selected, and whether alternative roles are available. Selection criteria must be objective and non-discriminatory. Common criteria include: skills and qualifications, performance, attendance, disciplinary record, and length of service. Criteria must be applied consistently across the pool. If the selection process is flawed or biased, the redundancy may be unfair. You have the right to appeal the decision in writing. Your employer should offer you any suitable alternative vacancies — if you unreasonably refuse a suitable alternative, you may lose your redundancy pay.

Benefits You Can Claim After Redundancy

After redundancy, you can claim Universal Credit (UC) or New Style Jobseeker's Allowance (JSA) to support you while you look for work. New Style JSA is a contribution-based benefit — you need at least 2 years of National Insurance contributions. It pays £71.70 per week for up to 6 months and is not means-tested, so savings do not affect it. Universal Credit is means-tested and depends on your savings, partner's income, and housing costs. You can claim both together. If you have a mortgage, you may qualify for Support for Mortgage Interest (SMI) after 3 months — see our SMI guide →. You can also apply for Council Tax Reduction through your local council. Use a benefits calculator on gov.uk or entitledto.co.uk to check what you can claim. Claim as soon as your redundancy ends — there is no waiting period for JSA if you claim within 3 days; Universal Credit has a 7-day waiting period. See our Universal Credit guide → and JSA guide → for full details.

Redundancy and Your Pension

Redundancy can affect your pension in several ways. If you are in a defined contribution pension, your employer stops contributing from your last day of employment. You can keep the pot invested, transfer it to a new employer's scheme, or move it to a personal pension. If you are over 55, you can access your pension pot, but be careful — withdrawing early reduces your retirement income. If you are in a defined benefit (final salary) pension, redundancy may trigger an early retirement pension if your scheme allows it, though your pension will be reduced for early payment. Some employers offer enhanced pension terms as part of a redundancy package — for example, adding notional years of service or waiving early retirement reductions. Always check the terms with your pension scheme administrator before making decisions. If you are made redundant close to retirement age, Pension Credit may be available — see our Pension Credit guide →. For free pension guidance, contact MoneyHelper (0800 011 3797).

FAQs

Can I be made redundant while on maternity leave?

Yes, but you have enhanced protection. If your role is redundant, your employer must offer you a suitable alternative vacancy (if one exists) in preference to other employees. Failing to do so is automatically unfair dismissal.

Do I pay tax on redundancy pay?

The first £30,000 of statutory and contractual redundancy pay is tax-free. Any amount above £30,000 is taxable as earnings. Notice pay and holiday pay are always taxable through PAYE.

What if my employer goes bust and cannot pay my redundancy?

Claim from the National Insurance Fund through the Insolvency Service (gov.uk/redundancy-payments). The government will pay your statutory redundancy pay, notice pay, holiday pay, and unpaid wages up to statutory limits.

Can I lose my redundancy pay if I find a new job quickly?

No — you are entitled to redundancy pay regardless of whether you find a new job. However, if you started a new job within your notice period, your new earnings may affect certain benefits but not your redundancy entitlement.

How long does it take to get redundancy pay?

Statutory redundancy pay must be paid by your employer no later than your final pay date. If your employer does not pay, you can claim through an Employment Tribunal or the Insolvency Service if the employer is insolvent.