Redundancy pay vs notice pay: what is the difference?
Compare statutory redundancy pay with notice pay in the UK, including eligibility, statutory notice periods and why the two payments are calculated and taxed differently.
They are two different entitlements
Redundancy pay compensates eligible employees for losing a role through redundancy. Notice pay covers the notice period when employment is ending. You can be entitled to both.
Usually requires at least two years' continuous employment and is calculated using age, service and weekly pay, subject to statutory limits.
Your employer must give the applicable statutory or contractual notice and normally keep paying you through that period, or deal with notice pay under the relevant rules.
For 2 to 12 years' service, statutory notice is one week per full year. At 12 years or more, the statutory minimum is 12 weeks. Contracts can provide more.
Notice-related pay is generally treated as earnings for tax purposes, while qualifying redundancy and severance payments can fall within the separate £30,000 termination-payment exemption.
What else might be in a final payment?
Your final settlement can also include unpaid salary, bonuses or commission, accrued holiday, payment in lieu of notice and an enhanced redundancy payment. Ask for an itemised breakdown so you can see how each element was calculated.
Use the redundancy pay calculator for the statutory redundancy component. Do not add notice pay into the calculator's weekly-pay result as if it were part of the statutory redundancy award.
Leaving early during redundancy notice
If you want to leave before the redundancy dismissal date because you have found another job, special counter-notice rules can affect your redundancy entitlement. Acas recommends dealing with this in writing and checking the timing carefully.
Notice and redundancy principles checked against current Acas and GOV.UK guidance.
Common questions
Yes. They are separate entitlements, and an eligible employee can receive both.
For 2 to 12 years of service, the statutory minimum is one week per full year; at 12 years or more it is 12 weeks.
Notice-related pay is generally treated as earnings and is not automatically covered by the £30,000 termination-payment exemption.