The number on the letter is rarely the ceiling
If you have just been handed a redundancy figure, here is the thing worth knowing before you reply to anything: the gap between the legal minimum your employer has to pay and what they might actually be willing to pay is often tens of thousands of pounds. Some of that gap is a formal policy you may not have been told about. Some of it is discretion. And some of it only closes if you ask. Knowing roughly where your offer sits against the floor, and against what your employer could reasonably do, is your leverage in the conversation that follows. This guide is about finding that out.
The legal minimum is just the floor
Statutory redundancy pay (SRP) is the minimum the law requires. It uses a capped weekly pay figure and a formula based on age and service length, and because of the weekly pay cap (£751 in 2026/27), it can feel laughably small for anyone earning a professional salary. Enhanced redundancy pay is anything your employer offers above that statutory minimum. It might be called 'ex gratia', 'contractual redundancy pay', or simply 'enhanced redundancy', the name varies but the principle is the same: the employer is paying more than they strictly have to. If you want to check the statutory floor your enhanced offer sits above, we have compared the UK redundancy calculators.
Where enhanced pay comes from
Enhanced redundancy pay can come from three sources: your contract of employment, your employer's redundancy policy (in a staff handbook or HR document), or a one-off negotiated settlement. If your contract or a company policy explicitly sets out an enhanced redundancy formula, that's contractually binding. Your employer can't simply ignore it and pay you the statutory minimum. If there's no such contractual entitlement, any enhanced payment is discretionary, but that doesn't mean it's not worth asking for.
So how do employers calculate enhanced pay?
Employers who have a formal enhanced redundancy policy typically use one of a few approaches. Some use the statutory formula but with a higher weekly pay cap, for example, uncapped actual weekly salary rather than the statutory cap. Some use a more generous multiplier, for example, two or three weeks' pay per year of service rather than the statutory one. Some also remove the age-banding, paying the same rate regardless of whether you're 22 or 45. Tech sector employers often add an additional 'ex gratia' lump sum on top of the formula-based calculation.
| Basis | Weeks | Week's pay used | Redundancy pay |
|---|---|---|---|
| Statutory (capped) | 10 | £751 | £7,510.00 |
| Statutory formula, actual weekly pay (uncapped) | 10 | £1,153.85 | £11,538.46 |
| 1.5 weeks per year, uncapped | 15 | £1,153.85 | £17,307.69 |
| 2 weeks per year, uncapped, no age banding | 20 | £1,153.85 | £23,076.92 |
What counts as your enhanced package
Enhanced redundancy pay is usually only one line of the offer. When people compare packages, they should be comparing the whole thing, because the other elements can be worth as much as the redundancy figure itself.
Alongside enhanced redundancy pay you would normally expect: notice pay, either worked, spent on garden leave, or paid as a lump sum in lieu of notice (PILON); accrued but untaken holiday, which must be paid out on your last day and is never part of what you negotiate — work out what you are owed with the holiday pay calculator; any bonus or commission you have earned or that your contract or scheme rules say is due; and, in a settlement, an 'ex gratia' sum on top, which is the part the employer is genuinely paying for your agreement not to bring a claim.
The tax treatment splits these into two groups. Genuine redundancy pay, statutory and enhanced, plus a true ex gratia compensation sum, share the first £30,000 tax-free, with anything above taxed as income but not National Insurance. Notice pay, PILON, holiday pay and bonuses are earnings: they are taxed in full through PAYE with income tax and National Insurance, and they do not use up any of the £30,000. Our guide to redundancy pay and tax works through how a package is split and where the line falls.
How to find out what you're entitled to
Start with your contract of employment. Look for a redundancy clause or any reference to termination pay. Then check your staff handbook, any HR policies you've been given, and any emails or communications from HR during the process. If you're in a company with a recognised trade union, check the collective agreement, it may specify enhanced terms. If none of these sources give a clear answer, ask HR in writing to confirm the basis for your redundancy payment calculation. Getting this in writing matters.
Not sure how your offer stacks up against the statutory floor and typical sector practice?
Check your redundancy offer →How to negotiate
Yes, and you often should. If your employer has no formal enhanced policy and is offering statutory pay, you can propose a higher figure. Your leverage comes from what a tribunal might award if the process was flawed: work out which claims you would realistically have, then how each is valued. Unfair dismissal is capped and follows the statutory formula; a discrimination claim is valued on past loss, future loss and injury to feelings under the Vento bands. Common grounds for negotiating more include: long service, a high base salary that makes the statutory cap particularly painful, a senior role where you'll struggle to find equivalent work quickly, or any concerns you have about the fairness of the selection process or consultation. You don't need to be aggressive, a calm, professional conversation about what would make you feel the departure was handled fairly is often enough.
If the process was fair and the offer is simply low, the tribunal-value argument does not apply and you are asking on goodwill, service and seniority. That is a weaker position, and it is worth being honest that many offers in this situation are genuinely fair.
If your employer calls a figure their "final offer", treat that as something to test rather than a fact. Sometimes it is genuine; often it is an opening position, with a second and third figure held back. Do not assume it is a bluff either — press, and see what moves.
Tax on enhanced payments
The first £30,000 of any redundancy payment, statutory or enhanced, is tax-free. Payments above £30,000 are subject to income tax (but not National Insurance). If your employer structures your settlement to include a payment in lieu of notice (PILON), that's treated differently for tax, PILONs are taxable in full. A good solicitor or accountant can help you understand how to structure a larger payment to minimise your tax exposure. If you're negotiating a settlement that might push above £30,000, always factor in the tax before comparing it to other offers.
Is your offer actually good?
There is no single benchmark for a 'good' enhanced package. Whether an offer is fair depends on your length of service, your salary, what is normal in your sector, and — often the biggest factor — how the redundancy process itself was run. An offer that looks thin on paper can be reasonable for short service in a sector that rarely enhances at all; an offer that looks generous can still be low if the selection or consultation was flawed and you had a real claim worth more.
Plenty of offers are genuinely fine, and it is worth saying so: not every redundancy is a fight. But the only way to know where yours sits is to check it against the statutory floor, typical sector practice, and whether the process gave you grounds to push for more. That is what the questionnaire does.
Statutory rates current for 2026/27.