Key Takeaways
- You can check if your redundancy package is below the legal minimum in England and Wales by comparing your offer to the statutory redundancy pay rates based on your age and years of continuous employment.
- Statutory redundancy pay is a legal entitlement if you have at least two years’ continuous service, and is calculated using capped weekly pay amounts and government-set age bands.
- Contractual redundancy schemes may provide more than the legal minimum, but your employer cannot lawfully pay less than the statutory redundancy pay you are owed.
- Your legal minimum redundancy pay is separate from other entitlements like notice pay, holiday pay, and any additional ex gratia or settlement sums.
- If your redundancy offer appears too low, our solicitors can review your calculations, advise on missing entitlements, and challenge any shortfall with your employer.
- You lose the right to negotiate a better deal if you sign a settlement agreement before checking for underpayments or errors in your redundancy package.
- Our solicitors provide remote appointments nationwide, are SRA regulated, and our independent legal advice is free to you as your employer pays our fees.
- Settlement Agreement Lawyers are rated Excellent with over 1,400 five-star reviews of our lawyers on Trustpilot, Google and other platforms.
How to check if your redundancy package is below the legal minimum in England and Wales
If you are being made redundant in England or Wales, it is vital to know how to spot whether your redundancy package is below the legal minimum. Anyone with two years’ continuous service is entitled by law to at least the statutory redundancy pay, based on your age, length of employment and capped weekly pay—your employer cannot legally offer less. Importantly, if you have been handed a settlement agreement, you must get independent legal advice before signing it or your agreement will not be legally binding; your employer usually covers the solicitor’s fee for this, meaning it is free to you.
Checking your redundancy package is not just about the total amount offered—it’s about making sure each part of the payment meets or exceeds your statutory entitlement, and understanding how this interacts with other sums like notice pay and holiday pay. If your offer is below the legal minimum, you could lose valuable payments and important rights by signing too soon. Our solicitors provide clear, expert legal advice at no cost to you, helping you identify any shortfall, resolve disputes with your employer, and ensure your agreement is tax-efficient before you sign away your rights.
This guide will walk you through exactly how statutory redundancy pay is calculated, how to check your entitlements line by line, and what steps to take if your redundancy pay is too low. For personalised support, you can call our solicitors on 0800 054 1144 or book your settlement agreement advice online.
How to check if your redundancy package is below the legal minimum in England and Wales
If you are being made redundant, it is essential to check whether your redundancy package meets at least the statutory legal minimum. Many employees are unaware of their precise entitlements, leading to situations where they receive less than they are legally owed. To spot whether your redundancy package is below the legal minimum in England and Wales, you should carefully review not only the proposed redundancy pay itself but also your notice pay, holiday pay, and other associated payments. Statutory requirements are set out in law and apply regardless of your employer’s policy or any suggestions to the contrary. Cross-check each figure your employer offers against the statutory rules, and do not assume the proposed settlement or agreement reflects everything you are actually entitled to under the law.
Employers sometimes make mistakes calculating qualifying service, use the wrong weekly pay, or mistakenly exclude certain elements such as accrued but untaken holiday. If your contract includes enhanced terms, check if the package is actually at this higher rate. Remember, settlement agreements often bundle several entitlements together, so you need to separate out the redundancy pay element from other sums.
To protect your rights, you should ensure the redundancy package lists each category of payment and matches or exceeds the legal thresholds. If anything is unclear, or if the total looks unexpectedly low based on your years of service, it is time to seek specific legal advice.
Always request a clear written breakdown of your redundancy package from your employer, showing exactly how each figure has been calculated. This makes errors much easier to spot, ensures transparency, and strengthens your position if you need to challenge the amount later.
What is statutory redundancy pay and who qualifies for it?
Statutory redundancy pay is the minimum amount employers must pay eligible employees dismissed due to redundancy under the Employment Rights Act 1996. To qualify, you must have at least two years’ continuous employment with your employer when redundancy takes effect. Statutory redundancy pay is calculated using your age, length of service (up to 20 years), and capped weekly pay (the cap is updated annually by the government).
Your job must genuinely disappear for you to qualify—such as due to workplace closure or role removal. If you’re offered suitable alternative employment and unreasonably refuse, you may lose entitlement.
Some workers (like agency staff, share-fishermen, or certain Crown servants) do not qualify, but most employees with sufficient service do. Contractual redundancy pay may be offered in addition, but can never fall below the statutory minimum.
A 52-year-old employee with 11 years’ service whose job is being cut will qualify for statutory redundancy pay, even if the employer offers only statutory rates. The calculation will use statutory multipliers and the weekly pay cap set for the relevant year.
Why you must get independent legal advice before signing a settlement agreement (s.203 ERA 1996)
Before you sign any settlement agreement (sometimes called a compromise agreement), you are legally required to take independent legal advice—see section 203 of the Employment Rights Act 1996. This is essential because once signed, a settlement agreement waives your right to bring employment claims like redundancy, unfair dismissal, discrimination, or notice pay. If you do not take independent advice, your agreement is not legally binding, and your employer cannot rely on it.
The legal advice must come from a qualified solicitor (or certain other authorised advisers) and must be truly independent. Our solicitors will review your agreement, explain the claims you are waiving, and confirm if the offer meets your full legal entitlements. Our ILA certificate is needed to make the settlement binding.
If your redundancy pay is below the legal minimum, our solicitor will raise this with your employer and negotiate an increase before you sign.
Never sign a settlement agreement before your solicitor has reviewed it. Signing before getting advice may mean you accidentally accept a package below your entitlement or sign away valuable legal rights.
How to calculate your legal minimum redundancy pay: step-by-step
To check if your redundancy package is below the legal minimum in England and Wales, follow these steps:
- Calculate your years of continuous service with your employer, up to 20 years.
- Note your age during each completed year of service:
- For each year aged 41+, you get 1.5 weeks’ pay.
- For each year aged 22–40, you get 1 week’s pay.
- For each year under 22, you get 0.5 week’s pay.
- Use your gross weekly pay, capped at the statutory maximum (for 2023–24, £643 per week). Check the latest cap on gov.uk’s redundancy pay guidance.
- Apply the multipliers above, add them up, and cap to a maximum of 20 years’ service.
If your employer offers less than this figure, your offer is below the legal minimum.
A 45-year-old with 12 years’ service and a gross weekly pay above the cap receives:
– 1.5 weeks × 4 years = 6 weeks
– 1 week × 8 years = 8 weeks
Total = 14 weeks at the capped weekly rate.
Using the statutory redundancy calculator
The easiest way is to use a redundancy calculator. You can try the government’s Redundancy Pay Calculator or our Redundancy Calculator. Enter your details, and compare the calculation against your employer’s figures.
Always save the calculator result and use it to double-check any offer. If your employer’s breakdown doesn’t match, ask them to explain each calculation.
What counts as continuous employment for redundancy entitlement?
Continuous employment means service without significant break. Absences for sickness, parental leave, or TUPE transfers usually do not break continuity. Leaving and rejoining after more than a week’s break may restart the clock. If you’re unsure about your service length, request a breakdown from HR.
If you transferred to your current employer under TUPE five years ago and worked another two years with your previous employer, your continuous service is seven years for redundancy purposes.
Statutory redundancy pay vs contractual redundancy schemes: what if your contract offers more (or less)?
Many employers offer enhanced redundancy pay—for example, a better multiplier, paying for more than 20 years’ service, or using your actual weekly pay with no cap. However, your employer cannot lawfully pay less than the statutory entitlement. If your contractual scheme is lower, the statutory minimum applies by law and any lower clause is void.
Always compare your contractual and statutory entitlements. Enhanced packages sometimes come with extra conditions—like extra notice or added confidentiality—so check the small print.
Get a copy of your employer’s written redundancy policy and compare the calculations. If your enhanced package is less generous than statutory, you are still entitled to the legal minimum.
What else should be included in your redundancy package? (Notice pay, holiday pay & other entitlements)
A lawful redundancy package also includes notice pay, holiday pay for unused accrued leave, outstanding commissions or bonuses, and any expenses owed. Notice pay is taxable and owed unless you work your full notice period; holiday pay is owed up to termination and must be paid in full at your normal rate.
Some employers “bundle” all payments into a single sum. Check your settlement agreement lists each payment separately.
An employee’s settlement omits accrued holiday; on checking and raising the issue, the sum is corrected and the payout increases. Always check you’re paid for all untaken holidays and full notice period.
If you are worried about any missing or underpaid elements, call 0800 054 1144 or book your settlement agreement advice online for a same-day solicitor review—our advice is free as your employer pays our fee.
When to challenge your employer: what to do if your redundancy pay is below the legal minimum
If you spot an underpayment, act quickly. Start by setting out your concerns in writing with your calculations, and ask for a written response. If not resolved, you may need to raise a formal grievance, contact your union if you have one, or escalate via ACAS’s early conciliation. Employment tribunal claims have strict time limits.
Keep all documentation—evidence is essential for both internal and external complaints.
Do not resign as an alternative to redundancy without legal advice. It can end your right to redundancy pay and you may lose other claims.
Tax on redundancy payments: is your settlement agreement tax free?
Statutory redundancy pay, and some contractual redundancy pay, is tax free up to £30,000. Payments for notice pay (PENP), holiday pay, and salary are always taxable and subject to National Insurance. Any “ex gratia” sums not relating to notice or salary, up to £30,000 in total (including redundancy), are also tax free. Amounts above this threshold are taxed at your usual rate.
Settlement agreements must set out how each element is taxed. Incorrect tax can mean you pay more or face a bill from HMRC.
A redundancy payment of £10,000 plus £4,000 PENP and £2,000 holiday pay is taxable only on the PENP and holiday—not on the redundancy sum (if within the £30,000 cap).
The £30,000 tax exemption for redundancy pay
Under Income Tax (Earnings and Pensions) Act 2003 s.403, redundancy and some ex gratia payments are tax free up to £30,000. After this, standard tax applies to the excess.
Ask our solicitor to make sure the settlement agreement clearly identifies the tax-free and taxable elements, so you receive your net entitlement.
Tax on notice pay (PENP), holiday pay, and ex gratia sums
HMRC rules require that notice pay (whether or not it is labelled “PILON”) is taxed. Accrued holiday pay and earnings after termination are always treated as salary and taxed via PAYE. Only genuine non-contractual compensation is eligible for the £30,000 exemption.
A settlement including £25,000 redundancy pay and £10,000 PENP will be tax free on the redundancy amount, but fully taxed on the notice pay.
If you have any questions about the tax on your redundancy, speak to our solicitors. Call 0800 054 1144 or book your settlement agreement advice online for fast, expert advice—our review is paid for by your employer.
Key clauses and hidden risks in redundancy settlement agreements
Settlement agreements often contain clauses that can affect your future rights. Watch out for restrictive covenants (non-compete, non-solicit), confidentiality (NDAs), reference terms, and tax indemnity or clawback clauses. All these can have serious implications if not carefully managed.
Our solicitors check every clause, negotiate improvements where possible, and confirm you are not risking your future prospects or exposing yourself to financial risk.
Compile a list of every non-financial clause. Ask our solicitor to review each and negotiate adjustments—especially to reference wording and broad NDAs.
Restrictive covenants and future employment
Restrictive covenants are promises not to compete, solicit clients, or work in rival businesses for a set time. In redundancy, these should always be reasonable. Overly wide restrictions can be challenged or negotiated.
A manager’s settlement included a non-compete covering the whole UK for 12 months. Our solicitor negotiated it down to 3 months and a smaller area, opening future job opportunities sooner.
Confidentiality clauses and NDAs
NDAs commonly require you to keep the settlement terms confidential, but you should retain the right to tell close family, professional advisers, and discuss with tax authorities. The wording should never prevent “protected disclosures” such as whistleblowing.
We can negotiate “carve-outs” in NDAs so you can share details with family and in legal or professional contexts without fear.
Reference wording and reputation protection
Some settlement agreements promise a reference. Make sure the exact wording is attached or agreed, especially if you faced performance issues, discrimination, or dispute.
Following allegations of poor performance, our solicitor negotiated a factual, neutral reference as part of the agreement, allowing the client to move roles without reputational harm.
Tax indemnities and repayment risks
Nearly all settlement agreements contain a tax indemnity—meaning if your employer pays you tax free but HMRC says PAYE should have been deducted, you could owe the tax back. Ask for your employer to notify you before making any payment to HMRC and to defend HMRC challenges before seeking repayment from you.
We always seek tighter wording to minimise your exposure, for example by requiring your employer to challenge tax demands before you can be asked to reimburse them.
What is the settlement agreement signing process and how does remote ILA work?
Once you receive your draft settlement agreement, you must get independent legal advice from a qualified solicitor. Our remote service means you send us your documents, we review your package thoroughly, calculate your entitlements, and check all clauses. You then speak to our solicitor by phone or video—usually the same day.
Once our solicitor is satisfied your deal is fair, we advise you to sign and return the ILA certificate to make the deal binding. Our fees are paid by your employer, so there is no cost to you.
A Manchester-based client got same-day remote ILA, our solicitor checked the calculations and negotiated an increase in her redundancy payment, and the process completed with the payout received in days.
Same-day service and what your lawyer will check
We offer rapid, same-day ILA appointments nationwide. Our solicitor checks that your package meets statutory minimums, all other sums are included, and the agreement clauses do not risk your future. We also ensure you are not waiving claims for less than you are owed.
Arrange your ILA appointment before any deadline set by your employer. Don’t rush—getting the legal check as soon as possible maximises your negotiating power.
What you need to prepare before your appointment
Save time by gathering:
- Your draft settlement agreement
- Contract of employment or staff handbook
- Recent payslips (ideally 12 weeks)
- Redundancy letter
- Evidence of outstanding holiday, bonus, or commission
Send these to our solicitors when you book ILA online.
A client sent payslips with their draft agreement. Our solicitor identified the employer had miscalculated average weekly pay and secured a larger final redundancy sum.
Why Choose Settlement Agreement Lawyers?
Settlement Agreement Lawyers are SRA-regulated specialists in redundancy and settlement agreements for employees across England and Wales. We check every entitlement step-by-step, ensure your redundancy package is not below the legal minimum, and identify hidden risks. Our 100% remote, same-day service is free for employees as your employer pays our fee.
We have a proven record of securing improved deals for clients—read our client success stories and over 1,400 five-star reviews on Trustpilot. We only advise you to sign if your interests are protected. For more information, read our page on settlement agreement advice.
Always choose a regulated, experienced redundancy settlement expert. Specialist advice can make a significant difference to your outcome.
Frequently Asked Questions About How to check if your redundancy package is below the legal minimum in England and Wales
How do I check if my redundancy pay is correct?
Use a statutory redundancy calculator and enter your age, years of continuous employment, and gross weekly pay (capped at the legal maximum). Compare the figure produced with your employer’s offer. If the sum is lower, seek legal advice before signing anything.
What counts towards continuous employment for redundancy rights?
Continuous employment is unbroken service with your employer, including time under TUPE transfer and statutory leave (such as maternity or sick leave). Gaps caused by dismissal and re-employment after a week or more may break continuity. If in doubt, ask your HR department or our solicitors to review your record.
What is the minimum redundancy package in England and Wales?
The legal minimum is statutory redundancy pay (calculated from your age, years of service, and capped weekly pay), owed notice pay, and accruals such as holiday and unpaid commissions. Even if your employer offers a contractual scheme, you must receive no less than the statutory amount.
What do I do if my employer offers less than statutory redundancy pay?
Raise your calculation and the evidence in writing with your employer first. If unresolved, consider submitting a formal grievance. If still not corrected, contact ACAS for early conciliation and, if necessary, make an employment tribunal claim before time limits expire.
Can a settlement agreement pay less than my legal minimum entitlement?
No—settlement agreements that offer less than statutory minimum are not legally valid for the waived rights. Do not sign unless you have had independent legal advice confirming your entitlements are met in full.
How is tax calculated on redundancy payments and settlement agreements?
Statutory redundancy and non-contractual “ex gratia” payments are tax free up to £30,000. Notice pay, holiday pay, and salary are always subject to tax and National Insurance via PAYE. Any sum over £30,000 is taxable. Your settlement agreement should spell out which parts are taxable.
What risks should I look out for in my settlement agreement?
Look for wide restrictive covenants, overly strict confidentiality or NDAs, vague reference promises, and demanding tax indemnities. Some repayment (clawback) clauses can also put you at financial risk if misunderstood.
Who pays for my independent legal advice on a settlement agreement?
Employers are legally required to pay for your independent legal advice—usually via a capped contribution. Our solicitors’ service is always free to you because the employer pays our fee.
Book Your Free Redundancy Package Review: Is Your Settlement Above the Legal Minimum?
Protecting your rights during redundancy is essential—mistakes in pay calculations, missed entitlements, or unclear settlement terms can mean your package ends up below the legal minimum in England and Wales. This guide has shown how to check every component of your redundancy offer, ensure accurate tax treatment, and understand the claims you may be waiving. If you spot errors or your employer’s figures do not seem right, our solicitors can identify underpayments and negotiate directly with your employer to secure everything you are owed.
With our SRA-regulated solicitors, you get clear, practical advice—from clarifying statutory and contractual rights to reviewing the finer details of your settlement agreement. Our service is completely free for employees (the employer pays our fee), and we offer same-day remote appointments wherever you are based. We will explain the process, check every clause, and only advise you to sign once your financial and legal interests are fully protected.
Ready to secure what you’re entitled to? Call Settlement Agreement Lawyers now on 0800 054 1144, or book your settlement agreement advice online for a fast, same-day appointment with a specialist solicitor.
