Key Takeaways
- Redundancy exit offers this week: how to spot when notice pay, redundancy pay and PILON are being underpaid is essential to protect your financial rights at termination.
- Many redundancy exit offers miscalculate statutory redundancy pay, notice pay, or payment in lieu of notice (PILON), so always check your calculations before signing.
- Typical errors include using the wrong weekly pay, missing out pension or car allowance, or applying your statutory notice period instead of your contractual one.
- If your redundancy pay and PILON are underpaid, you may lose thousands—our solicitors can audit your exit package and identify every shortfall.
- Never sign a settlement agreement before understanding if ex-gratia, tax-free allocations, bonuses, and owed holiday pay have been included and calculated correctly.
- Our SRA regulated solicitors negotiate improved redundancy exit terms and better references, all with legal fees paid directly by your employer.
- You risk losing your right to bring claims for unfair dismissal or discrimination if you sign an agreement without specialist independent legal advice.
- Settlement Agreement Lawyers are rated Excellent on Trustpilot, offer same-day remote appointments nationwide, and provide a free expert review of your redundancy offer.
Redundancy Exit Offers This Week: How to Spot When Notice Pay, Redundancy Pay and PILON Are Being Underpaid
If you have just received a redundancy exit offer or settlement agreement this week, it is crucial to carefully check your notice pay, redundancy pay, and payment in lieu of notice (PILON) for accuracy. Employers frequently make mistakes—such as applying incorrect pay rates, omitting allowances, or confusing contractual entitlements with statutory minimums. This leaves employees at risk of losing thousands of pounds.
This guide explains how to review your redundancy exit offer for any underpayments, outlines your key statutory and contractual rights, and details the most common employer mistakes. Our solicitors can audit your entire exit package, identify all shortfalls, and negotiate a better, tax-efficient deal for you—with no cost to you as your employer pays our fees.
Book your free redundancy settlement review now.
What Should Your Redundancy Exit Offer Include?
A properly structured redundancy exit offer should contain every payment you are legally or contractually entitled to receive as your employment ends, including:
- Statutory redundancy pay: Calculated by your age, years of service, and capped weekly pay under the current government limit.
- Notice pay: Based on your contractual or statutory notice period—whichever is more generous.
- Payment in lieu of notice (PILON): If you are exiting immediately, you should receive your full notice pay (including regular allowances).
- Accrued but untaken holiday pay: For any unused holiday earned up to your termination date.
- Other accrued sums: Bonuses, commission, outstanding expenses, and fringe benefits (such as car allowance).
- Any enhanced redundancy payments: Sometimes offered as part of the settlement agreement.
Employers can underpay by forgetting regularly paid allowances, bonuses, or updated pay rates.
How to Check If Your Notice Pay and Redundancy Pay Have Been Underpaid
Carefully auditing your settlement agreement is vital. Here’s a simple step-by-step process:
Step 1: Check Statutory Redundancy Pay Calculation
- Use the official government redundancy pay calculator.
- Cross-reference your age, length of continuous service, and weekly pay. Watch for outdated figures and missing years of service.
Step 2: Compare Notice Periods
- Consult your employment contract for your contractual notice period.
- Statutory minimum is one week per year of completed service (up to 12 weeks)—you are entitled to the longer of the two.
Step 3: Confirm Pay Calculation Basis
- Your “week’s pay” should include average earnings, guaranteed overtime, regular commission, and allowances from the previous 12 weeks.
- Mistakes frequently occur with variable pay and allowances.
Step 4: Review PILON Calculation
- PILON must cover your full notice period. It must include base salary, benefits (e.g., pension and car allowance), and all sums you would have received.
Step 5: Audit All Extras
- Ensure pay for untaken holiday, owed bonuses, and earned commission is included.
Redundancy Settlement Agreements: Why You Need Independent Legal Advice
Independent legal advice (ILA) from specialist employment solicitors is required for all settlement agreements under s.203 Employment Rights Act 1996. The purpose is to protect your legal rights and ensure you do not unknowingly waive claims—such as for unfair dismissal, discrimination, or underpaid sums.
Our solicitors:
- Forensically check every element of your exit offer for errors or missing sums.
- Advise you if your offer is fair, or if it should be renegotiated.
- Provide your ILA certificate, which is essential for your settlement to be paid out.
Does Your Employer Pay for Legal Advice?
Yes. Almost every employer will pay all legal costs for independent legal advice when you are offered a settlement agreement. In practice, this means:
- Our solicitor’s consultation and review are free to you.
- We negotiate on your behalf, directly with your employer if needed.
- Your employer pays for your ILA certificate and all work on the settlement agreement.
You are free to choose your own solicitor. Our solicitors act exclusively for you, never your employer.
Tax on Redundancy Pay, Notice Pay and PILON: What You Need to Know
Tax treatment of each element in a redundancy settlement is different:
- Statutory redundancy pay and ex-gratia sums are usually tax-free up to £30,000.
- Notice pay and PILON (including any holiday pay and bonuses for your notice period) are taxable and subject to National Insurance, under the PENP rules.
- Enhanced redundancy payments may qualify for the £30,000 tax-free cap, but only if genuinely ex-gratia.
Employers can get the breakdown wrong, resulting in excessive tax deductions or future problems with HMRC.
Common Employer Mistakes in Redundancy Exit Offers
Our team sees these frequent employer errors:
- Calculating notice pay or PILON on basic salary only, omitting commission or regular allowances.
- Using statutory, not contractual, notice—leaving you with less compensation.
- Outdated weekly pay limits in redundancy calculation, especially after April changes.
- Missing payments for unused holiday, bonus, or other accrued benefits.
- Errors in tax allocations between PILON and redundancy sums.
Important Clauses in Settlement Agreements: What to Watch For
A redundancy settlement agreement does not just determine pay—it will also set obligations and restrictions:
- Restrictive covenants might limit your next job options.
- Warranties and indemnities could expose you to future risk.
- References—push for agreed or positive wording.
- Confidentiality clauses require you to keep the terms private.
- Return of company property—be clear about arrangements for return.
Why Choose Settlement Agreement Lawyers?
When you choose Settlement Agreement Lawyers, you benefit from:
- Specialist, SRA-regulated solicitors dedicated to employee settlement agreements.
- No cost to you—your employer pays our full legal fees.
- Same-day and express appointments, including remote consultations anywhere in England & Wales.
- Professional, up-to-date employment law advice and robust negotiation.
- Clients rate us “Excellent” on Trustpilot.
Frequently Asked Questions About Redundancy Exit Offers
How do I know if I’m being underpaid?
Use the government redundancy calculator and check against your contract and pay slips. Our solicitors can thoroughly review your offer for missed sums.
Should PILON include allowances and pension?
Yes, PILON must reflect your entire package—salary, allowances, pension, and any commission you would have earned.
What about unused holiday?
You must be paid for all earned but unused holiday—our solicitor can confirm this is included in your package.
Can I negotiate if my offer is low?
Absolutely. Our solicitors frequently negotiate higher exit packages and improved terms for employees.
Is redundancy pay always tax free?
Statutory redundancy pay is tax free up to £30,000. PILON and notice pay are generally taxable as earnings.
Can my employer refuse to pay for my legal advice?
In almost all cases, the employer pays our fees. If not, our solicitors will explain your options and next steps.
How long do I have to consider a settlement agreement?
You should be allowed at least 10 days to make your decision. We provide express, same-day legal reviews if time is tight.
What if I find a new job?
Exit packages and timelines can be negotiated around your next opportunity—let our solicitors manage this for you.
Book Your Free Settlement Agreement Consultation
Facing a redundancy exit offer this week? Our SRA-regulated solicitors are experts at spotting when notice pay, redundancy pay and PILON are being underpaid. We will ensure every element of your package—statutory entitlements, holiday pay, bonuses and tax treatment—is calculated and allocated correctly. Our free service means you can avoid financial loss and gain the peace of mind of expert support.
Our fees are always covered by your employer. From start to finish, our solicitors offer confidential, same-day consultations remotely, handle urgent timelines, and negotiate better offers on your behalf.
Book your free redundancy settlement agreement review today. Call Settlement Agreement Lawyers on 0207 459 4037 or book online for immediate help.
This article is for guidance purposes only and does not constitute legal advice specific to your situation. For tailored advice and your ILA certificate, contact our solicitors directly.
