Key Takeaways
- Redundancy exit offers this week: how to spot when notice pay, redundancy pay and PILON are being underpaid is about ensuring you receive your full legal entitlement when leaving employment.
- Statutory notice pay and redundancy pay are protected by law and cannot be offered below your legal minimums.
- Pay in lieu of notice (PILON) must reflect all your normal pay, including commission, bonuses, and paid holiday.
- Underpayments often happen due to calculation errors or failure to include enhanced package elements, especially if you do not get specialist advice.
- Our solicitors meticulously review and, where necessary, negotiate redundancy settlement agreements so you receive every sum owed, including maximising tax-efficient payments.
- Independent legal advice (ILA) is required by law under section 203 of the Employment Rights Act 1996 before any settlement agreement is binding.
- Our solicitors are SRA-regulated, can meet you remotely on the same day, and our fees are covered by your employer—so our expertise comes at no cost to you.
- With 1,400+ five-star reviews on Trustpilot, Google, and elsewhere, our solicitors are trusted to secure your rights during redundancy.
Redundancy exit offers this week: how to spot when notice pay, redundancy pay and PILON are being underpaid
Redundancy exit offers can come suddenly, often with complex terms and tight deadlines. It’s crucial to know how to check for underpayments—particularly with notice pay, redundancy pay and pay in lieu of notice (PILON). In England & Wales, you cannot lawfully be paid less than your statutory minimums, and your employer almost always pays for you to get our independent legal advice before signing a settlement agreement.
When you sign a settlement agreement, you usually waive the right to challenge your redundancy—so our solicitors scrutinise your exit package line by line, ensuring all entitlements are present: statutory and enhanced redundancy, holiday, bonuses, and PILON. We also check the tax position to ensure it is as favourable as possible.
This guide explains step-by-step checks to spot underpayment, how to challenge errors or unfair terms, and what each exit package element should include. If you want confidence that your package is fair, call our solicitors today on 0800 054 1144 or book your settlement agreement advice online.
Redundancy exit offers this week: how to spot when notice pay, redundancy pay and PILON are being underpaid
Redundancy cases are moving quickly, with many employees handed exit packages containing multiple components at once. It’s easy to miss errors—especially under time pressure. A typical redundancy exit package in England & Wales includes statutory redundancy pay (or enhanced/contractual redundancy if available), notice or PILON, accrued holiday, and sometimes bonuses, commission or an ex gratia sum. Usually, the package comes as a settlement agreement, requiring you to waive claims in return for payment. Because template documents are common, figures or eligibility are often misapplied.
An employee with six years’ service discovered, after a review by our solicitors, that their redundancy was wrongly calculated on an old, lower wage. Seven days’ holiday pay was missing too. Following our advice and negotiation, they received all sums owed and an ex gratia payment.
What is included in a redundancy exit offer and how do you check each element?
Redundancy packages have several parts, each governed by specific legal rules: (a) redundancy pay—statutory (or enhanced, if your contract provides more), (b) notice period—worked or PILON, (c) payment for accrued but untaken holiday, and (d) bonuses or commission earned but not paid. Settlement sums may also include discretionary ex gratia payments. Each must be calculated carefully.
- Ask HR for a detailed breakdown listing every payment.
- Check redundancy sums using the redundancy calculator.
- Review your contract or staff handbook for any enhanced redundancy terms.
- Ensure the full notice period is paid, or if PILON, that all elements are included.
- Confirm all unused holiday is paid at your normal rate.
- Verify all due commission or bonuses are included.
Gather your most recent payslips, employment contract, and any HR correspondence before your review. This helps our solicitors to spot errors and negotiate the best possible outcome.
Statutory vs enhanced redundancy pay: how to calculate your entitlement
Statutory redundancy is the baseline, set by law under the Employment Rights Act 1996. If you have at least two years’ continuous employment, you’re eligible. Pay is based on age, years of service, and weekly wage (capped annually). Many employers provide enhanced redundancy—either by contract or custom.
| Statutory Redundancy Pay | Enhanced/Contractual Redundancy Pay | |
|---|---|---|
| Basis | Set by law (ERA 1996) | Employer policy or contract |
| Cap | Usually capped (by statute) | Sometimes uncapped |
| Formula | Age and service factor | Varies by contract |
| Eligibility | 2+ years’ service | Employer’s criteria |
Enhanced terms are often hidden in policy or custom, not just your contract. Ask HR for confirmation and written policies if only statutory sums appear in your offer.
Statutory notice pay, contractual notice, and Pay In Lieu of Notice (PILON): what should be paid?
The statutory minimum notice is one week per complete year worked, up to 12 weeks. Your contract might grant more. If you’re paid PILON to leave straight away, it should include your usual salary and all regular benefits—unless the contract expressly limits this.
- Check the notice period matches your contract or statutory minimum.
- Review whether PILON reflects everything you’d earn if you worked your notice—salary, car allowance, pro-rata bonuses.
- Verify tax is being handled correctly (PILON is taxable).
Employers sometimes use the term “PENP”—Post-Employment Notice Pay—when calculating tax on PILON.
A client’s PILON was based on basic pay only. Our solicitors checked the contract and uncovered a missed monthly car allowance and overtime, resulting in an extra £2,000 after our intervention.
Accrued holiday, bonuses, and commission: ensuring your final exit package is complete
Under the Working Time Regulations 1998, any accrued but untaken leave must be paid in your final pay, usually at your average daily rate. Any commission, bonus, or allowance earned before leaving but unpaid should also be included. Employers sometimes mistakenly exclude in-year performance or sales-based income.
- Compare official holiday records against what’s being paid.
- Ask for written justification if any sums are left out.
- Double-check for “in year” commission, sales, or target bonuses.
Never accept a no-details lump sum marked “full and final” pay—demand a payment schedule. A clear breakdown makes it easier for our solicitors to challenge missing amounts.
Why must you get independent legal advice on a redundancy settlement agreement? (s.203 ERA 1996 explained)
Section 203 of the Employment Rights Act 1996 says that you cannot waive key employment rights (such as unfair dismissal or redundancy pay) unless you receive independent legal advice. Our solicitor provides the required ILA certificate so your agreement is binding and the employer releases your compensation.
This law exists to prevent people giving up valuable rights without understanding the impact. Employers fund your legal fees, and our solicitors ensure your agreement is safe and any problems are fixed before you sign.
A client brought a draft agreement with a defective ILA clause—plus undercalculated redundancy pay. Our solicitors resolved both with the employer, increasing the exit package and protecting the client’s rights.
How to spot if your redundancy pay, notice pay or PILON are being underpaid
With high volumes of redundancies, standard calculation errors are common—outdated weekly rates, forgotten allowances, and incorrect notice. Rushed processes can mean elements are either wrongly excluded or taxes are applied incorrectly. Cross-check every sum using government redundancy guidance or the settlement agreement calculator.
Request a complete breakdown and ask for calculations showing how each figure was reached. Where numbers don’t match your own, pause and call our solicitors for a detailed review.
Are your redundancy, notice, and PILON payments tax free? Tax rules and hidden liabilities explained
By law, statutory redundancy (and many ex gratia sums) are not taxable up to £30,000. However, PILON, bonuses, and holiday pay are always taxed as normal pay. HMRC monitors split settlements for compliance. A clear allocation of each payment element in your agreement, with a tax indemnity, reduces risk.
Don’t accept “tax free” PILON or one undivided lump sum—insist on an itemised breakdown. If your package appears above £30,000 or split ambiguously, call our solicitors for advice and negotiation.
Key clauses and risks in redundancy settlement agreements: What to look out for
Settlement agreements will also contain restrictions—such as confidentiality, non-compete clauses, or tax indemnities. Some may go beyond your contract. Make sure you understand everything you are agreeing to, especially NDAs and references.
Our solicitors helped a client soften a 12-month non-compete clause to six months, allowing a return to work in their field much sooner.
If you’re worried about your agreement, payout, or legal restrictions, call our solicitors on 0800 054 1144 or book your settlement agreement advice online. Our advice is free for employees, as your employer always covers our fees.
Step-by-step: The process for reviewing, negotiating, and signing your redundancy settlement agreement
Rushing, or missing any step, can cost you thousands. Here’s how to secure your rights:
- Gather your exit letter, agreement draft, payslips, bonus records and contract.
- Book a same-day remote appointment with our solicitors (book now).
- Our solicitors provide a forensic review, spotting all underpayments or pitfalls.
- We negotiate for better terms or increased sums if possible.
- Once you accept the final version, we provide your ILA certificate.
- You send the signed deal and certificate to your employer, and payment usually follows within days.
Never resign or sign without our solicitors’ advice—this protects both your bargaining position and your future legal claims.
Why Choose Settlement Agreement Lawyers?
Redundancy exit offers are high-stakes and fast-moving. Here’s why employees trust us:
- Our advice is free to you—your employer must pay our legal fees.
- Our fees are capped at your employer’s fixed contribution—never any hidden cost.
- All appointments are remote and often same-day, so you meet urgent deadlines with ease.
- Our solicitors are fully SRA-regulated specialist redundancy and settlement lawyers.
- We deliver clear, technical expertise plus negotiation strength for every package.
- Over 1,400 five-star client reviews—see client success stories.
For fast, expert, free advice call us now on 0800 054 1144 or book your settlement agreement advice online. Our fees are paid by your employer and you keep every improvement we secure.
Frequently Asked Questions About Redundancy exit offers this week: how to spot when notice pay, redundancy pay and PILON are being underpaid
How do I check if my redundancy pay is correct?
To check redundancy pay, use the redundancy calculator with your weekly pay, age, and service. Compare the result to your HR offer and your contract. For guidance, see the gov.uk redundancy rights page.
What counts as PILON and what should it include?
Pay in lieu of notice (PILON) covers all pay and benefits you would get during your notice period, including salary, allowances, holiday accrual, and regular bonuses. It should match what you’d have earned if you worked notice, unless your contract says otherwise.
Can my employer pay less than the statutory redundancy amount?
No, if you have at least two years’ service, your employer cannot pay you less than your statutory minimum. Any underpayment is unlawful, regardless of contract. Enhanced redundancy pay may be offered, but not less.
Am I entitled to be paid for untaken holiday and for bonuses?
Yes, you’re entitled to payment for accrued but untaken holiday, and any bonuses or commission earned prior to termination, if set out by your contract or scheme. Always check your payslips and agreements and seek advice if excluded.
Is redundancy pay tax-free?
Statutory redundancy pay and genuine ex gratia sums are tax free up to £30,000 but notice pay, PILON, bonus, and holiday pay are taxed as earnings. If your exit pay is more than £30,000, the balance is taxed. See the HMRC guidance on termination payments for details.
What if my exit offer seems too low or unclear?
Request a detailed breakdown from HR, run your own calculation via the redundancy calculator, and get legal review. Do not sign before taking advice from our solicitors, who can spot problems and secure better terms.
How quickly can I get legal advice on a redundancy settlement?
Most clients get same-day remote appointments with our solicitors. You can call us or book online to get rapid expert review—no charge to you, as your employer pays for your advice.
Is it risky to sign a settlement agreement without legal advice?
Yes. You risk missing due pay, unfair restrictions, or waiving important rights. Legally binding waivers require ILA. For absolute protection, consult our solicitors before signing any document.
Redundancy exit packages are often under-calculated or missing key sums—especially notice pay, redundancy pay, and PILON—when employers use templates or rush the process. Our solicitors provide detailed, independent legal advice (paid for by your employer) so you get everything owed and spot every risk before you sign. For fast, expert support on redundancy offers, call Settlement Agreement Lawyers on 0800 054 1144 or book your settlement agreement advice online for a same-day remote appointment.
