Redundancy pay, notice and what to check

Redundancy—the closure or reduction of a job role—is common in the UK, but it comes with clear legal obligations for employers and protections for employees. Whether you have worked here for two years or twenty, understanding what you are entitled to, what notice you must receive, and what happens if you hold a visa-sponsored job are essential if your role is at risk.

What counts as genuine redundancy?

Redundancy is not simply dismissal for poor performance or misconduct. For a redundancy to be lawful and fair, it must be based on a genuine business need: the role itself is closing, the work has diminished, or the organisation is restructuring and your position no longer exists. The role may be closed altogether or merged with another position, but it cannot be relabelled and handed to someone else at lower pay, nor can it be an excuse to dismiss someone you dislike.

Your employer must follow a fair process. This includes warning you that redundancy is a possibility, consulting you about why your role is affected, explaining the selection criteria if more than one person does your type of work, and giving you the chance to comment. The selection must be based on objective criteria—skills, qualifications, attendance, or performance records—not personal preference or discrimination. Any selection that disadvantages employees because of age, gender, disability, pregnancy, race, or other protected characteristics under the Equality Act 2010 is unlawful.

Statutory redundancy pay after 2 years' service

You are entitled to statutory redundancy pay if you have at least two years of continuous employment with the same employer and you are classified as an employee (not self-employed or a worker on an atypical contract). The relevant date for calculating service is when your notice period expires, not when you are first told.

Statutory redundancy pay is calculated by multiplying three factors: your age, your length of service (capped at 20 years), and your gross weekly pay (capped at £751 per week from 6 April 2026). The pay multiplier depends on your age during each completed year of service: you receive half a week's pay for each year worked under age 22, one week's pay for each year aged 22 to 40, and one and a half weeks' pay for each year aged 41 or over. This means the maximum statutory redundancy payment is £22,530.

Statutory redundancy pay is calculated on gross pay—your earnings before tax and National Insurance deductions. Your employer looks back 12 weeks before notice was given to work out your average weekly pay. If you earn more than £751 per week, only £751 is used in the calculation. If you earn less, the actual figure is used. Any taxable redundancy payment up to £30,000 is tax-free.

Notice period: separate from redundancy pay

Your notice period and redundancy payment are two separate legal rights. Even if you receive a large redundancy sum, your employer must still give you notice or pay you for the notice period.

Statutory notice depends on how long you have worked for your employer when notice is given. If you have worked for at least one month, you are entitled to a minimum of one week's notice. For every year of completed service, you get one additional week's notice, up to a maximum of 12 weeks. For example, if you have worked for four years and nine months, you are entitled to four weeks' notice. Some contracts offer longer notice; if they do, the longer period applies.

During your notice period, you continue to receive your normal pay and all contractual benefits. You keep your normal salary alongside any redundancy payment. Your employer can ask you to work your notice, or they can ask you to leave immediately and pay you 'in lieu of notice' (PILON)—a lump sum covering the salary you would have earned during the notice period. This notice pay is taxed as earnings, unlike the tax-free portion of redundancy pay.

Visa-sponsored workers: the 60-day deadline

If you are in the UK on a Skilled Worker visa or similar sponsored work visa (such as the former Tier 2 or ICT routes), redundancy creates an urgent immigration issue. Your visa is tied to your sponsoring employer and your specific job. When that employment ends, your permission to stay in the UK is no longer supported.

Your employer is required to report the end of your employment to the Home Office within 10 working days using the Sponsor Management System (SMS). Once that report is submitted, the Home Office begins the visa curtailment process. This typically results in a curtailment letter reducing your remaining visa to 60 days—or your original visa expiry date if there is less than 60 days left. The 60-day period gives you time to find a new sponsor, switch to a different visa route, or arrange to leave the UK.

Your options during the 60-day period are: find a new employer with a valid sponsor licence willing to sponsor you on a Skilled Worker visa; switch to another eligible visa route such as a Graduate Visa, Global Talent visa, or partner visa; or make arrangements to leave the UK. A new Skilled Worker role must meet the salary threshold (currently £41,700 or the going rate for the role, whichever is higher, though some roles have lower floors). Even if you have another job offer, the new employer still needs to assign you a Certificate of Sponsorship, which takes time, so act early.

If you hold a Skilled Worker visa and are close to reaching five years of continuous residence (the threshold for Indefinite Leave to Remain, or ILR), a gap in sponsorship of more than 60 days before your ILR application date can break your continuous residence requirement. Discuss timing carefully with an immigration adviser before your 60 days expire.

If you have dependants (spouse, partner, or children) who were granted permission to be in the UK based on your sponsorship, the Home Office will typically curtail their visas at the same time as yours, with the same 60-day timeline.

Settlement agreements and legal advice

Many employers offer a settlement agreement (also called a compromise agreement) instead of letting redundancy run its course. A settlement agreement is a legally binding contract that sets out your final pay, redundancy terms, references, and what you give up in return—typically the right to claim unfair dismissal, wrongful dismissal, or discrimination in an employment tribunal.

Before you sign a settlement agreement, you are entitled by law to seek independent legal advice from a solicitor, union official, or certified advice worker. Your employer must make a contribution towards the cost of this advice. Typical employer contributions range from £250 to £500 plus VAT, though more complex cases may justify higher sums. This contribution is usually capped at what you need to pay your solicitor; costs above that are your responsibility unless negotiated otherwise.

Your solicitor will review the agreement to check whether the terms are fair, whether you are giving up valuable rights, and whether the payment reflects what you are entitled to. They can also negotiate on your behalf for better terms. For the agreement to be legally enforceable, it must clearly state that you have received independent advice and have had a reasonable opportunity to take it. Without this, the agreement is void and your employer cannot rely on it to prevent claims.

A settlement agreement may also include non-compete clauses (preventing you from working for a rival), confidentiality obligations, or rules about what you can say to future employers. Review these carefully with your solicitor. Some clauses may be unenforceable if they are too broad or unfair.

What else to check in a settlement agreement

• That redundancy pay is calculated correctly using the statutory formula (or any enhanced formula if your contract provides it).
• That notice pay is included as a separate item and is taxed accordingly.
• That accrued holiday pay is paid out (any unused annual leave you are entitled to).
• That your final salary and any bonuses or commission owed are clearly stated.
• That the agreement confirms your employer is withdrawing sponsorship (if applicable) and states the date it will be reported to the Home Office.
• That you understand what rights you are waiving—unfair dismissal, discrimination, breach of contract, and so on.
• That the payment is sufficient to compensate you for the rights given up, especially if the redundancy was handled unfairly.
• That a good reference is offered or that the wording of any reference is agreed in writing.
• That any confidentiality or non-compete clause is reasonable in scope and duration.

Do not be afraid to ask for clarification on anything you do not understand. A good settlement agreement protects both you and your employer by bringing closure; a bad one can cost you thousands.

Key deadlines and next steps

• If you are a visa-sponsored worker: treat 60 days from your last day of employment as your deadline to find a new sponsor or switch visa routes. Act on day one.
• If offered a settlement agreement: request time to obtain independent legal advice. Do not sign under pressure.
• If you disagree with your redundancy pay: calculate what you are owed (using the statutory formula) and raise it in writing within a reasonable timeframe. If your employer refuses, you can take a claim to an employment tribunal within three months of the date your employment ended (subject to ACAS Early Conciliation first).
• If you believe the redundancy was unfair (poor selection, no consultation, discrimination): keep records of all communications and seek legal advice quickly. You have three months minus one day to lodge a tribunal claim, and you must contact ACAS first.

Where to find help

ACAS (Advisory, Conciliation and Arbitration Service) offers free telephone advice and guidance on redundancy and settlement agreements. Citizens Advice provides free information and support on redundancy rights and can refer you to local advisers. If you need legal representation, contact the Law Society or a specialist employment law solicitor. Immigration advice on visa options must come from a solicitor or adviser listed on the Office of the Immigration Services Commissioner (OISC) register.

Redundancy is stressful, but knowing your rights protects you financially and legally. Take your time, seek advice, and do not rush into any agreement without understanding what you are signing.