Enhanced Redundancy Pay Calculator UK — Above Statutory 2026

Enhanced redundancy pay is anything above the statutory minimum, and the gap between the two is often large. Statutory pay is capped at £751 a week and £22,530 in total from 6 April 2026, so anyone earning well above the cap or with long service can find the statutory figure bears little relation to their actual salary. Enhanced schemes close that gap by lifting the weekly cap, raising the multiplier, or removing the 20-year service limit. This page explains the common structures, how to find out whether you are entitled to one, and where the £30,000 tax threshold starts to bite.

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What counts as enhanced redundancy pay

Enhanced redundancy pay is any redundancy payment that exceeds the statutory formula. It is not a legal requirement — no employer has to offer it — but where it is written into a contract, a staff handbook, a redundancy policy or a collective agreement, it becomes contractually enforceable rather than discretionary.

The distinction matters. A contractual enhanced scheme is something you are owed and can pursue if the employer fails to apply it. A discretionary ex gratia offer made at the point of redundancy is something you are negotiating for. Which one you are dealing with determines how the conversation should go.

Custom and practice can also create an entitlement. Where an employer has consistently paid enhanced terms over a long period, that consistency can itself become contractually binding even without anything written down — though establishing it is fact-specific and worth taking advice on.

How enhanced schemes are usually structured

Most enhanced schemes work by relaxing one or more of the three constraints in the statutory formula. Understanding which lever your employer's scheme pulls tells you quickly how much better off you are.

Worked example. Take someone aged 55 with 10 years of service earning £1,200 a week — well above the statutory cap. All ten years were worked at 41 or over, so the formula gives 10 × 1.5 = 15 weeks, and statutory pay uses the capped £751 figure: 15 × £751 = £11,265. An enhanced scheme that simply removes the cap and uses actual pay gives 15 × £1,200 = £18,000. One that also raises the multiplier to two weeks per year gives 20 weeks × £1,200 = £24,000 — more than double the statutory figure, and above the £30,000 tax threshold once notice and holiday are added.

  • Removing the weekly cap, so your actual gross weekly pay is used instead of £751
  • Increasing the multiplier — commonly two weeks per year of service regardless of age band
  • Removing or extending the 20-year service cap
  • Applying a flat multiple of annual salary, common in senior and executive schemes
  • Adding a fixed lump sum on top of the statutory calculation
  • Counting part years pro rata rather than ignoring them

How to find out whether you are entitled to enhanced terms

Check in this order, because the earlier sources are the ones that create enforceable rights.

Your employment contract and any offer letter come first — enhanced redundancy is sometimes written directly into individual terms, particularly for senior roles or where employment transferred from another employer under TUPE. Then the staff handbook and any standalone redundancy policy, noting whether the document says the terms are contractual or expressly discretionary.

If you are a union member, the collective agreement is often where the best terms sit, and your representative will know how the scheme has been applied in practice. Finally, ask HR directly and in writing for the redundancy policy that applies to you. A written request creates a record, which matters if the figure you are later offered does not match the policy.

If you transferred in under TUPE, your previous employer's enhanced terms may have carried across with you. This is frequently overlooked by both sides and is worth raising specifically.

Tax on enhanced redundancy pay: where £30,000 matters

Statutory redundancy pay can never breach the £30,000 tax-free threshold, because the statutory maximum is £22,530. Enhanced packages routinely do, which makes the tax treatment a live issue rather than a footnote.

A genuine redundancy payment is tax-free up to £30,000. Anything above that is taxed as employment income at your marginal rate. Notice pay is different again — pay in lieu of notice is taxable in full through PAYE with National Insurance, and it does not use up any of the £30,000 allowance.

This creates a distinction worth understanding when you read an offer. Two packages of identical headline value can leave you with materially different net amounts depending on how much of the total is characterised as genuine redundancy compensation versus notice pay, holiday and salary. HMRC looks at the substance of each element rather than the label, so restructuring an offer to relabel notice pay as redundancy compensation does not work.

Negotiating an enhanced offer

Where enhanced terms are contractual, there is usually little to negotiate — the scheme says what it says, and your task is checking the employer has applied it correctly. Errors in service dates and weekly pay calculations are common and worth verifying line by line.

Where the offer is discretionary, it is a negotiation, and the same logic applies as anywhere else: the employer is usually asking you to sign a settlement agreement waiving claims, and what that is worth to them sets the range. Leverage comes from specific facts — a flawed consultation process, selection criteria that look unobjective, potential discrimination, or a redundancy that does not look genuine.

A settlement agreement in the UK is only binding if you have received independent legal advice on it, and the employer is normally expected to contribute toward that cost. This is a legal requirement rather than a courtesy, so use it: the adviser is there to tell you whether the offer is reasonable, not merely to sign the certificate.

  • Verify the service dates and weekly pay figure before anything else — arithmetic errors are the most common problem
  • Ask for the redundancy policy in writing and check the offer against it
  • Ask the employer to increase its contribution to your legal fees if the agreement is complex
  • Consider what is negotiable besides cash: notice worked or paid, references, outplacement, retention of equipment

Frequently Asked Questions

What is enhanced redundancy pay?

Any redundancy payment above the statutory minimum. It is not legally required, but where it appears in a contract, staff handbook, redundancy policy or collective agreement it becomes contractually enforceable. Long-standing custom and practice can also create an entitlement even without a written scheme.

How much more is enhanced redundancy pay worth?

It depends which constraint the scheme relaxes. For someone aged 55 with 10 years service earning £1,200 a week, statutory pay is £11,265 using the capped £751 weekly figure. Removing the cap gives £18,000. Removing the cap and raising the multiplier to two weeks per year gives £24,000 — more than double the statutory amount.

How do I find out if I get enhanced redundancy?

Check your employment contract and offer letter first, then the staff handbook and any redundancy policy, noting whether the terms are described as contractual or discretionary. Union members should check the collective agreement. Ask HR in writing for the policy that applies to you, which also creates a record.

Is enhanced redundancy pay taxable?

A genuine redundancy payment is tax-free up to £30,000, and anything above that is taxed as employment income at your marginal rate. Notice pay is taxed in full through PAYE with National Insurance and does not use up any of the £30,000 allowance, so how the package is split between elements affects what you keep.

Can I negotiate enhanced redundancy pay?

If the scheme is contractual there is usually little room — check instead that the employer has applied it correctly, since service date and weekly pay errors are common. If the offer is discretionary it is a negotiation, and leverage comes from a flawed consultation, questionable selection criteria, or a redundancy that does not look genuine.

Does TUPE affect my enhanced redundancy entitlement?

It can. Where your employment transferred to a new employer under TUPE, enhanced redundancy terms from your previous employer may have transferred with you. This is often missed by both sides, so raise it specifically if you transferred in rather than assuming the current employer's standard scheme applies.

Do I need a solicitor for a settlement agreement?

Yes — a settlement agreement is only legally binding in the UK if you have received independent legal advice on its terms, and employers normally contribute toward that cost. Use the adviser properly: they are there to assess whether the offer is reasonable, not just to sign the certificate.

Is enhanced redundancy pay instead of statutory or on top?

Instead of, in most schemes — the enhanced figure replaces the statutory calculation rather than being added to it. Read the policy wording carefully, since a minority of schemes are structured as a top-up. Notice pay and accrued holiday remain separate entitlements either way.

Disclaimer

This calculator provides an estimate for planning purposes. It is not legal or financial advice, and enhanced redundancy terms vary entirely by employer — only your contract, policy or collective agreement determines what you are actually entitled to. Take advice from an employment solicitor or Acas before accepting a settlement, particularly where the package exceeds £30,000.

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