Redundancy pay vs notice pay

These are different legal payments. Redundancy pay compensates for loss of role when eligibility conditions are met. Notice pay covers your notice period, whether you work that period or are paid instead.

Quick comparison

• Redundancy pay: based on age, full years of service, and capped weekly pay under statutory rules (or contractual enhancement if offered).
• Notice pay: based on your notice entitlement under contract or statutory minimum notice rules.

Can you receive both?

Usually yes. If you qualify for statutory redundancy pay, receiving notice pay does not normally remove that entitlement. Many settlement letters include both lines and they should be itemised separately.

Tax treatment is usually different

Redundancy compensation may be tax-free up to relevant limits. Notice pay is typically taxed like normal earnings through PAYE. This is one reason net pay at termination often looks lower than expected.

Simple example

Example: statutory redundancy amount GBP 7,190 and notice pay GBP 3,000. The first line may be tax-free (subject to rules), while the notice line is generally taxed as income. If both are merged into one line, ask payroll for a split before accepting the final statement.

Checks before signing off your final figure

• Ask HR for written separation of redundancy and notice lines.
• Confirm years of service and weekly cap assumptions used for statutory redundancy.
• Check whether your contract gives better notice terms than statutory minimum.
• Keep your consultation letters, contract, and final payslip together.

Start with the redundancy calculator to estimate the statutory piece, then compare with employer paperwork.

Official sources

• GOV.UK: Redundancy rights
• GOV.UK: Notice periods in redundancy
• Acas: Notice when being dismissed or made redundant
• Acas: Redundancy pay

Information only, not legal advice.