Redundancy Notice 2026: Periods, Pay, Templates

Redundancy notice is one of the most scrutinised aspects of any redundancy process. Employers often focus on selection criteria and consultation mechanics, but miscalculating or mishandling notice can be just as legally damaging. Errors around notice periods, payment in lieu, tax treatment or timing frequently underpin wrongful dismissal claims and can also contribute to findings of unfair dismissal if the overall process is flawed.

A redundancy dismissal is still a dismissal in law. That means statutory notice rules under the Employment Rights Act 1996 apply unless a longer contractual notice period overrides them. Employers must also ensure that notice is issued following a fair and meaningful consultation process, particularly in collective redundancy situations where additional statutory duties arise. For wider compliance context, see our employment law guidance at https://www.davidsonmorris.com/employment-law/.

What this article is about

This guide explains the legal framework governing redundancy notice in the UK. It sets out how to calculate statutory and contractual notice periods, whether employees must work their notice, how notice pay differs from redundancy pay, and how tax rules apply. It also addresses practical employer risk areas such as consultation timing, PILON drafting and notice letter content. The aim is to give employers a compliance-first, commercially focused understanding of redundancy notice obligations and the risks of getting them wrong. For practical background on the wider redundancy process, including sequencing and documentation, see our related guidance.

Section A: What Is a Redundancy Notice?

Redundancy notice is the formal notification that an employee’s employment will terminate by reason of redundancy. It is not the same thing as consultation, and it is not simply an administrative letter confirming an outcome. In legal terms, it is the employer exercising its right to terminate the contract of employment on notice, relying on redundancy as the potentially fair reason for dismissal.

For employers, understanding what redundancy notice is — and what it is not — is critical. Many tribunal claims arise not because redundancy was an invalid reason, but because the dismissal process, including notice handling, was procedurally or contractually defective. Employers should therefore treat redundancy notice as a key compliance step within the wider redundancy process, not a formality.

1. Legal Meaning of Redundancy Notice

A redundancy dismissal occurs where the employer’s requirement for employees to carry out work of a particular kind has ceased or diminished, or is expected to do so. If the employer decides to dismiss on that basis, statutory notice rules apply unless the contract provides for a longer period.

Redundancy notice therefore serves two practical legal functions:

• It confirms that dismissal will take place.
• It triggers the notice period during which statutory and contractual rights continue to apply.

Failing to provide the correct notice period can amount to breach of contract and lead to wrongful dismissal exposure (including claims for notice pay shortfalls). Even where redundancy is a potentially fair reason for dismissal, defective notice handling may also undermine the employer’s overall defence to an unfair dismissal claim if it forms part of a wider procedurally unfair process.

The key point for employers is that redundancy does not displace notice obligations. The fact that a role is redundant does not permit summary termination unless there is separate lawful justification, such as gross misconduct.

Section Summary: Redundancy notice is the formal act of dismissal for redundancy and it triggers notice rights. If the notice period is wrong, the primary risk is wrongful dismissal, and it can also feed into unfair dismissal risk where the overall process is flawed.

2. Redundancy Notice vs Redundancy Consultation

Redundancy notice and redundancy consultation are often confused, but they serve distinct legal purposes.

Consultation is the process by which the employer explains the proposed redundancy situation, considers alternatives, and allows employees or their representatives to respond before a final decision is made. Notice, by contrast, is issued once a final decision to dismiss has been taken.

Issuing notice before consultation has been meaningful risks a finding that the decision was predetermined. In individual redundancy situations, this may contribute to an unfair dismissal finding. In collective redundancy situations, premature decisions can expose the employer to protective award claims and also increase the risk of challenge to the quality of consultation.

Employers should therefore keep the stages clearly separated in both communications and documentation:

• “At risk” notification and consultation (see redundancy consultation guidance).
• Fair selection and scoring (including objective redundancy selection criteria and a defensible scoring approach).
• Decision confirmation and notice of dismissal.

In collective redundancy scenarios (proposals for 20 or more redundancies within 90 days at a single establishment), employers must also comply with collective consultation duties. The collective process is normally conducted through recognised trade unions or elected employee representatives, and employers should ensure the consultation structure aligns with collective consultation rules.

Employers should also be alert to discrimination risk in selection and scoring. Redundancy decisions must be free from unlawful bias and supported by evidence, particularly where absence, disability, pregnancy, age or other protected characteristics may intersect with selection outcomes. For related risk management, see our guidance on discrimination at work.

Accompaniment point (accuracy): Employees do not have an automatic statutory right to be accompanied at individual redundancy consultation meetings in the same way as in disciplinary and grievance hearings. Many employers do allow a companion as good practice, and collective consultation necessarily involves representatives. If you allow companions in individual meetings, document the approach consistently and apply it fairly.

Section Summary: Consultation and notice are different stages. Consultation must be meaningful and properly evidenced, and notice should not be issued in a way that makes the outcome look predetermined. Selection must be objective and non-discriminatory to avoid unfair dismissal and Equality Act exposure.

3. When Redundancy Notice Should Be Given

There is no standalone statutory rule stating that notice can only be given after consultation has ended. However, as a matter of fairness and tribunal risk management, notice should ordinarily be issued once:

• Consultation has been completed meaningfully.
• Any representations from the employee have been considered.
• Suitable alternative employment options have been assessed.
• The selection decision is confirmed and documented.

At that point, the employer can issue notice of dismissal on redundancy grounds. Employers should also ensure that collective consultation obligations have been met where applicable, including the requirement to notify the Secretary of State using Form HR1 in collective redundancy situations, as failures can create serious compliance consequences.

Notice should be confirmed in writing as best practice to avoid disputes over timing, termination date and pay entitlements. Written confirmation is also important for evidencing fairness and clarity in the event of challenge. Employers should ensure that the written notice aligns with the employee’s contractual notice entitlement where it exceeds statutory minimum notice.

Section Summary: Notice is best issued after meaningful consultation and once decisions are finalised and evidenced. Written confirmation is strongly recommended as best practice, and collective redundancy situations require additional statutory steps including HR1 notification.

Section B: Redundancy Notice Period Rules

The redundancy notice period is the minimum amount of notice an employer must give before terminating employment for redundancy. Getting this calculation wrong is one of the most common technical errors in restructuring exercises. The legal exposure is immediate: underpayment of notice is a breach of contract and may give rise to wrongful dismissal claims, unlawful deduction of wages claims and reputational damage.

Notice periods are governed first by statute and then by contract. Employers must always apply whichever entitlement is greater. Redundancy notice must also sit within a fair and defensible redundancy process, particularly where selection and consultation are under scrutiny.

1. Statutory Redundancy Notice Periods

Under the Employment Rights Act 1996, employees are entitled to minimum statutory notice based on continuous service:

• At least one week’s notice if employed for one month up to two years.
• One week’s notice for each complete year of service if employed between two and twelve years.
• A maximum of twelve weeks’ notice if employed for twelve years or more.

These are minimum legal entitlements. They apply regardless of whether the redundancy is voluntary or compulsory. Employers managing either compulsory redundancy or voluntary redundancy must still comply with statutory notice requirements.

For example:

• An employee with 18 months’ service is entitled to 1 week’s notice.
• An employee with 5 complete years’ service is entitled to 5 weeks’ notice.
• An employee with 20 years’ service is entitled to the statutory maximum of 12 weeks.

The statutory clock runs from the date notice is given. Employers must ensure that the termination date aligns correctly with contractual notice provisions, payroll cycles and any accrued entitlements.

Section Summary: Statutory notice is service-based and capped at 12 weeks. It applies to all redundancy dismissals and cannot be reduced by contract.

2. Contractual Notice Periods

Employment contracts frequently provide for longer notice periods than the statutory minimum. Senior employees in particular may have three months, six months or longer.

Where the contractual notice period exceeds the statutory minimum, the employer must honour the contractual period. Failing to do so constitutes breach of contract and exposes the business to wrongful dismissal claims.

Employers cannot lawfully contract out of statutory minimum notice. Any contractual provision that purports to give less than the statutory minimum will be unenforceable.

From a compliance perspective, employers should:

• Review the employee’s written contract before issuing notice.
• Confirm whether enhanced notice applies.
• Ensure internal redundancy documentation reflects contractual entitlements.

Inconsistent application of contractual notice across employees in comparable roles can also create employee relations issues and may increase risk of challenge, particularly where selection decisions are already sensitive.

Section Summary: Where contractual notice exceeds statutory notice, the contractual entitlement prevails. Employers must check contracts carefully before issuing redundancy notice.

3. Calculating Continuous Employment

Continuous employment determines both statutory notice entitlement and eligibility for statutory redundancy pay. Errors in calculating service frequently lead to underpayment disputes.

Continuous employment usually begins on the employee’s start date and runs until the effective date of termination. Certain breaks do not interrupt continuity, including:

• Statutory leave such as maternity, paternity, adoption or shared parental leave.
• Periods of sickness absence.
• Temporary cessations of work.
• Transfers under TUPE, where service transfers to the new employer (see TUPE redundancy guidance).

Days spent on industrial action do not typically break continuity but may not count towards calculating total length of service for certain entitlements.

Employers should verify:

• The correct start date.
• Any preserved service under TUPE or corporate restructuring.
• Whether any breaks affect continuity.

Accurate service calculation is essential before confirming both notice entitlement and redundancy pay.

Section Summary: Continuous service drives both notice and redundancy pay entitlement. TUPE transfers and statutory leave usually preserve continuity, and miscalculation is a frequent source of claims.

4. Extension of Redundancy Notice

Questions sometimes arise about extending redundancy notice, particularly where business needs change or redeployment opportunities emerge.

An employer cannot unilaterally extend notice unless the contract permits variation or both parties agree. Attempting to extend notice without consent risks breach of contract and potential constructive dismissal allegations.

If both parties agree to extend the notice period, this should be documented clearly in writing, confirming:

• The revised termination date.
• The continued application of notice pay and benefits.
• Any impact on redundancy pay timing.

Where a business withdraws notice entirely because redundancy no longer applies, careful legal handling is required. Withdrawing notice without employee agreement may create legal complications depending on timing and the employee’s response. Employers should ensure that any change aligns with the overall redundancy process and does not create inconsistency with prior communications.

Section Summary: Notice can only be extended or varied by agreement or contractual authority. Unilateral extension risks breach of contract and further claims.

Section C: Do Employees Have to Work Their Redundancy Notice Period?

Once redundancy notice has been issued, a practical question often arises: does the employee have to work during their notice period? The answer depends on the contract of employment and the employer’s operational decision. The default position in law is that notice is “working notice”, but employers have alternative options if the contract permits them.

Managing this stage correctly is important not only for operational continuity but also for payroll compliance, tax treatment and post-termination risk.

1. Working Notice

In the absence of any contractual provision allowing payment in lieu or garden leave, notice is normally worked. This means:

• The employee continues performing their duties.
• Salary and contractual benefits continue.
• All contractual obligations remain in force.

During working notice, employees remain bound by their duties of fidelity, confidentiality and any post-termination restrictions that are expressed to apply during employment.

From an employer perspective, working notice may be appropriate where knowledge transfer, project completion or client continuity is required. However, employers should consider morale, productivity and the potential risk of disengagement.

If an employee refuses to work their notice without lawful justification, the employer may treat that as a breach of contract. However, in redundancy situations, employers often adopt a pragmatic approach, particularly where the notice period is short.

Section Summary: Unless the contract provides otherwise, redundancy notice is normally worked. Salary and benefits continue in full during this period.

2. Garden Leave During Redundancy Notice

Garden leave involves instructing the employee not to attend work during the notice period while continuing to pay salary and benefits. The employee remains employed but does not perform active duties.

Garden leave is generally only enforceable where the employment contract contains an express garden leave clause. Without such a clause, excluding the employee from work may risk breaching contractual obligations in certain roles.

When lawfully applied, garden leave can:

• Reduce disruption within the workforce.
• Protect confidential information and client relationships.
• Preserve restrictive covenants by keeping the employee employed for the full notice duration.

During garden leave, employers must continue to provide full contractual pay and benefits unless the contract specifies otherwise. This includes pension contributions and other contractual entitlements.

Clear written communication is essential to avoid disputes about access to systems, handover obligations and ongoing availability requirements.

Section Summary: Garden leave may be used during redundancy notice where the contract permits it. The employee remains employed and entitled to full contractual pay and benefits.

3. Payment in Lieu of Notice (PILON)

Payment in lieu of notice allows the employer to terminate employment immediately while paying the employee the value of their notice entitlement.

Payment in lieu of notice (PILON) is typically only lawful where:

• The contract contains a PILON clause; or
• The employee agrees to accept payment in lieu.

If there is no contractual right to make a PILON, terminating immediately and paying notice as damages may technically constitute breach of contract. Although damages are often limited to notice pay, improper termination can have wider consequences, including potential impact on enforceability of post-termination restrictions.

From a payroll perspective, notice pay — including PILON — is treated as earnings for tax and National Insurance purposes. Employers must ensure payroll calculations are accurate and compliant with HMRC rules.

When calculating PILON, employers should confirm whether the contractual clause requires:

• Basic salary only; or
• Salary plus benefits and allowances that would have been earned during notice.

Poorly drafted PILON clauses are a common source of litigation, particularly for senior employees with complex remuneration packages. In some cases, employers may also consider a redundancy settlement agreement to formalise enhanced terms and manage risk.

Section Summary: PILON allows immediate termination with notice pay, but contractual authority is critical. Incorrect use can create breach of contract and post-termination enforcement issues.

4. Do Employees Have to Work During the Redundancy Consultation Period?

The consultation period precedes the issuance of redundancy notice. During this stage, employment continues as normal unless agreed otherwise.

Employees are generally required to continue working during consultation unless:

• They are placed on agreed leave.
• The employer exercises a contractual suspension or garden leave right.
• A separate arrangement is agreed.

Consultation itself does not automatically suspend working obligations. Confusion often arises because employees assume that being “at risk” of redundancy removes their duty to work. In legal terms, it does not.

Employers managing proposals involving 20 or more redundancies must also comply with statutory collective consultation duties, but this does not automatically alter day-to-day working obligations unless otherwise agreed.

Section Summary: Consultation and notice are separate stages. Employees normally continue working during consultation unless alternative arrangements are agreed or contractually authorised.

Section D: Redundancy Notice Pay & Redundancy Calculator Explained

Confusion frequently arises between notice pay and redundancy pay. They are separate legal entitlements, calculated differently and triggered by different rules. Employers who conflate the two risk underpayment claims, payroll errors and unnecessary disputes at termination.

This section clarifies how the payments interact and how redundancy calculations should be approached from a compliance perspective.

1. Notice Pay vs Statutory Redundancy Pay

Notice pay is the employee’s contractual or statutory pay during their notice period. It reflects what the employee would have earned had employment continued for that period.

Statutory redundancy pay, by contrast, is compensation for loss of employment where the employee has at least two years’ continuous service. It is calculated using a statutory formula based on age, length of service and weekly pay (subject to a statutory cap). For a detailed breakdown of eligibility and calculation principles, see our guidance on statutory redundancy pay.

An employee may receive both notice pay and redundancy pay. They serve different purposes:

• Notice pay compensates for the contractual or statutory notice period.
• Redundancy pay compensates for job loss in a qualifying redundancy situation.

If an employer provides payment in lieu of notice, redundancy pay remains separately payable where eligibility criteria are met.

Section Summary: Notice pay and redundancy pay are distinct entitlements. Employers must calculate and pay each separately where applicable.

2. How a Redundancy Calculator Works

Many employers refer to a “redundancy calculator”, but in practice this means applying the statutory formula correctly and consistently.

The statutory redundancy calculation works as follows:

• 0.5 week’s pay for each full year of service under age 22.
• 1 week’s pay for each full year of service between ages 22 and 40.
• 1.5 weeks’ pay for each full year of service aged 41 and over.

Only complete years of service count, and total service is capped at 20 years. Weekly pay is subject to an annually updated statutory maximum.

The calculation must be based on the employee’s age at the date of dismissal. Employers must ensure that service length is calculated accurately, including preserved service under TUPE where applicable.

From a risk perspective, errors most commonly arise where:

• Service is miscalculated.
• The statutory weekly cap is ignored.
• Enhanced contractual redundancy schemes are misapplied.

If the employer offers enhanced redundancy pay, the enhanced formula must be applied consistently to avoid discrimination risk and potential breach of contract.

Section Summary: A redundancy “calculator” applies the statutory age and service formula. Accuracy in service length and weekly pay is essential to avoid underpayment disputes.

3. Suitable Alternative Employment & Trial Period

Before confirming redundancy dismissal, an employer must consider whether suitable alternative employment exists within the organisation.

If a suitable role is offered and the employee unreasonably refuses it, they may lose their entitlement to statutory redundancy pay.

Suitability is assessed objectively and may include consideration of:

• Pay and benefits.
• Status and seniority.
• Location.
• Working hours.
• Required skills and responsibilities.

Employees who accept an alternative role are generally entitled to a statutory trial period, normally four weeks. The trial period can be extended by written agreement for retraining purposes. If the alternative role proves unsuitable during the trial, redundancy pay entitlement is normally preserved.

Whether a refusal is unreasonable depends on the circumstances. Employers should document their assessment carefully, particularly where pay, location or status differ materially from the original role.

Section Summary: Employers must consider suitable alternative roles before confirming dismissal. A statutory trial period usually applies, and refusal must be unreasonable before redundancy pay is forfeited.

4. Holiday, Bonus & Benefits During Notice

During notice, employees remain entitled to their normal contractual pay and benefits unless lawfully varied.

This may include:

• Accrued but untaken statutory and contractual holiday pay.
• Contractual bonuses, depending on scheme rules.
• Pension contributions.
• Car allowance or private medical cover.

Where employment terminates immediately under PILON, employers must confirm whether the PILON clause covers basic salary only or includes benefits.

Accrued statutory annual leave must be paid on termination if not taken. Failure to do so can result in unlawful deduction of wages claims and weaken the employer’s position in any related litigation.

Section Summary: Notice does not suspend contractual benefits. Employers must account for accrued holiday and contractual entitlements when calculating final payments.

Section E: Redundancy Letter Template UK – What Must Be Included

A redundancy notice letter is not simply a courtesy confirmation. It is the formal written record of dismissal and frequently becomes key evidence in any tribunal claim. Poor drafting, inconsistent dates or unclear pay calculations can undermine an otherwise defensible redundancy process.

While statutory minimum notice does not universally require written notice, written confirmation is strongly recommended as best practice. In practice, employers should always issue a formal redundancy notice letter following a consultation meeting in which the dismissal decision is confirmed.

1. Essential Contents of a Redundancy Notice Letter

A compliant redundancy notice letter should clearly and accurately set out the following:

Termination date
The letter must specify the employee’s final date of employment. This date must reflect the correct statutory or contractual notice period and must align with payroll processing. Ambiguity over the effective date of termination is a common source of dispute.

Notice period and how it will be handled
The letter should confirm:

• The length of the notice period.
• Whether the employee will work their notice.
• Whether garden leave will apply.
• Whether payment in lieu of notice (PILON) will be made.

If PILON applies, the letter should clarify how it has been calculated.

Redundancy pay entitlement
Where the employee has at least two years’ continuous service, the letter should set out:

• The statutory redundancy pay calculation.
• The weekly pay figure used.
• The number of qualifying years counted.
• Any enhanced redundancy payment offered.

Providing a clear breakdown reduces the likelihood of later challenge. For detailed guidance on calculation rules, see statutory redundancy pay.

Outstanding entitlements
The letter should confirm:

• Accrued but untaken holiday pay.
• Any bonus or commission position.
• Pension arrangements.
• Final salary payment date.

Failure to address these matters can lead to unlawful deduction of wages claims.

Right of appeal
Although redundancy is a business decision, a fair process includes the opportunity to appeal. The letter should:

• Explain how to submit an appeal.
• State the timeframe.
• Identify who will hear the appeal.

Next steps and post-termination obligations
The letter should outline:

• Return of company property.
• Confidentiality and restrictive covenant obligations.
• IT access arrangements.

Section Summary: A redundancy notice letter should clearly state the termination date, notice arrangements, pay breakdown and appeal process. Accuracy and clarity significantly reduce tribunal risk.

2. Common Drafting Errors

Several recurring drafting mistakes create avoidable legal exposure:

Incorrect notice calculation
Failure to check contractual notice clauses before drafting the letter can result in underpayment and exposure to wrongful dismissal claims.

Confusing consultation letters with dismissal letters
An “at risk” letter is not the same as a notice of dismissal letter. Mixing the two stages can suggest predetermination and undermine fairness in any subsequent unfair dismissal claim.

Poorly drafted PILON wording
Where PILON is used, ambiguity about whether benefits are included can lead to high-value disputes, particularly for senior employees.

Inconsistent dates
Discrepancies between the consultation meeting, the notice letter date and the termination date can create uncertainty over the effective date of termination.

Accuracy and internal cross-checking before issuing the letter are essential.

Section Summary: Most drafting disputes arise from incorrect notice calculations, unclear PILON wording and inconsistent documentation. Careful review before issue is critical.

3. Delivery of Redundancy Notice

The manner in which notice is delivered can affect both employee relations and litigation risk.

Face-to-face meeting
Best practice is to confirm the redundancy decision in a meeting, allowing the employee to ask questions and discuss next steps. The written letter should then be provided promptly.

Remote delivery
Where employees work remotely, a video meeting may be appropriate. The letter should follow immediately by email and, where appropriate, recorded post.

Record keeping
Employers should retain:

• Copies of all correspondence.
• Notes of consultation meetings.
• Evidence of service of the notice letter.

Clear documentation is vital if the redundancy process is later scrutinised, particularly where the fairness of selection or consultation is challenged.

Section Summary: Redundancy notice should be delivered clearly, respectfully and with complete documentation. Written confirmation and accurate records are central to defending any subsequent claim.

Section F: Redundancy Tax & Payroll Risk

Redundancy payments frequently trigger confusion around tax treatment. Employers must distinguish carefully between statutory redundancy pay, enhanced redundancy payments and notice pay. Errors at this stage can lead not only to employee disputes but also to HMRC exposure.

A compliant redundancy process therefore requires both employment law accuracy and payroll precision.

1. The £30,000 Tax-Free Threshold

Under current tax rules, genuine redundancy payments are generally tax-free up to £30,000. This threshold typically applies to:

• Statutory redundancy pay.
• Enhanced redundancy pay.
• Ex gratia termination payments.

However, not all termination payments fall within the £30,000 exemption. Payments that represent earnings are taxable in full.

Employers must therefore determine whether a payment is compensation for loss of employment or earnings arising from the employment contract. For a detailed breakdown of qualifying and non-qualifying payments, see is redundancy pay taxable.

Where the total qualifying redundancy payment exceeds £30,000, the excess is subject to Income Tax. Employer National Insurance contributions may also apply to the excess above the threshold. Employers must ensure correct payroll treatment at the point of payment.

Section Summary: Genuine redundancy payments may benefit from the £30,000 exemption, but only qualifying termination payments fall within this relief. Earnings are taxable in full.

2. Tax Treatment of Notice Pay (Including PILON)

Notice pay is treated differently from redundancy pay.

Where an employee works their notice, salary paid during that period is taxed as normal earnings.

Where employment terminates immediately and payment in lieu of notice (PILON) is made, statutory post-employment notice pay (PENP) rules apply. In practice, notice pay is treated as earnings and is subject to Income Tax and National Insurance contributions.

This means employers cannot treat notice pay as part of the £30,000 tax-free exemption. Attempting to do so risks payroll errors and HMRC penalties.

When calculating notice pay for payroll purposes, employers must confirm:

• The correct notice entitlement.
• Whether the PILON clause covers basic salary only or salary plus benefits.
• The correct tax and NIC deductions.

Payroll teams should be involved early in redundancy planning to ensure accurate treatment.

Section Summary: Notice pay, including PILON, is generally taxable as earnings under PENP rules and cannot be included within the £30,000 exemption.

3. Settlement Agreements and Tax Considerations

In some redundancy situations, employers use a settlement agreement to formalise enhanced payments or resolve potential claims.

Even within a settlement agreement, tax rules continue to apply. The agreement cannot recharacterise earnings as tax-free compensation where statutory tax rules treat the payment as taxable.

Employers should exercise caution where:

• Payments are split into different categories.
• There is ambiguity about what constitutes notice pay.
• Large ex gratia payments are involved.

Specialist legal and payroll advice may be appropriate in complex or high-value redundancies, particularly where enhanced terms are negotiated.

Section Summary: Settlement agreements do not override statutory tax rules. Employers must ensure that termination payments are categorised and taxed correctly.

Section G: Common Employer Risks in Redundancy Notice Management

Redundancy notice errors rarely occur in isolation. They tend to arise in pressured restructuring exercises where operational urgency overtakes procedural discipline. The financial and reputational consequences can be significant, particularly where multiple employees are affected.

Understanding the most common risk areas allows employers to build internal safeguards into redundancy planning.

1. Providing the Wrong Notice Period

The most frequent technical error is miscalculating notice entitlement. This typically occurs where:

• Continuous service is miscalculated.
• Contractual notice is overlooked.
• The statutory maximum is incorrectly applied.
• Notice is calculated from the wrong date.

Providing insufficient notice constitutes breach of contract and may lead to wrongful dismissal claims. Even small underpayments can trigger formal disputes.

Employers should implement a structured verification process before issuing notice letters, including HR and payroll sign-off.

Section Summary: Incorrect notice calculation is one of the most common redundancy errors and exposes the employer to breach of contract claims.

2. Confusing Consultation and Dismissal

Issuing notice before meaningful consultation has concluded can suggest that the outcome was predetermined. While redundancy is a potentially fair reason for dismissal, a procedurally flawed process may result in findings of unfair dismissal.

In collective redundancy situations, failure to follow statutory consultation timelines can expose employers to protective awards of up to 90 days’ pay per affected employee.

Clear separation between:

• “At risk” communication.
• Consultation meetings.
• Final dismissal notice.

is essential to demonstrate procedural fairness.

Section Summary: Consultation and dismissal must remain distinct stages. Predetermination risk is a common vulnerability in redundancy claims.

3. Mishandling Payment in Lieu of Notice (PILON)

PILON clauses are frequently misunderstood. Common problems include:

• Exercising PILON where no contractual right exists.
• Under-calculating notice pay.
• Excluding contractual benefits without justification.
• Incorrect tax treatment.

In senior employee cases, PILON disputes can involve significant sums. Employers should review contractual wording carefully before exercising the clause and ensure payroll treatment aligns with tax rules.

Section Summary: Incorrect use of PILON can create breach of contract risk and significant financial exposure.

4. Failing to Consider Suitable Alternative Employment

An employer must consider whether suitable alternative roles exist within the organisation before confirming redundancy dismissal.

Failing to explore redeployment opportunities can undermine the fairness of the dismissal. Equally, mishandling offers of alternative employment — particularly in relation to trial periods — can lead to disputes over redundancy pay entitlement.

Employers should document:

• Alternative roles considered.
• Why they were or were not suitable.
• The employee’s response.

Section Summary: Alternative employment must be properly considered and documented to protect redundancy pay entitlement decisions.

5. Errors in Continuous Employment Calculations

Misunderstanding preserved service under TUPE or statutory leave periods can lead to incorrect notice and redundancy pay calculations.

Particular care should be taken where:

• The employee has transferred from another employer.
• There have been changes to corporate structure.
• Service includes periods of statutory leave.

Accurate employment records are critical in defending pay calculations.

Section Summary: Continuous service errors frequently underpin notice and redundancy pay disputes.

6. Overlooking Time Off to Seek Work

Employees with at least two years’ service are entitled to reasonable paid time off to look for work or undertake training once under notice of redundancy, subject to statutory limits.

Failure to accommodate reasonable requests can generate grievances and weaken the employer’s position in any subsequent tribunal claim.

Clear communication about how requests should be made and approved reduces friction during the notice period.

Section Summary: Time off rights during notice must be respected and managed consistently.

7. Poor Documentation

Tribunal claims are often determined by documentation rather than recollection. Employers who fail to retain:

• Consultation notes.
• Selection scoring matrices.
• Notice letters.
• Pay calculations.

place themselves at unnecessary evidential disadvantage.

Robust record keeping should form part of any redundancy project plan, particularly where multiple dismissals are involved.

Section Summary: Documentation underpins defensibility. Weak records are a recurring theme in unsuccessful tribunal defences.

Section H: Summary & Employer Action Points

Redundancy notice is a legally significant stage in any workforce reduction. It formalises dismissal, triggers statutory and contractual notice rights and activates final pay calculations. Even where redundancy is a genuine business necessity, errors in notice handling can convert a defensible dismissal into a wrongful dismissal or unfair dismissal claim.

Employers must ensure that notice is issued only after meaningful consultation has concluded and decisions are properly documented. The correct notice period must be calculated by reference to both statutory minimum requirements and any longer contractual entitlement. Continuous service must be verified carefully, particularly where TUPE transfers or statutory leave are involved.

Notice pay and redundancy pay are separate entitlements and must be calculated independently. Where payment in lieu of notice is used, contractual authority should be confirmed and payroll treatment must comply with tax rules. Redundancy payments up to £30,000 may benefit from tax exemption, but notice pay is generally treated as taxable earnings.

To reduce legal and financial risk, employers should:

• Verify statutory and contractual notice entitlement before issuing dismissal letters.
• Separate consultation from dismissal clearly and document both stages.
• Confirm payroll treatment of notice pay and redundancy pay in advance.
• Provide a clear written redundancy notice letter setting out termination date, pay breakdown and appeal rights.
• Maintain detailed records of calculations, correspondence and consultation notes.

A structured, compliance-focused approach to redundancy notice significantly reduces tribunal exposure and strengthens the employer’s position if challenged.

Section Summary: Redundancy notice must be handled with the same care as selection and consultation. Accurate calculation, proper sequencing and thorough documentation are central to legal compliance.

Section I: FAQs

1. What is a redundancy notice period?

A redundancy notice period is the minimum amount of notice an employer must give before terminating employment for redundancy. It is determined by statutory rules and may be extended by contractual terms.

2. How much notice do you get for redundancy?

Statutory minimum notice is one week if employed between one month and two years, one week per complete year of service between two and twelve years, and a maximum of twelve weeks for twelve or more years of service. A longer contractual notice period overrides the statutory minimum.

3. Do I have to work my redundancy notice period?

In most cases, yes. Notice is normally worked unless the employer places the employee on garden leave or exercises a contractual payment in lieu of notice (PILON) clause.

4. Can my employer put me on garden leave during redundancy?

Yes, if the employment contract allows it. During garden leave, the employee remains employed and must receive full contractual pay and benefits.

5. Can redundancy notice be extended?

Notice can only be extended if the contract allows variation or both parties agree. Unilateral extension risks breach of contract.

6. Do I have to work during the redundancy consultation period?

Yes. Consultation takes place before notice is issued, and employees are generally expected to continue working unless alternative arrangements are agreed.

7. How is redundancy pay calculated?

Statutory redundancy pay is calculated using a formula based on age, length of service (up to 20 years) and weekly pay, subject to a statutory cap. For detailed guidance, see statutory redundancy pay.

8. Is redundancy pay taxable?

Genuine redundancy payments are generally tax-free up to £30,000. Notice pay and salary are taxed as earnings. For more detail, see is redundancy pay taxable.

9. What should a redundancy notice letter include?

It should state the termination date, notice period, whether notice will be worked or paid in lieu, redundancy pay calculation, outstanding entitlements and appeal rights.

10. Can I claim unfair dismissal for redundancy?

Yes, if the redundancy process was not handled fairly, consultation was inadequate or selection was discriminatory. Employees generally require two years’ continuous service to claim ordinary unfair dismissal.

Section J: Glossary

Section K: Useful Links