If your employer has just given you a redundancy figure and you're wondering whether that's all there is, you're asking the right question.
Statutory redundancy pay is the legal minimum. Enhanced redundancy pay is anything your employer offers on top of that. The difference can be thousands of pounds, and a lot of people don't realise they might be entitled to more than the basic amount.
Statutory redundancy pay
This is set by law. Every employer has to pay it if you've been continuously employed for at least 2 years and you're being made genuinely redundant.
The formula is based on your age, length of service (up to 20 years), and weekly pay (capped at £719 from 6 April 2025). The maximum you can get is £21,570.
It's not a lot, especially if you've been there a long time and earn a decent salary. That cap at £719 a week means someone earning £60,000 gets the same statutory payout as someone earning £37,000.
You can work out your exact figure using our free calculator.
Enhanced redundancy pay
This is the extra your employer pays on top of the statutory amount. It's not required by law. But many employers offer it, and there are several ways it can happen.
A company redundancy policy. Some employers have a written policy that offers a multiplier above the statutory formula. For example, "two weeks' pay per year of service" instead of the statutory one week. These are often in your staff handbook or on the company intranet. Your employer won't always tell you about it, so check.
Your employment contract. Some contracts include enhanced redundancy terms. If it's in your contract, it's a contractual entitlement, not a discretionary bonus. Your employer has to honour it.
Custom and practice. If your employer has consistently paid enhanced redundancy to other employees, you may be able to argue it's become an implied term of employment. This is harder to prove, but it's worth knowing about if colleagues have received enhanced packages in previous rounds.
Negotiation. Even if there's no formal scheme, you can negotiate for more. This is especially true if your employer made mistakes in the redundancy process, if you have long service, or if they want you to sign a settlement agreement.
How to find out what you're entitled to
- Read your contract. Look for anything about redundancy pay, enhanced terms, or termination payments.
- Check the staff handbook. Company redundancy policies are often buried in handbooks or HR portals rather than individual contracts.
- Ask HR. A direct question: "Does the company have an enhanced redundancy policy?" They have to answer honestly.
- Talk to colleagues. If others have been through redundancy at the same company, ask what they received. Previous payments can set a precedent.
The tax difference
Both statutory and enhanced redundancy pay fall within the £30,000 tax-free allowance for termination payments (ITEPA 2003, s.403). So the first £30,000 of your total package (statutory plus enhanced combined) is tax-free.
If your total goes over £30,000, only the amount above that threshold is taxed.
Notice pay and holiday pay are always taxed as normal earnings and sit outside this allowance.
Why this matters
The difference between statutory and enhanced can be huge. Someone with 10 years' service earning £50,000 would get around £7,190 in statutory redundancy pay. An enhanced scheme paying two weeks per year of service at actual salary would give them £19,230.
That's £12,000 more. And if there are process failures on top of that, a negotiated settlement could push it higher still.
Don't assume you're only getting statutory. Check your contract, check the handbook, and ask the question.
This article is general guidance about UK redundancy rights. It's not legal advice and shouldn't be treated as a substitute for advice from a qualified employment solicitor.