The Redundancy Roadmap
It feels chaotic, but the process is highly structured. Here is exactly what happens, step by step.
1. The "At Risk" Letter
You will receive a letter or email stating your role is "at risk of redundancy". This is not a dismissal. Not yet.
Action: Check your employment contract immediately. Look for "Enhanced Redundancy" terms. If they exist, calculate what the company owes you above the statutory minimum.
2. The Consultation
Your employer must meet you to discuss alternatives to dismissal. This is your chance to challenge your selection scores or suggest a different role.
- Under 20 redundancies: No fixed time limit, but must be "reasonable".
- 20-99 redundancies: Minimum 30 days before dismissal.
- 100+ redundancies: Minimum 45 days before dismissal.
3. Notice of Dismissal
If no alternative is found, you get a formal letter ending your employment. This triggers your Notice Period.
The Vital Choice:
- Worked Notice: You work usually, get paid usually. Taxed as normal salary.
- Garden Leave: You stay home but remain employed. Taxed as normal salary.
- PILON (Payment in Lieu): Employment ends immediately. You get a lump sum. Taxed as normal salary (fully taxable).
4. Final Pay & Tax-Free Limit
On (or shortly after) your final day, you receive your payments.
The £30,000 Rule
The first £30,000 of statutory (and
enhanced) redundancy pay is Tax-Free.
However, Notice Pay (PILON) and Holiday Pay are always taxed. They do not count towards the £30k allowance.
5. Insolvency (If Applicable)
If your employer has gone bust (liquidated), they can't pay you. You must claim from the government (Redundancy Payments Service) using form RP1.
You will need an "LN" reference number from the insolvency practitioner. Caps apply (e.g., weekly pay cap of £700 as of 2025/26).