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Dismissal and redundancy are not always the same
In the UK, notice pay and redundancy pay are linked to the reason your employment ends. A dismissal can happen for many reasons, while redundancy is a specific legal situation where your role is no longer needed. That difference matters because it affects what you may be entitled to receive.
If you are dismissed for misconduct, capability, or another non-redundancy reason, you may still be entitled to notice pay. However, you will not usually qualify for statutory redundancy pay unless the dismissal is genuinely a redundancy situation. Employers should be clear about the reason for ending the contract.
Notice pay rights on dismissal
Most employees are entitled to at least statutory notice, even if they are dismissed. The length of notice depends on how long you have worked for your employer, with a minimum of one week after one month’s service. Your contract may give you more than the legal minimum.
Sometimes an employer will choose to give pay in lieu of notice instead of making you work your notice period. This is often called PILON. Whether you receive notice worked, pay in lieu, or garden leave depends on your contract and the employer’s decision.
Redundancy pay rights
Statutory redundancy pay is only available if you qualify and your job ends because of redundancy. In general, you must be an employee with at least two years’ continuous service. The amount is based on age, length of service, and weekly pay, subject to the statutory cap.
If you are dismissed but the real reason is redundancy, you may still have a redundancy pay claim. The label your employer uses is not always decisive. What matters is whether the legal definition of redundancy applies to your situation.
Can both payments apply?
Yes, it is possible to receive both notice pay and redundancy pay. Redundancy pay compensates for the loss of your job due to redundancy, while notice pay covers the notice period you should have been given. They are separate entitlements.
For example, if your employer makes your role redundant and ends your employment immediately, you may be entitled to redundancy pay plus notice pay or pay in lieu of notice. The exact amount will depend on your contract, your service, and the circumstances of the termination.
If you think you have been treated unfairly
If you believe you were dismissed instead of made redundant to avoid redundancy payments, you may want to challenge the decision. Keep copies of letters, emails, your contract, and any redundancy consultation documents. These can help show what really happened.
You can raise the issue with your employer first, then consider ACAS early conciliation or legal advice if needed. If your redundancy or dismissal feels incorrect, acting quickly is important because strict time limits can apply.
Frequently Asked Questions
Notice pay is payment in lieu of the statutory or contractual notice period when employment ends. Redundancy pay is a separate payment due only when the job ends because the employer needs fewer employees to do work of a particular kind, or the business closes or moves. If you are dismissed for misconduct, redundancy pay is usually not due, though notice pay may still be due depending on the circumstances.
Most employees are entitled to notice pay if their employment ends, subject to contract and minimum legal notice rules. Statutory redundancy pay is usually only available to employees with at least 2 years' continuous service who are made redundant and meet the legal conditions.
Notice pay is usually based on your normal pay for the notice period you are owed. Statutory redundancy pay is based on age, length of service, and weekly pay, up to the statutory cap. Contractual terms may provide more generous amounts than the legal minimum.
The statutory minimum notice is generally 1 week if employed between 1 month and 2 years, then 1 additional week for each full year of service up to 12 weeks. Your contract may require more notice, and if so the contractual notice usually applies unless the statutory minimum is higher.
Redundancy pay is due when the dismissal is genuinely for redundancy and you meet the qualifying conditions, including usually 2 years' continuous service. It is not due simply because an employer ends the employment for performance, conduct, or other non-redundancy reasons.
Notice pay is usually due whenever employment ends unless you are dismissed without notice for gross misconduct or the contract lawfully allows immediate termination. In redundancy situations, notice pay may be paid during a notice period or as pay in lieu of notice.
Yes, in many redundancy cases an employee can receive both notice pay and redundancy pay because they are separate entitlements. Notice pay relates to ending the employment, while redundancy pay compensates for losing the job because the role is no longer needed.
Yes. If an employee is dismissed for gross misconduct, they may lose the right to notice pay under the contract and may not be entitled to statutory notice pay in practice. Redundancy pay is not normally available because the dismissal is not for redundancy.
A dismissal for poor performance is usually not a redundancy dismissal, so redundancy pay is generally not due. Notice pay is often still due unless the contract or law allows the employer to end employment immediately or on payment in lieu.
Payment in lieu of notice, often called PILON, means the employer pays you instead of making you work your notice period. It can apply in both redundancy and dismissal cases. If redundancy applies, you may receive PILON for notice plus any redundancy payment separately.
Redundancy usually means the employer no longer needs your role because the business closes, the workplace closes, or there is a reduced need for employees to do work of a particular kind. If the real reason is capability or conduct, it is usually not redundancy.
No, the label is not decisive. What matters is the real reason for dismissal. If the genuine reason is redundancy and the employee qualifies, redundancy pay may be owed even if the employer uses a different description.
Yes. Statutory redundancy pay is the minimum legal amount for eligible employees. Some contracts, policies, or collective agreements provide enhanced contractual redundancy pay, which can be more generous. Notice pay may also be contractual if the contract gives more than the statutory minimum.
Generally, normal pay and payment in lieu of notice are subject to tax and National Insurance. Statutory redundancy pay is usually tax-free up to the first GBP 30,000, though anything above that may be taxable.
Holiday pay is separate from notice pay and redundancy pay. Any accrued but untaken holiday should usually be paid out when employment ends, whether the termination is by dismissal or redundancy.
Usually no, because redundancy pay is linked to being dismissed by reason of redundancy, not voluntary resignation. Notice pay may still arise if the employee gives notice and the employer ends the employment early, depending on the contract and circumstances.
Statutory notice pay can start from the beginning of employment, but the amount rises with service. Statutory redundancy pay generally requires at least 2 years' continuous employment with the employer.
In redundancy situations, employers are normally expected to consult before dismissal. Consultation does not remove the right to notice pay or redundancy pay. If a redundancy is confirmed, the employee may still be entitled to both, subject to the legal conditions.
They should check their contract, payslips, dismissal letter, and redundancy paperwork, and ask the employer for a written breakdown of the sums owed. If the dispute is not resolved, they may consider raising a grievance, contacting ACAS, or seeking legal advice.
Yes. A contract can increase notice rights or provide enhanced redundancy terms, but it cannot usually reduce statutory minimum rights below the legal floor. The employer must pay at least the minimum legal entitlement where it applies.
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