Negotiating a Redundancy Package with Your Employer

Why redundancy packages are often open to negotiation

Redundancy packages are not always set in stone. The scope for discussion varies by company and by the seniority of your role, but in many cases there is room to talk through the terms with your employer. You can do this directly, or instruct a solicitor to do it on your behalf. As a general rule, do not agree too hastily to the first offer. Ask to see the proposals in writing, say you would like time to consider them, and then come back with your own thoughts.

Before accepting any offer, it is worth checking whether the terms are reasonable. Our free Settlement Agreement Checker can give you a sense of whether what you have been offered is fair for your role, length of service and circumstances.

Know your statutory baseline first

Before you can negotiate sensibly, you need to know what you are entitled to as a minimum. In most cases this includes:

• Statutory redundancy pay, if you have at least two years of continuous service. The amount depends on your age, length of service and weekly pay, subject to a statutory cap. These figures are usually updated each April, so it is worth checking the current numbers on GOV.UK before doing your sums.
• Your contractual or statutory notice period, or pay in lieu of notice.
• Any accrued but untaken holiday pay.
• Any enhanced redundancy terms set out in your contract, staff handbook, or a collective agreement.

Anything offered above this baseline is generally where the room for discussion lies, although it is worth being realistic. Some employers stick rigidly to the statutory minimum or follow a fixed internal formula, particularly in larger redundancy exercises, and in those cases the room to move may be limited.

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Understanding your negotiating leverage

If you are heading into a discussion with your employer, it helps to understand what leverage you actually have. Why is the company willing to talk to you at all, rather than simply paying the statutory minimum and showing you the door?

First, do not underestimate the goodwill factor. If you have worked with your line manager or HR contact for a long time, they may feel uncomfortable about the situation, and that often translates into a willingness to be reasonable. For this reason, it is usually better to avoid an adversarial approach at the start, and to keep the tone cordial and professional. You can always escalate later if you need to.

Second, if the firm is continuing to trade, the employer normally wants a clean break. A signed settlement agreement, in which you waive your right to bring claims in the employment tribunal, has real value to them. That is why companies often pay more than the statutory minimum: they are buying certainty. The stronger your potential claims, for example around unfair selection, a flawed consultation process, discrimination, or breaches of your contract, the more that certainty is worth.

Third, your knowledge, contacts and handover matter. If the business needs your cooperation to transfer work, train a replacement, or maintain client relationships during a notice period, that gives you a practical reason to be treated well.

What you may be able to negotiate

A redundancy package is rarely just a single number. There are several elements you may be able to influence, depending on your circumstances and how much flexibility your employer has:

• The ex gratia or compensation payment. This is the discretionary lump sum on top of statutory redundancy pay. The first £30,000 of genuine compensation for loss of employment is generally tax free, although tax rules can change, so it is worth confirming the current position on GOV.UK or with a tax adviser.
• Notice pay. You may prefer to be paid in lieu rather than work your notice, or vice versa, depending on your situation.
• Bonus and commission. If a bonus year is part-completed, you may be able to argue for a pro rata payment.
• Share options or long-term incentives. Check the scheme rules to see what happens to unvested awards on a "good leaver" basis.
• Pension contributions. An additional employer contribution can sometimes be more tax efficient than extra cash.
• Private medical cover or other benefits. These can sometimes be extended for a few months after your leaving date.
• An agreed reference. A factual or, where possible, positive reference written into the agreement can be very useful.
• Outplacement support. Coaching, CV help and job-search support are often provided by a third party at modest cost to the employer.
• The announcement and wording. How your departure is communicated internally and externally can matter for your next role.

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

Practical steps for the conversation

The way you handle the discussion often matters as much as the points you raise. A simple approach works well:

1. Ask for the offer in writing before you respond in detail.
2. Take time to read it properly. Most employers expect you to come back after a few days, not on the spot.
3. Work out your statutory baseline so you know what is genuinely on the table.
4. Prepare your counter-proposal in writing. Set out what you are asking for and, briefly, why.
5. Anchor your reasoning in concrete points. For example, if you have fifteen years of service and trained two of the people staying behind, say so. If you were scored against criteria that were never properly explained, flag that. If a colleague at the same level recently left with a larger package, mention it.
6. Keep emotion out of the written exchanges, even if you feel the process has been unfair.
7. Be willing to trade. You may get more on the lump sum if you are flexible on the leaving date, or accept a shorter notice period in return for a better reference.

Getting legal advice and knowing when to accept

If you are offered a settlement agreement, independent legal advice is not optional. It is a legal requirement, designed to make sure you understand the rights you are giving up before you sign. The employer normally pays a contribution towards this cost. A solicitor can also negotiate on your behalf, which can help if the relationship has become strained, the sums involved are significant, or you think you may have a claim for unfair dismissal, discrimination or whistleblowing. Even in straightforward cases, a solicitor can sense-check whether the figures and wording are fair.

There usually comes a point where the employer has moved as far as they reasonably will, and pushing harder risks the offer being withdrawn or the relationship souring. If the package is broadly in line with what others in your position tend to receive, covers your immediate financial needs, and reflects the strength of any claims you might have, it may be the right moment to accept. Running the figures through our Settlement Agreement Checker, alongside a conversation with a qualified adviser, can help you make that call with more confidence.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Redundancy Pay Calculator lets you find out how much statutory redundancy pay you could be entitled to. Enter your details and get an estimate in less than a minute. Try it now →