In the lumi reward benchmark, 60.5% of UK organisations offer some enhanced redundancy pay (58.2% + 2.3%) and 20.5% pay statutory redundancy pay only (n = 263, 2026 H1).
Key findings
- Enhanced redundancy pay on a standard formula is the common answer, at 58.2% (n = 263). 60.5% offer some enhanced redundancy pay (58.2% + 2.3%).
- Where pay is enhanced, a maximum of "More than 1.5× to 2×" the statutory entitlement is the common answer, at 26.3% (n = 99; 120 "Not applicable" answers excluded). 18.1% set a maximum above 2× (13.1% + 3.0% + 2.0%).
- A maximum of "13–26 weeks" of pay is the common answer, at 23.7% (n = 97; 122 "Not applicable" answers excluded). 43.3% use a maximum above 26 weeks (13.4% + 18.6% + 6.2% + 4.1% + 1.0%).
- Payment in lieu of notice (PILON) is the common approach to notice, at 55.7% (n = 201). An average redundancy cost of "3x-4x" monthly base salary is the common answer, at 31.8% (n = 236).
- 75.6% have a documented redundancy process applied consistently (n = 262). 16.7% review outcomes for fairness and bias (n = 246).
- "No outplacement support" is the common answer, at 45.6% (n = 261). Voluntary redundancy terms are the same as compulsory terms at 68.8% (n = 170).
- On avoiding dismiss-and-rehire, "No policy" and "Informal practice" are joint common answers, at 36.9% each (n = 263).
About the data
This paper reports how UK employers answered lumi's questions on redundancy and restructuring terms. The lumi reward benchmark covers 269 UK organisations across 14 sectors and five size bands. Data was collected in the 2026 H1 collection window. Each figure gives its base (n): the number of organisations that answered that question. Percentages are rounded to one decimal place, so a distribution can add up to 100.1%. Figures here are national. Sector and size comparisons are available to lumi members. See how lumi works for the method.
The legal context
Enhancement above the statutory redundancy entitlement, and support such as outplacement or pension bridging, is not set by statute. The GOV.UK timeline lists these related changes:
- 6 April 2026: the maximum protective award for collective redundancy was doubled.
- 1 October 2026: the employment tribunal time limit is extended from 3 to 6 months.
- January 2027: the unfair dismissal qualifying period is reduced to 6 months, the compensatory award is uncapped, and fire-and-rehire protections are introduced.
- 2027, timing to be confirmed: enhanced dismissal protection for pregnant women and new mothers.
The answers here were given in 2026 H1, before the October 2026 and January 2027 changes.
How many UK employers offer enhanced redundancy pay?
The first question asked: What redundancy pay terms does your organisation typically offer? (n = 263).
"Enhanced redundancy pay (standard formula)" is the common answer, at 58.2%. "Statutory only (no enhancement)" is an alternative, at 20.5%. "Discretionary / negotiated case-by-case" (19.0%) and "Enhanced redundancy pay (varies by grade/tenure)" (2.3%) are rare. Adding the two enhanced answers gives 60.5% (58.2% + 2.3%).
A standard formula fixes payments in advance. Cost is easier to estimate, but terms cannot be adjusted to a particular exercise. Discretionary terms keep that flexibility, at the price of predictability and of showing that similar cases were treated alike. "Rare" describes frequency, not merit.
The second question asked: Where redundancy pay is enhanced, what is the maximum enhancement offered, as a multiple of the statutory entitlement? (n = 99, excluding 120 "Not applicable" answers).
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| More than 1.5× to 2× | 26.3% | 26 | common |
| Varies by grade/tenure | 25.3% | 25 | — |
| More than 1× to 1.5× | 23.2% | 23 | alternative |
| More than 2× to 3× | 13.1% | 13 | rare |
| Up to 1× weekly pay | 7.1% | 7 | rare |
| More than 3× to 4× | 3.0% | 3 | rare |
| More than 4× | 2.0% | 2 | rare |
49.5% set a maximum above 1× and up to 2× (23.2% + 26.3%). 18.1% set a maximum above 2× (13.1% + 3.0% + 2.0%). For the 25.3% answering "Varies by grade/tenure", there is no single ceiling. A higher multiple gives leavers more income protection and raises the cost of each exit.
The third question asked: What is the maximum number of weeks' pay used to calculate redundancy payments? (n = 97, excluding 122 "Not applicable" answers).
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| 13–26 weeks | 23.7% | 23 | common |
| Varies by grade/tenure | 22.7% | 22 | — |
| 40–52 weeks | 18.6% | 18 | rare |
| 27–39 weeks | 13.4% | 13 | rare |
| Up to 12 weeks | 10.3% | 10 | rare |
| 53–78 weeks | 6.2% | 6 | rare |
| 79–104 weeks | 4.1% | 4 | rare |
| More than 104 weeks | 1.0% | 1 | rare |
34.0% use a maximum of up to 26 weeks (10.3% + 23.7%). 43.3% use a maximum above 26 weeks (13.4% + 18.6% + 6.2% + 4.1% + 1.0%).
The multiple scales the payment. The cap limits it for employees whose formula entitlement would exceed it, and so contains the cost of the largest payments.
How do UK employers calculate redundancy pay and handle notice?
The pay basis question asked: What pay basis is typically used to calculate redundancy payments? (n = 204).
The common answer is "Basic salary + contractual allowances", at 32.4%. "Average earnings over a reference period" (29.4%) and "Includes regular overtime" (27.5%) are alternatives. "Basic salary only" and "Includes variable pay (bonus/commission) where applicable" are rare, at 3.9% each. "Varies by employee group/contract" and "Other" are each given by 1.5%.
The basis matters most for employees with regular overtime, allowances or commission. Salary and fixed allowances are simple to calculate and forecast. Average earnings reflect actual pay but need a defined reference period and reliable records.
The notice question asked: How is notice typically handled in redundancy situations? (n = 201).
"Payment in lieu of notice (PILON) is typically used" is the common answer, at 55.7%. The other answers are rare: "Combination (depends on role/level/case)" at 17.4%, "Garden leave is typically used" at 11.4%, "Notice is typically worked" at 9.0% and "Case-by-case / discretionary" at 6.5%. 20.4% keep the employee employed through notice, on garden leave or working it (11.4% + 9.0%).
PILON gives an early, clean break, and the organisation gives up the employee's work for the notice period. Worked notice keeps that work and allows a handover. Garden leave keeps the employee employed but away from work, which can protect client relationships or confidential information.
The cost question asked: What did an average redundancy cost last year, as a multiple of monthly base salary? (n = 236).
"3x-4x", at 31.8%, is the common answer. "2x-3x" is an alternative, at 22.9%. The other bands are rare: "1x-2x" at 15.7%, "4x-5x" at 13.6%, "Less than 1x" at 9.7% and "More than 5x" at 6.4%. 51.8% report a cost in the "3x-4x" band or above (31.8% + 13.6% + 6.4%).
This figure reflects the choices above. The question does not list which cost items to include, so organisations may count different items.
Do UK employers enhance voluntary redundancy terms or offer outplacement?
The voluntary redundancy question asked: Do you offer voluntary redundancy terms enhanced above your compulsory terms? (n = 170, excluding 95 "Not applicable" answers). The common answer is "Same as compulsory terms", at 68.8%. "Yes — enhanced VR terms" is an alternative, at 31.2%.
Enhanced voluntary terms can draw more volunteers and reduce compulsory selection, at a higher cost per leaver. Volunteers select themselves, so the organisation has less say over who leaves. One set of terms for both routes keeps a single basis for costing.
The pension question asked: Is early-retirement or pension-bridging support offered in restructuring? (n = 266). "No", at 78.9%, is the common answer. "Case-by-case" (14.3%) and "Yes" (6.8%) are rare. 21.1% offer it at least case by case (6.8% + 14.3%). This support gives employees near retirement a route out other than a redundancy payment alone. Its cost depends on the pension arrangements in place.
The outplacement question asked: Is outplacement or career transition support offered? (n = 261). "No outplacement support" is the common answer, at 45.6%. "Yes – for some groups only" is an alternative, at 34.9%. "Yes – outplacement for all redundancies" (12.6%) and "Case-by-case" (6.9%) are rare. 47.5% answer yes, for all or for some groups (12.6% + 34.9%).
Outplacement is a cost per leaver on top of redundancy pay. Offering it to some groups targets that cost, and raises the question of which groups qualify and why.
Do UK employers have a documented redundancy process?
The process question asked: Is there a documented redundancy process applied consistently? (n = 262). "Yes" is the common answer, at 75.6%. "No" (19.5%) and "Partially (varies by region/business unit)" (5.0%) are rare.
The selection question asked: Are selection criteria for redundancy documented and objective? (n = 260). The common answer is "Yes", at 40.4%. "No" (32.7%) and "Partially" (26.9%) are alternatives. 59.6% answer "No" or "Partially" (32.7% + 26.9%).
A process sets out the steps; criteria decide who is selected. Written, objective criteria give a record of how each decision was reached. Criteria left partly to judgement allow a view of the individual case and leave less of that record.
The fairness question asked: Are redundancy outcomes reviewed for fairness and bias? (n = 246). "No", at 69.1%, is the common answer. "Yes" (16.7%) and "Sometimes / ad hoc" (14.2%) are rare. 30.9% review outcomes at least sometimes (16.7% + 14.2%). A review checks whether selections fall unevenly across groups of employees. It adds a step and needs workforce data.
The training question asked: Are line managers trained to manage redundancy conversations? (n = 252). The common answer is "No", at 64.3%. "Yes" (18.3%) and "Some managers only" (17.5%) are rare. 35.8% train at least some managers (18.3% + 17.5%). Training sets a common standard for these conversations, at a cost in time.
The legal changes above concern who can bring an unfair dismissal claim, when, and what can be awarded. Documented processes, criteria and outcome reviews are the record an organisation would draw on if a redundancy dismissal were challenged.
Do UK employers have a policy on dismiss-and-rehire?
The final question asked: When you change pay, pension or benefit terms, what is your policy on avoiding dismiss-and-rehire? (n = 263). "No policy" and "Informal practice" are joint common answers, at 36.9% each. "Documented policy" (19.4%) and "Policy + consultation route" (6.8%) are rare. 26.2% have a policy (19.4% + 6.8%).
The question asks about policy, not practice: "No policy" does not mean the organisation uses dismiss-and-rehire. A documented policy gives consistency and a record; a consultation route sets out how proposed changes are discussed. These answers predate the fire-and-rehire protections due in January 2027.
What the data means for reward decisions
Certainty against discretion. A standard formula gives employees and finance a known outcome. Discretionary terms keep flexibility and make consistency harder to show.
Generosity against cost. The multiple, the cap and the pay basis each move the size of a payment, and each acts on different employees.
Speed against continuity. PILON ends employment early and gives up the notice period's work. Worked notice and garden leave keep the employee employed for longer.
Volunteers against control. Enhanced voluntary terms can reduce compulsory selection, at a higher cost and with less say over who leaves.
Evidence against administration. Documented criteria, outcome reviews and manager training take time and data. They also record how decisions were reached, as unfair dismissal rules change in January 2027.
Questions a reward manager might ask of their own terms:
- Would two employees with the same grade and service receive the same payment?
- What do the multiple, the cap and the pay basis produce for a long-serving employee with regular overtime?
- What did an average redundancy cost last year, and which cost items does that include?
- Who receives outplacement or pension-bridging support, and on what grounds?
- Are selection criteria written down, and are outcomes checked for uneven effects?
- How are changes to pay, pension or benefit terms made, and how does that sit with the January 2027 fire-and-rehire protections?
Frequently asked questions
What percentage of UK employers offer enhanced redundancy pay? In the lumi reward benchmark, 60.5% of UK organisations offer some enhanced redundancy pay (58.2% + 2.3%, n = 263, 2026 H1). 58.2% use a standard formula and 2.3% vary it by grade or tenure, while 20.5% pay statutory only and 19.0% negotiate case by case.
How much more than statutory redundancy pay do UK employers pay? In the lumi reward benchmark, the common maximum enhancement is "More than 1.5× to 2×" the statutory entitlement, at 26.3% (n = 99, 2026 H1; 120 "Not applicable" answers excluded). 49.5% set a maximum above 1× and up to 2× (23.2% + 26.3%), and 18.1% set one above 2× (13.1% + 3.0% + 2.0%). For the 25.3% answering "Varies by grade/tenure", there is no single ceiling.
How many weeks' pay do UK employers use to cap redundancy payments? In the lumi reward benchmark, "13–26 weeks" is the common maximum, at 23.7% (n = 97, 2026 H1; 122 "Not applicable" answers excluded). 34.0% cap at up to 26 weeks (10.3% + 23.7%) and 43.3% use a maximum above 26 weeks (13.4% + 18.6% + 6.2% + 4.1% + 1.0%).
Do UK employers pay in lieu of notice in a redundancy? In the lumi reward benchmark, 55.7% of UK organisations typically use payment in lieu of notice (n = 201, 2026 H1). 20.4% keep the employee employed through notice, on garden leave or working it (11.4% + 9.0%).
How much does a redundancy cost UK employers? In the lumi reward benchmark, the common answer is an average cost of "3x-4x" monthly base salary, at 31.8% (n = 236, 2026 H1). 51.8% report "3x-4x" or above (31.8% + 13.6% + 6.4%). Organisations may count different cost items.
Do UK employers offer outplacement support in redundancy? In the lumi reward benchmark, 47.5% of UK organisations offer outplacement for all redundancies or for some groups only (12.6% + 34.9%, n = 261, 2026 H1). "No outplacement support" is the common answer, at 45.6%. Pension-bridging support is rarer: 21.1% offer it at least case by case (6.8% + 14.3%, n = 266).
Do UK employers document their redundancy process and selection criteria? In the lumi reward benchmark, 75.6% of UK organisations have a documented redundancy process applied consistently (n = 262, 2026 H1). Selection criteria are documented and objective at 40.4% (n = 260), and 30.9% review outcomes for fairness and bias at least sometimes (16.7% + 14.2%, n = 246).
Notes
- Base, "Not applicable" handling and rounding as described in "About the data".
- Three questions exclude "Not applicable" from the base: maximum enhancement (120 excluded, n = 99), maximum weeks' pay (122 excluded, n = 97) and enhanced voluntary redundancy terms (95 excluded, n = 170). For every other question, any "Not applicable" answers sit inside the base.
- "Varies" answers, "Other" and combined figures carry no prevalence word. Combined figures add listed percentages within one question.
- Answer options are quoted as worded in the questionnaire, including "Up to 1× weekly pay".
Data appendix
Every question on this page, with its base and full distribution, as a spreadsheet: download the CSV.
All national figures used in this paper, as recorded in the lumi reward benchmark (collection window 2026 H1).
What redundancy pay terms does your organisation typically offer?
Base: 263 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Enhanced redundancy pay (standard formula) | 58.2% | 153 | common |
| Statutory only (no enhancement) | 20.5% | 54 | alternative |
| Discretionary / negotiated case-by-case | 19.0% | 50 | rare |
| Enhanced redundancy pay (varies by grade/tenure) | 2.3% | 6 | rare |
| Not applicable | 0.0% | 0 | — |
Where redundancy pay is enhanced, what is the maximum enhancement offered, as a multiple of the statutory entitlement?
Base: 99 organisations · "Not applicable" excluded from base
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| More than 1.5× to 2× | 26.3% | 26 | common |
| Varies by grade/tenure | 25.3% | 25 | — |
| More than 1× to 1.5× | 23.2% | 23 | alternative |
| More than 2× to 3× | 13.1% | 13 | rare |
| Up to 1× weekly pay | 7.1% | 7 | rare |
| More than 3× to 4× | 3.0% | 3 | rare |
| More than 4× | 2.0% | 2 | rare |
What is the maximum number of weeks' pay used to calculate redundancy payments?
Base: 97 organisations · "Not applicable" excluded from base
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| 13–26 weeks | 23.7% | 23 | common |
| Varies by grade/tenure | 22.7% | 22 | — |
| 40–52 weeks | 18.6% | 18 | rare |
| 27–39 weeks | 13.4% | 13 | rare |
| Up to 12 weeks | 10.3% | 10 | rare |
| 53–78 weeks | 6.2% | 6 | rare |
| 79–104 weeks | 4.1% | 4 | rare |
| More than 104 weeks | 1.0% | 1 | rare |
What pay basis is typically used to calculate redundancy payments?
Base: 204 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Basic salary + contractual allowances | 32.4% | 66 | common |
| Average earnings over a reference period | 29.4% | 60 | alternative |
| Includes regular overtime | 27.5% | 56 | alternative |
| Basic salary only | 3.9% | 8 | rare |
| Includes variable pay (bonus/commission) where applicable | 3.9% | 8 | rare |
| Varies by employee group/contract | 1.5% | 3 | — |
| Other | 1.5% | 3 | — |
How is notice typically handled in redundancy situations?
Base: 201 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Payment in lieu of notice (PILON) is typically used | 55.7% | 112 | common |
| Combination (depends on role/level/case) | 17.4% | 35 | rare |
| Garden leave is typically used | 11.4% | 23 | rare |
| Notice is typically worked | 9.0% | 18 | rare |
| Case-by-case / discretionary | 6.5% | 13 | rare |
| Not applicable | 0.0% | 0 | — |
What did an average redundancy cost last year, as a multiple of monthly base salary?
Base: 236 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| 3x-4x | 31.8% | 75 | common |
| 2x-3x | 22.9% | 54 | alternative |
| 1x-2x | 15.7% | 37 | rare |
| 4x-5x | 13.6% | 32 | rare |
| Less than 1x | 9.7% | 23 | rare |
| More than 5x | 6.4% | 15 | rare |
Is there a documented redundancy process applied consistently?
Base: 262 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Yes | 75.6% | 198 | common |
| No | 19.5% | 51 | rare |
| Partially (varies by region/business unit) | 5.0% | 13 | rare |
Are selection criteria for redundancy documented and objective?
Base: 260 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Yes | 40.4% | 105 | common |
| No | 32.7% | 85 | alternative |
| Partially | 26.9% | 70 | alternative |
Are redundancy outcomes reviewed for fairness and bias?
Base: 246 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 69.1% | 170 | common |
| Yes | 16.7% | 41 | rare |
| Sometimes / ad hoc | 14.2% | 35 | rare |
Is outplacement or career transition support offered?
Base: 261 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No outplacement support | 45.6% | 119 | common |
| Yes – for some groups only | 34.9% | 91 | alternative |
| Yes – outplacement for all redundancies | 12.6% | 33 | rare |
| Case-by-case | 6.9% | 18 | rare |
Are line managers trained to manage redundancy conversations?
Base: 252 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 64.3% | 162 | common |
| Yes | 18.3% | 46 | rare |
| Some managers only | 17.5% | 44 | rare |
Do you offer voluntary redundancy terms enhanced above your compulsory terms?
Base: 170 organisations · "Not applicable" excluded from base
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Same as compulsory terms | 68.8% | 117 | common |
| Yes — enhanced VR terms | 31.2% | 53 | alternative |
Is early-retirement or pension-bridging support offered in restructuring?
Base: 266 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 78.9% | 210 | common |
| Case-by-case | 14.3% | 38 | rare |
| Yes | 6.8% | 18 | rare |
When you change pay, pension or benefit terms, what is your policy on avoiding dismiss-and-rehire?
Base: 263 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No policy | 36.9% | 97 | common |
| Informal practice | 36.9% | 97 | common |
| Documented policy | 19.4% | 51 | rare |
| Policy + consultation route | 6.8% | 18 | rare |
See how your organisation compares with other UK employers. Book a call
David Whitfield, Enhanced redundancy pay: UK benchmark 2026. lumi, collection window 2026 H1. https://lumihr.co.uk/research/redundancy-terms-2026Last reviewed 20 September 2026 · Figures describe organisations in the lumi reward benchmark, not a random sample of UK employers. Every figure on this page states the question asked and the number of organisations that answered it.