By Team SalaryCalculate · 9/24/2025
While statutory redundancy pay provides a legal minimum of £21,570 maximum, many employers offer enhanced packages that can significantly boost your financial cushion during job loss.
This comprehensive guide explains what enhanced redundancy packages typically include, from performance bonuses to long service awards, and how to ensure you receive the best possible terms beyond the statutory minimum.
Understanding Enhanced Redundancy Packages
Enhanced redundancy packages are additional benefits offered by employers beyond the statutory minimum. Use our redundancy settlement calculator to work out exactly what your total enhanced package should include, from basic statutory pay to additional benefits.
Enhanced packages are typically offered when:
• You have long service with the company
• You've consistently performed well
• The company is financially stable
• You're in a senior or specialist role
• The company wants to avoid disputes
Components of Enhanced Packages
Enhanced redundancy packages typically include several components beyond the statutory minimum:
| Component | Description | Typical Value | Notes |
|---|---|---|---|
| Statutory redundancy pay | Legal minimum based on age, service, and pay | Up to £21,570 (2025) | Required by law |
| Enhanced redundancy multiplier | Extra pay beyond statutory minimum | 1.5x to 3x statutory | Company discretion |
| Performance bonus | Bonus for good performance | 5-20% of annual salary | Based on performance reviews |
| Long service award | Recognition for years of service | £500-£10,000 | Usually for 10+ years |
| Garden leave | Paid leave during notice period | Full salary | May include restrictions |
| Outplacement support | Career transition assistance | £2,000-£10,000 | Professional coaching |
| Extended benefits | Continued health insurance, pension | 3-12 months | Maintains security |
Enhanced Redundancy Multipliers
Many employers offer enhanced redundancy pay calculated as a multiple of the statutory amount. This provides a significant boost to your total package.
Common enhanced multipliers:
• 1.5x statutory: Common for good performers
• 2x statutory: For senior staff and long service
• 3x statutory: For executives and key personnel
• Custom formulas: Based on salary, service, and performance
Performance-Based Bonuses
Performance bonuses in redundancy packages reward your contributions to the company. These are typically calculated as a percentage of your annual salary and are based on your recent performance reviews.
Performance bonus factors:
• Recent performance reviews and ratings
• Achievement of targets and objectives
• Contributions to team and company success
• Special projects or initiatives led
• Client relationships and business development
Long Service Awards
Long service awards recognize your loyalty and commitment to the company. These are typically paid in addition to statutory redundancy and can significantly boost your package.
Common long service award levels:
• 5-9 years: £500-£1,500
• 10-14 years: £1,000-£3,000
• 15-19 years: £2,000-£5,000
• 20+ years: £3,000-£10,000+
Garden Leave and Notice Periods
Garden leave means you're paid to stay away from work during your notice period. You continue to receive full salary and benefits but don't need to attend the office.
Garden leave benefits:
• Full salary during notice period
• Continued benefits (pension, health insurance)
• Time to job search without pressure
• Maintained employment status
Outplacement Support
Many enhanced severance packages include outplacement support - professional assistance with finding your next role. This can be worth thousands of pounds and significantly improve your job search success.
Outplacement services typically include:
• CV writing and interview coaching
• LinkedIn profile optimization
• Networking and industry connections
• Career transition planning
• Access to job boards and recruitment agencies
Extended Benefits
Enhanced packages often include extended benefits that continue beyond your employment end date. These provide valuable security during your job search.
Common extended benefits:
• Health insurance (3-12 months)
• Life insurance coverage
• Pension contributions (limited period)
• Company car or car allowance
• Mobile phone and laptop
Negotiating Enhanced Packages
Many employees don't realize that enhanced packages are often negotiable. Learn effective strategies for redundancy settlement negotiation to maximize your package value beyond the statutory minimum.
When negotiating, consider asking for:
• Higher enhanced redundancy multiplier
• Extended garden leave period
• Additional outplacement support
• Extended health insurance coverage
• Positive reference letter
Tax Implications
Understanding the tax treatment of different enhanced package components is crucial for planning. Use our redundancy severance calculator to see the tax implications of your total enhanced package.
Tax treatment of enhanced components:
• Enhanced redundancy pay: Tax-free up to £30,000 total
• Performance bonuses: Taxed as normal income
• Long service awards: Usually tax-free
• Garden leave pay: Taxed as normal income
• Outplacement support: Usually tax-free benefit
Frequently Asked Questions
Q: Are enhanced redundancy packages negotiable?
A: Yes, many employers are open to negotiating enhanced terms, especially for valued employees or to avoid disputes. It's worth asking for improvements to the package.
Q: How much should I expect in an enhanced package?
A: Enhanced packages typically range from 1.5x to 3x statutory redundancy pay, plus additional benefits like outplacement support, garden leave, and performance bonuses.
Q: What's the difference between garden leave and pay in lieu of notice?
A: Garden leave means you're still employed but don't work, maintaining benefits and pension contributions. Pay in lieu is a lump sum payment that ends employment immediately.
Q: Should I accept the first enhanced package offer?
A: Rarely. Most employers expect some negotiation and build this into their initial offer. Take time to review the package and consider what additional benefits would help your transition.
Enhanced redundancy packages can significantly improve your financial position during redundancy. Understanding what's typically included and how to negotiate better terms can make a substantial difference to your transition.
Remember: redundancy is a business decision, not a reflection of your value. A good enhanced package recognizes your contributions and helps you move forward with confidence.
