How does redundancy pay work

Other Payments (e.g.

Contractual redundancy pay

holiday)

Employees will also be entitled to anything else under their contract of employment. For example, payment of any accrued but untaken holiday (depending on your contract, you could ask employees to take any outstanding holiday during their notice period). 

If you have bonus schemes or other payments due under the contract of employment, these will also have to be paid. 

Pay in lieu of Notice

If a payment in lieu of notice is made, then the contract will come to an end on the employee's last day of work.

The notice period will be paid as a lump sum 'in lieu' of notice.  Accrual of holiday will then stop, together will any other contractual rights. But please note that when calculating redundancies, you need to consider statutory notice periods in your calculations.

Please see Redundancy and employment facts for more details.

Ideally you should have a PILON clause in the contract of employment to allow for this.