--- title: "UK Termination & Severance 2026 | Notice, Redundancy, Procedure..." description: "UK termination 2026: statutory notice schedule, redundancy pay capped at £751/week, fair procedure, collective redundancy doubled to 180-day protective award." canonical: https://www.teamed.global/country-hiring-guides/united-kingdom/termination-and-severance --- United Kingdom · Termination child Served by Teamed-owned entity: Teamed Ltd, London # How do you *terminate a UK employee* in 2026? Statutory notice scales with tenure. Redundancy pay caps at £751/week. The protective award for collective redundancies doubled to 180 days' pay in April 2026. Last reviewed 20 May 2026 · United Kingdom guide ![A view of a London street scene with brick terraces and a misty sky.](/images/country-guides/uk-termination-severance.webp) Illustration · London, United Kingdom Answer.cite this UK termination is process-driven. Notice is set by law and scales with tenure. **Under 1 month: none. 1 month to 2 years: 1 week. After that: 1 week per year.** It caps at **12 weeks** once the employee reaches **12+ years** of service. Redundancy pay kicks in after 2 years of continuous service. The weekly pay used in the calculation is capped at £751 from 6 April 2026. From January 2027, the unfair dismissal qualifying period falls from 24 months to 6 months. That is a meaningful shift in UK risk. ![A bunch of keys on a wooden desk.](/images/country-guides/united-kingdom-termination-polaroid-1.webp) Handed in ## How much notice must you give a UK employee? The law sets minimum notice. **Under 1 month: none. Between 1 month and 2 years: 1 week. After that: 1 week per year of service.** It caps at **12 weeks** once the employee reaches 12+ years ([Employment Rights Act 1996](https://www.legislation.gov.uk/ukpga/1996/18/contents)). Contracts can set a longer notice period. They cannot set a shorter one. | Length of continuous service | Statutory minimum notice | | --- | --- | | Less than 1 month | None | | 1 month to less than 2 years | 1 week | | 2 years | 2 weeks | | 3 years | 3 weeks | | 5 years | 5 weeks | | 10 years | 10 weeks | | 12+ years | 12 weeks (statutory cap) | These are statutory minimums. Senior roles routinely carry **3 to 6 months contractual notice**; C-suite contracts often go to 12 months with garden leave clauses. The contract sets the floor for the employer; statutory rules set the floor for the employee. ### Pay in Lieu of Notice (PILON) Employers can pay the notice period rather than work it, if the contract has a PILON clause. **PILON payments are fully taxable** as earnings under the Income Tax (Earnings and Pensions) Act 2003, the historical tax-free treatment was abolished in 2018. The first £30,000 of an *ex gratia* termination payment (separate from PILON, contractual bonuses, and accrued holiday) remains tax-free. ## What is "fair procedure" and when does it apply? Fair procedure applies from **day one of employment**. Follow it even before formal unfair dismissal protection applies. That protection currently starts after 24 months of service. It drops to 6 months in January 2027. Fair procedure means a written warning, a real chance to improve, a documented review meeting, and the right to appeal. The Acas Code of Practice on Disciplinary and Grievance Procedures is the operational guide. Failure to follow it doesn't automatically make a dismissal unfair, but it can increase compensation by up to **25%** at tribunal and almost guarantees an unfair-dismissal finding when the qualifying period is met. ### The five fair reasons for dismissal 1. **Conduct**, gross misconduct or sustained misconduct after warning 2. **Capability**, performance below required standard, with reasonable support to improve 3. **Redundancy**, genuine role redundancy with fair selection 4. **Statutory bar**, e.g. loss of [right to work](/country-hiring-guides/united-kingdom/hiring-guide), lost driving licence for a driver role 5. **Some other substantial reason (SOSR)**, a catch-all that's tightly construed Any dismissal outside these five reasons is presumed unfair if the employee has qualifying service. ### The unfair-dismissal qualifying period, January 2027 change From **January 2027**, the unfair-dismissal qualifying period drops from **24 months to 6 months** under the [Employment Rights Act 2025](/country-hiring-guides/united-kingdom/compliance-and-day-one-rights). Note: this is *not* the "day-one rights" widely reported in the press. The Act introduced day-one rights for paternity leave, parental leave, and SSP from 6 April 2026, but unfair dismissal stays at a qualifying period, just a shorter one. Practical implication: from January 2027 you have meaningful unfair-dismissal risk on any employee past 6 months of service. The window for "easy" dismissal compresses from 24 months down to 6 months. 1. Establish the fair reason Anchor the dismissal to one of the five fair reasons: conduct, capability, redundancy, statutory bar, or some other substantial reason. Anything outside them is presumed unfair once the employee has qualifying service. 2. Issue a written warning Set out the problem and the standard required in writing. The Acas Code of Practice on Disciplinary and Grievance Procedures is the operational guide. 3. Allow opportunity to improve Give a genuine chance to meet the standard, with reasonable support and a clear review point. 4. Hold a documented review meeting Review progress in a recorded meeting and confirm the outcome in writing. 5. Offer the right of appeal Let the employee appeal the decision and document the appeal. Skipping it can raise tribunal compensation and undermines the fairness of the whole process. ## How is UK redundancy pay calculated? Redundancy pay applies after **2 years of continuous service**. The rate depends on age. Under 22: 0.5 week's pay per year. Age 22 to 40: 1 week per year. Age 41 and over: 1.5 weeks per year. Service counts up to **20 years**. The weekly pay used is capped at £751/week from 6 April 2026. The lifetime maximum payment is £22,530. | Age band | Statutory redundancy pay per year of service | | --- | --- | | Under age 22 | 0.5 week's pay | | Age 22 to 40 | 1 week's pay | | Age 41 and above | 1.5 weeks' pay | The weekly pay cap rose to **£751** from 6 April 2026 (from £719 the previous year). The cap matters: a £60,000 salaried employee earns ~£1,150/week, but redundancy calculations use the capped £751. Lifetime maximum statutory redundancy: **£22,530**. ### Worked example A 35-year-old employee with 6 years' continuous service on £60,000 salary: - Age band: 22 to 40 → 1 week per year of service - Years of service: 6 → 6 weeks' pay - Weekly pay: £1,154 but capped at £751 - **Statutory redundancy pay: 6 × £751 = £4,506** - Tax: redundancy pay tax-free up to **£30,000** ceiling under ITEPA 2003 s.401 ### Enhanced redundancy schemes Many UK employers operate *enhanced* redundancy schemes that pay more than statutory minimum, typically uncapped weekly pay or higher multipliers. Enhanced terms can be contractual (binding) or discretionary (not binding but creating custom-and-practice over time). Worth being explicit about which it is in offer letters. ## Collective redundancy: the doubled penalty from April 2026 These rules apply when you propose **20 or more redundancies** at one site within a 90-day window. You must consult for **30 days for 20 to 99 redundancies** or **45 days for 100 or more**. Skip the consultation and the penalty is 180 days' full pay per affected employee. That doubled from April 2026. GOV.UK · Redundancy: your rights Propose **20 or more redundancies** at one establishment within 90 days and the collective rules bite: 30 days of consultation for 20 to 99 redundancies, 45 days at 100+. Skip the process and the protective award is **180 days' full pay** per affected employee. Source: [GOV.UK, Redundancy: your rights](https://www.gov.uk/redundancy-your-rights) This is the single biggest change in UK termination risk in 2026. Pre-April 2026, the protective award for failure to follow collective consultation rules was 90 days' pay per affected employee. From April 2026 it's **180 days**. The Employment Rights Act 2025 doubled the penalty. A botched collective redundancy of 30 employees now risks 180 × 30 = **5,400 days of full pay** in protective awards, roughly £4 to £6 million in liability before any individual unfair-dismissal claims. The change isn't marginal. ### Consultation requirements - **Form HR1** filed with the Insolvency Service before redundancies announced - **Election of employee representatives** if no recognised trade union - **Information and consultation** "in good time", 30 or 45 days before first dismissal - **Genuine consideration** of alternatives (redeployment, voluntary redundancy, reduced hours) - **Fair selection criteria** applied objectively ## Settlement agreements: the clean exit A settlement agreement is the standard way to end a UK employment relationship cleanly. The employee receives compensation and gives up the right to bring claims. The employer gets certainty. The employee must get **independent legal advice** before signing. The employer usually pays for it. The cost is typically £500 to £1,500. Settlement agreements are governed by section 203 of the Employment Rights Act 1996. They must be in writing, identify the specific claims being waived, and confirm the employee received independent legal advice from a qualified adviser whose details appear in the agreement. Typical structure: - **Ex gratia payment** (the "termination payment"), tax-free up to £30,000 under ITEPA 2003 s.401 - **Notice pay**, fully taxable as earnings (PILON) - **Accrued holiday pay**, fully taxable - **Pension contributions** for an additional period (sometimes) - **Reference clause**, agreed wording for future reference requests - **Restrictive covenants**, non-compete, non-solicit, confidentiality - **Mutual non-disparagement** - **Legal fees contribution**, usually £500 to £1,500 paid directly to the employee's solicitor When to use a settlement agreement: contested performance, redundancy with mutually-agreed enhanced terms, senior exits, any termination where the employer wants finality rather than a process. ## How Teamed runs UK terminations Teamed is your legal [employer of record](/employer-of-record) in the United Kingdom. The cost is [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency. Teamed Ltd is the legal employer. All termination procedures run through Teamed's UK team. We handle the fair-procedure paperwork, notice calculation, redundancy pay maths, and final-pay reconciliation. All of it runs on **one platform**. The decision on who to dismiss, why, and on what terms is always yours. **Real HR and legal experts** handle your UK hires, from the first offer letter through every RTI submission and year-end P60. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**, and employer cost **passes through at cost, itemised** on every invoice. The split of responsibilities under EOR for UK terminations: | What Teamed handles | What the client decides | | --- | --- | | Notice period calculation against statutory minimums | Whether to dismiss, why, and on what timeline | | Fair-procedure documentation (warnings, meetings, appeals) | Performance standards and what counts as breach | | Redundancy pay calculation and tax handling | Whether to enhance redundancy terms above statutory | | Settlement agreement drafting with qualified employment-law partners we engage | The commercial terms (ex gratia amount, reference wording) | | Final payroll: notice, holiday accrual, redundancy, tax codes | Whether to contribute to legal fees beyond standard | | P45 issuance, [RTI submissions](/country-hiring-guides/united-kingdom/tax-and-payroll), HMRC notifications | Communication with the wider team | | Coordination of tribunal-stage support if a claim is raised | Settlement vs defence strategy | The economics work because Teamed carries the procedural risk at scale across many UK employers, not just yours. Tribunal defence for an individual employer is expensive; built into platform overhead, it's minor. EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A UK contractor who converts to PAYE keeps their record, and that same employee can **graduate** from EOR to your own UK entity without switching systems. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. EOR is the right model for a first UK hire, **until it isn't**. Start from [the UK hiring overview](/country-hiring-guides/united-kingdom); each guide here takes one layer of UK employment law. Key sources: [GOV.UK employing people](https://www.gov.uk/browse/employing-people), [HMRC PAYE for employers](https://www.gov.uk/paye-for-employers), and [ACAS employment advice](https://www.acas.org.uk/). ## Frequently asked questions How much notice must you give a UK employee in 2026? Statutory minimum notice under the Employment Rights Act 1996 is none under 1 month of service, 1 week between 1 month and 2 years, then 1 week per year of service, capped at 12 weeks at 12+ years. Contractual notice can be longer, never shorter. Who qualifies for statutory redundancy pay in the UK? Employees with at least 2 years' continuous service. The rate is 0.5 week's pay per year of service under age 22, 1 week per year aged 22 to 40, and 1.5 weeks per year aged 41 and above, counting at most 20 years of service. What is the UK redundancy pay cap in 2026? Weekly pay is capped at £751 from 6 April 2026, and the lifetime maximum statutory redundancy payment is £22,530. The first £30,000 of an ex gratia termination payment is tax-free under ITEPA 2003 s.401. When do collective redundancy rules apply in the UK? When 20 or more redundancies are proposed at one establishment within 90 days. Consultation runs 30 days for 20 to 99 redundancies and 45 days at 100 or more, and failure to consult risks a protective award of 180 days' full pay per affected employee. When does unfair dismissal protection start in the UK? The qualifying period is currently 24 months of service, dropping to 6 months from January 2027 under the Employment Rights Act 2025. Fair procedure should be followed from day one regardless, and an Acas Code failure can raise tribunal compensation by up to 25%. Teamed Legal Operations The January 2027 change to the unfair-dismissal qualifying period, six months instead of two years, is the change UK employers haven't fully priced in. Your six-month review meeting needs to start carrying the same weight as a year-one review does today. A note from Tom Price-Daniel Most UK employers know the redundancy pay cap is £751 a week. Fewer know the collective redundancy protective award doubled to 180 days' pay per employee in April 2026. A botched collective process of 30 people now risks 5,400 days of full pay before a single individual claim. The penalty didn't creep up. It doubled. Tom Price-Daniel · Co-founder, Teamed ## Related United Kingdom guides - [Hiring in the United Kingdom, overview](/country-hiring-guides/united-kingdom)parent - [UK EOR vs entity](/country-hiring-guides/united-kingdom/eor-vs-entity)sibling - [UK employer cost breakdown](/country-hiring-guides/united-kingdom/cost-breakdown)sibling - [UK compliance and day-one rights](/country-hiring-guides/united-kingdom/compliance-and-day-one-rights)sibling - [UK probation and onboarding](/country-hiring-guides/united-kingdom/probation-and-onboarding)sibling - [Employer of Record overview](/employer-of-record)core - [Pricing, Zero FX Fixed](/pricing)core - [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool - [Talk to an expert](https://www.teamed.global/contact)CTA A note on this page. This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction, so verify current requirements with the relevant authorities, GOV.UK, HMRC and Acas for the United Kingdom, or speak to a qualified professional, before relying on any specific framework. The Employment Rights Act 2025 transition is live: the collective-redundancy protective award doubled in April 2026 and the unfair-dismissal qualifying period changes in January 2027.