Does Redundancy Pay Include Overtime and Bonuses?
Two different payments, two different rules — and this is where a lot of people get short-changed.
← Back to Blog · Employment · Published 8 September 2026 · Directed and published by Matt Thompson, founder of UK Work Rights
This is free rights guidance, not legal advice. Every statutory figure here is checked against a primary source — see our Editorial & Verification Policy.
Two payments people confuse
When you are made redundant you may receive two quite different things: statutory redundancy pay, and notice pay. They are calculated differently, and the treatment of overtime is not the same for both. Mixing them up is how people end up underpaid without realising.
Statutory redundancy pay and the weekly cap
Statutory redundancy pay is based on your age, length of service and a "week's pay" — but that week's pay is capped. From 6 April 2026 the cap is £751 per week, and the maximum statutory redundancy payment is £22,530.
The practical effect: if you earn well above the cap, extra overtime in your reference period often makes no difference to the statutory figure, because you are already capped. If you earn below it, your average including certain regular payments can matter a great deal.
You generally need 2 years' continuous service to qualify for statutory redundancy pay at all.
Notice pay: this is where overtime bites
Notice pay is not capped in the same way, and here regular overtime matters. Notice pay must include regular overtime in the reference period. If overtime was a normal, regular part of what you earned, excluding it understates what you are owed.
Statutory notice itself is often misunderstood too. Under section 86 of the Employment Rights Act 1996, after one month of continuous service you are entitled to at least one week's notice. From 2 years it is one week per complete year, up to a maximum of 12 weeks. The 2-year threshold applies to ordinary unfair dismissal and statutory redundancy pay — not to notice. If your contract gives longer notice, the contractual period applies.
What about bonuses?
It depends entirely on the nature of the bonus. A contractual bonus that forms a regular, guaranteed part of your pay is treated very differently from a discretionary annual bonus that the employer can withhold. Commission that is a normal part of your earnings is generally in a stronger position than a one-off discretionary payment.
Because this turns on your specific contract wording and payment history, it is one of the clearest cases for getting your own paperwork checked rather than relying on a general rule.
Enhanced redundancy pay
Many employers pay more than the statutory minimum, either because the contract says so or because it has been done consistently enough to become an implied term. Check your contract, staff handbook and any collective agreement. If an enhanced scheme applies, the statutory caps are the floor, not the ceiling.
If you think you have been underpaid
An underpayment is usually an unlawful deduction from wages or a breach of contract. Time limits are tight: currently 3 months less 1 day from the deduction, moving to 6 months less 1 day for acts falling on or after 1 October 2026. Where there is a series of deductions, the date of the last one is the one that counts.
Notify ACAS first — Early Conciliation is mandatory and can take up to 12 weeks. Confirm your deadline on 0300 123 1100.
Check your own situation free
Every situation turns on its own facts. These free tools use the same verified figures as this article: