How do I compare two redundancy packages?
Compare net take-home and UC impact, not the headline gross figure. Two offers of £40,000 can produce very different amounts in your bank if one includes more PILON and holiday pay (taxable earnings) and the other is mostly qualifying redundancy (may be tax-free up to £30,000 combined).
What to line up side by side
| Line item | Why it matters for comparison |
|---|---|
| Statutory redundancy | Fixed formula — verify against GOV.UK |
| Enhanced / contractual redundancy | May be tax-free within £30k combined |
| Settlement compensation | Tax treatment depends on what it actually is (not the label) |
| PILON / notice pay | Always taxable — reduces take-home vs same gross in redundancy |
| Holiday pay | Taxable earnings |
| Unpaid wages / bonus | Taxable earnings |
| Legal fees contribution | Usually paid to your solicitor — not your income |
Step-by-step comparison
- Get a breakdown for each offer — not just a total.
- Estimate take-home for each line (tax + NI on earnings; £30k exemption on qualifying payments).
- Split for Universal Credit: qualifying payments → capital; PILON/holiday/wages → earnings if received after you claim (earnings or capital guide).
- Include existing savings and partner capital for household UC capital position.
- Check non-cash terms separately — reference, restrictive covenants, termination date, benefits (not financial modelling).
Worked example
Offer A: £12k statutory + £8k enhanced + £6k PILON = £26k gross.
Offer B: £12k statutory + £14k enhanced + £0 PILON = £26k gross.
Same gross — but Offer A has £6k fully taxable PILON. Offer B may leave more in your pocket and may add more to UC capital (enhanced redundancy) rather than UC earnings. The “better” offer depends on your tax position and whether you claim Universal Credit.
Use scenario comparison in the calculator
On step 2, tick Compare two offers. Enter Offer A in the main fields and Offer B in the scenario B section. The live comparison table shows gross, take-home, household capital and illustrative UC tariff differences as you type.
What this does not tell you
Comparing financial outcomes is not the same as deciding whether to accept an offer. We do not assess fairness, legal claims, or whether you should sign. For that, use your solicitor (required for settlement agreements —ACAS).
Related guides
- How much will I actually take home?
- Can I counter offer a redundancy package?
- Does redundancy pay affect Universal Credit?
FAQ
Should I compare gross or net?
Net (take-home) for spending power; also compare UC capital position if you claim or plan to claim Universal Credit.
Can I compare two redundancy offers in your calculator?
Yes — enable scenario comparison on step 2 and enter each package breakdown separately.
Compare your offers
Enable scenario comparison and see estimated take-home, capital and UC tariff differences side by side.
Use the calculatorSources: GOV.UK — termination payments;GOV.UK — UC capital. Last reviewed September 2026. Illustrative estimates only — not legal or benefits advice.