This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to final wages after redundancy in England and Wales. Understand what pay employers must include on termination - unpaid wages, notice pay, unused holiday, bonuses and commission - and how statutory and contractual rights affect timing and calculation of final pay. Knowledge to help employees check their entitlements and options if payment is missing.
When an employee is made redundant in England and Wales, their final wages - the last sums owed by the employer - must be calculated and paid correctly. Final wages encompass more than just salary for the final pay period. They can include notice pay, accrued holiday, bonuses, commission, unpaid overtime and other contractual entitlements. Employers who fail to include every sum legally due may be at risk of tribunal claims for unlawful deduction from wages or breach of contract. This article explains what final wages after redundancy include, the legal framework governing payment, how notice and other elements affect final pay, and what actions employees can take if payment is missing or incorrect.
What Final Wages Include
Final wages should comprise all earnings and entitlements accrued up to the end of employment. This includes:
- Salary or wages owed up to the last working day - the basic pay for time actually worked.
- Accrued but untaken holiday pay - payment for statutory leave accrued under the Working Time Regulations 1998 but not taken by the termination date.
- Notice pay - payment for the notice period the employee is entitled to, either worked or paid in lieu of notice (PILON).
- Bonuses, commission, overtime and other contractual earnings that have accrued but not yet been paid.
- Contractual benefits and expenses that are due under the terms of the employment contract.
Employers should itemise these elements on the final payslip so the employee can see how each payment has been calculated.
Legal Framework and Employer Obligations
Under the Employment Rights Act 1996, employees are entitled to be paid all wages they have earned without unlawful deductions. Final wages must be paid no later than the employee's normal contractual payday, even if the employment ends before the usual pay date. Failure to do so may give rise to claims for unlawful deduction from wages at an employment tribunal.
In addition to statute, the employment contract plays a central role. Contractual terms determine notice periods, eligibility for bonuses or commission, and conditions for deductions. Employers must abide by both statutory and contractual obligations when calculating and issuing final wages.
Notice Pay and Redundancy
Notice Period Entitlements
Employees are normally entitled to a paid notice period when made redundant. This can be:
- Statutory notice - the legal minimum based on the length of service.
- Contractual notice - a longer period specified in the employment contract.
During the notice period, the employer must pay the normal rate of pay, including any guaranteed elements specified in the contract, such as regular overtime or commission if contractually required. If notice is not worked, the employer may provide a payment in lieu of notice (PILON), which compensates the employee for the earnings they would have received during the notice period.
Notice Pay Within Final Wages
Notice pay is part of final wages and should be paid alongside other entitlements or on the next normal pay date. If notice is worked through normally, wages are paid for each week worked during the notice period. If a PILON is agreed or specified in the contract, the employer must pay the equivalent of the notice pay, usually calculated on the employee's average weekly earnings.
Holiday Pay and Final Wages
Statutory Holiday Entitlement
Employees accrue holiday under the Working Time Regulations 1998, and this entitlement continues until the termination of employment. If any statutory holiday remains unused at the end of employment, the employer must pay the employee in lieu for these unused days. Holiday pay must be calculated up to the last day of employment and added to the final pay.
Contractual Holiday Above Statutory Minimum
If the employment contract provides more leave than the statutory minimum, contractual holiday may also be payable on termination, depending on the terms of the contract. Employers should review the contract carefully to determine whether additional holiday pay is owed.
Other Components of Final Wages
Bonuses, Commission, Overtime and Expenses
If an employee has earned bonuses, commission or overtime before the end of their employment, and the terms of the contract entitle them to be paid for these amounts, they should be included in the final wage payment. Unpaid expenses that were incurred in the course of employment and are due should also be paid.
Deductions from Final Wages
Employers can deduct amounts from final wages only if:
- A statute requires the deduction (such as tax and National Insurance).
- The contract expressly allows the deduction in writing.
- The employee has agreed in writing to the deduction.
Deductions for items like training costs, property not returned or other alleged debts must have contractual authority; otherwise, they risk being unlawful.
Timing of Final Pay
There is no specific statutory deadline that final wages must be paid immediately on the last day of employment. However, they should be paid by the normal contractual pay day following the last working day or within a reasonable time thereafter if no contractual pay day is specified. A delay could constitute an unlawful deduction from wages under the Employment Rights Act 1996.
When Employers Are Insolvent
If an employer becomes insolvent and cannot pay final wages, redundancy pay or other owed amounts, employees can apply to the UK government's Redundancy Payments Service for payments of statutory redundancy pay, unpaid wages, holiday pay and notice pay up to statutory caps. Claimants must apply within specified time limits, usually within six months of the date of dismissal.
Steps to Take If Final Wages Are Missing or Incorrect
- Check Your Payslip and Contract: Confirm what you have been paid and what you think you are owed, based on your contract and statutory entitlements.
- Raise the Issue with Your Employer: Contact the payroll or HR department promptly in writing to highlight any discrepancies.
- Seek Advice: If informal resolution fails, seek advice from sources such as ACAS or Citizens Advice, which can help clarify rights and options.
- Consider a Tribunal Claim: If you believe your final wages have been withheld unlawfully, you may be able to bring a claim for unlawful deduction from wages at an employment tribunal, usually within three months less one day from the date of the deduction. Early conciliation with ACAS is normally required before submitting a tribunal claim.
Key Takeaways
Final wages after redundancy in England and Wales include all pay and entitlements earned up to the end of employment. This typically covers:
- Outstanding wages for work done up to termination.
- Holiday pay for accrued but untaken leave.
- Notice pay, whether worked or paid in lieu.
- Bonuses, commission and other contractual earnings.
Employers must ensure these amounts are paid by the normal payday or within a reasonable time, and they must respect contractual terms and statutory rights. If final wages are not paid in full, employees have options to raise disputes informally and, if necessary, bring claims to employment tribunals for unlawful deduction from wages.
