UK redundancy guide · reviewed 23 September 2026

Holiday pay, bonuses and garden leave in redundancy

The redundancy line is only one part of final pay. Holiday, bonus and notice arrangements can add thousands to the gross figure, but they do not all behave like redundancy compensation.

Short answer

Untaken statutory holiday accrued when you leave must normally be paid. Holiday pay and bonuses are generally taxed as earnings. Garden leave normally keeps you employed and paid through your notice period, so it is also treated as ordinary earnings.

Untaken holiday

Acas says employers must pay workers for untaken statutory holiday entitlement they have accrued when they leave. Contractual holiday above the statutory minimum can have its own rules, so check the contract.

Holiday pay is final-pay earnings, not part of the tax-free redundancy allowance.

Bonus and commission

Whether a bonus is due can depend on the scheme rules, the date employment ends, whether the bonus is contractual or discretionary, and any good-leaver wording.

If it is paid, bonus or commission is normally taxable earnings. Do not quietly fold it into the redundancy amount when estimating take-home.

Garden leave

On garden leave you generally remain employed and continue to receive pay during the notice period, although you may be told not to work.

That is different from PILON, where employment can end and notice pay is paid instead. In both cases, notice-period pay is normally taxed as earnings.

Build the final-pay picture

Your package model should show redundancy or severance, notice arrangements, holiday, bonus and any transition or benefits separately. That makes it easier to see which parts are guaranteed, which are conditional and what may actually arrive after deductions.

This guide explains the general position and is designed to help you ask better questions about a redundancy offer. Contract terms, payroll treatment and individual circumstances can change the outcome.

Turn the package into a number you can use

DunDunSee™ separates the moving parts of a redundancy package, estimates take-home and helps translate it into financial runway.

Open DunDunSee™

Official sources