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What to check before relying on a settlement package figure

A practical route page for users who have a rough settlement-package figure but need to know what to verify before treating that figure as meaningful.

  • Is part of it really PILON?
  • Is holiday pay bundled into the figure?
  • Is any part actually enhanced redundancy?
  • Is independent advice really in place?
Why this page matters:

A headline settlement figure can look better or worse depending on what is actually inside it. This page exists to stop users from confusing tax treatment with fairness or completeness.

What this page covers

The most important checks before relying on a settlement package figure: what is PILON, what is wages/holiday pay, what may sit within the £30,000 threshold, and whether independent advice is in place.

What this page does not cover

A full tax calculation, payroll advice, or legal advice on whether the offer is fair in your exact case.

1. Separate earnings-style amounts from termination-payment amounts

GOV.UK says PILON, holiday pay, and unpaid wages are treated differently from qualifying termination-payment elements. A rough package figure is not very useful until those parts are separated.

2. Check whether there is a genuine redundancy element

If part of the package is statutory redundancy pay or enhanced redundancy, that can affect which part may sit within the £30,000 threshold route.

Open redundancy calculator

3. Check notice and holiday separately

Many users treat the whole figure as one lump sum, but notice pay and holiday owed often need checking separately first.

Open final pay page

4. Check whether independent advice is actually in place

Acas says a settlement agreement must meet legal conditions to be valid, including advice from a relevant independent adviser.

Open contact and trust page

Official sources used

Official sources checked for this page

GOV.UK: What you pay tax and National Insurance on

Used for the point that PILON, holiday pay, and unpaid wages are treated differently from certain qualifying termination-payment elements.

Open official source

GOV.UK: Tax and National Insurance on redundancy payments

Used for the route where statutory redundancy pay and enhanced redundancy may be relevant to understanding the package.

Open official source

Acas: settlement agreements

Used for the independent-adviser requirement and validity conditions.

Open official source