mazzer - the cap at 12 years is because under statute they have to give 1 weeks notice for each complete year's service, up to 12 years. The way they have done it is odd but - as I said before - the redundancy element is well above the statutory minimum so I don't think there is anything you can do about it. (If someone had worked for them for a very long time - say 30 years - then what they have done just might breach the redundancy stat. min. rules, but unlikely to.) But do make sure they payment is tax & NI free, at least up to �30K.
doirecormac - if it is pilon - in other words your employment ends without you being given the proper notice - then yes it is tax & NI free. There might be an upper limit - I am not sure about that - but if there is I think it is quite high. The situation is different if you are on "gardening leave" because then you are still employed until the leave ends, so pay during that period is normal pay & taxable etc. The crucial issue is what is the end date of employment - which should be on the P45.