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Increase in Redundancy Payments and Employment Tribunal Awards

The amount which employers have to pay employees they make redundant or are found to have unfairly dismissed increases on 1st February 2011.

The “week’s pay” is the figure which is used in calculating the amount due under statutory redundancy. Employees they are due a week’s pay for each full year of service up to the age of 41, and one-and-a-half weeks’ for each year beyond that age.

The maximum figure is now increasing from £380 to £400, which means the maximum amount someone can be paid if they are made redundant after 1st February goes up from £11,400 to £12,000. However, many employers, particularly in the public sector, offer better terms as part of their contractual terms. Even where they don’t, where they are asking employees to consider voluntary redundancy, they will offer an enhanced rate, well in excess of these figures. Often this proposal is put in the form of a Compromise Agreement, which requires legal advice to be taken before it can come into force.

The increase in the “week’s pay” also increases the amount the Employment Tribunal can award to those who are successful in showing that they have been unfairly dismissed, or otherwise discriminated against.

The figure is used to calculate the Basic Award, which is calculated in the same way as the redundancy figure above. However, Tribunals also have the discretion to award a Compensatory Award, which is based on the actual wage, rather than being capped at the new level.

The total which a Tribunal can award in a dismissal case has also been increased, from £76,700 to £80,400. However, in cases where there is found to be discrimination an additional sum of up to £30,000 can also be awarded for injury to feelings. The discrimination can be found to be on the grounds of race, sex, disability, age, religion or belief, or sexual orientation.

*We have experience in dealing with the financial and practical implications of a redundancy. We also have experience in progressing and defending claims of unfair dismissal and discrimination, and can offer independent advice from a qualified solicitor.