The maximum limits on statutory redundancy pay and unfair dismissal awards will increase from the 6th April 2017.
Statutory Redundancy Pay And The Basic Award
A formula based upon age, length of service, and average gross weekly pay is used to calculate statutory redundancy pay and the basic award in unfair dismissal claims. The figure for average weekly pay is currently capped at £479.00 per week, but this goes up on the 6th April 2017 to £489.00 per week. Moreover, only the most recent 20 years are taken into account in terms of length of service. Accordingly, statutory redundancy pay and the basic award are calculated as follows:-
- Weekly pay is multiplied by 0.5 for years of service below 22 years of age
- The employees weekly pay is multiplied by 1 for years of service between the ages of 22 and 41
- Weekly pay is multiplied by 1.5 for years of service from aged 41 onwards
The maximum limit on statutory redundancy pay and the basic award is currently 20 x £479.00 x 1.5 = £14,370.00. However, given that the weekly pay cap is set to rise to £489.00, the maximum limit for statutory redundancy pay and the basic award will rise from the 6th April 2017 to 20 x £489.00 x 1.5 = £14,670.00.
The Compensatory Award
The maximum limit for the compensatory award in unfair dismissal claims will also increase from £78,962.00 to £80,541.00.
When Will The Changes Be Applied?
The increases will apply where the termination date is on or after the 6th April 2017.
Full details of the increased limits are contained in the The Employment Rights (Increase of Limits) Order 2017
The limits on statutory redundancy pay and unfair dismissal awards are amended annually each year on the 6th April, to reflect changes in the retail prices index.