Employment e-Brief – Redundancy pay increases on 1 October 2009

Wednesday 9th September 2009

Most of you will be accustomed to the annual increase in compensation limits taking place on 1 February each year.

In an attempt to support individuals being made redundant the Government has this year decided to introduce a one off increase to the maximum limit of a week’s pay.

The change will be effective from 1 October 2009, when the maximum limit of a week’s pay will rise from £350 to £380.

This will effect calculations when working out an employee’s statutory redundancy payment.  It will also apply for the purpose of calculating other statutory compensation payments, most notably, the basic award for unfair dismissal.

The new rate will in most instances apply where the event giving rise to compensation or payment occurs on or after 1 October 2009.

On the plus side for employers, as a result of this one off increase, it is proposed that the limit will not be altered in February 2010 consequently the maximum limit of £380 should remain in place until February 2011.

If you have any queries in relation to the information contained in this e-brief please contact a member of the employment team.