Redundancy pay limit to rise to GBP380 on 1 October 2009

The Government has confirmed that the increase in the weekly limit used to calculate statutory redundancy pay, from GBP350 to GBP380, will take place on 1 October 2009. It has also stated that the limit will not rise again in February 2010, as it would usually do, instead remaining at GBP380 until February 2011.

The Government announced a one-off increase in the limit of GBP30 in the 2009 Budget. The increase is intended to provide a stronger safety net for employees in the recession without placing too heavy a burden on employers. Since 1999, an annual uprating formula has been applied each February to raise the limit on a week’s pay in line with the Retail Prices Index rounded to the nearest GBP10. This uprating will be suspended in 2010. The weekly limit also applies when calculating certain other types of payment, such as the basic award for unfair dismissal – it appears that the increase will also apply to these other kinds of payment.

Comments

1. The effect of this only really brings forward the usual annual increase by a period of four months as it would have increased anyway (maybe not quite as much) on 1st February 2010. Employees will not be breathing huge sighs of relief from any increased protection and it is unlikely to make much difference to employers.

   Posted by John Cook (Employment Partner sas daniels LLP) on 09/06/09