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Increase in Redundancy and Dismissal Payments

View profile for Robin Williams
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0n 6 April, the statutory caps in place for redundancy payments will rise from their current limits.

The maximum amount for a week’s pay (as well as the basic award for unfair dismissal) will rise from £489 to £508.

Currently, the maximum statutory redundancy payment allowed is £14,670 but this will now rise to £15,240.  All statutory redundancy payments are based on the employee’s age and length of service. A handy redundancy calculator is here:

The maximum Employment Tribunal award for an ordinary unfair dismissal claim will rise from £80,541 to £83,682.  But note that the maximum amount an employee can be awarded is the lesser of £83,682 or one year’s salary. 

Unfair dismissal connected to an employee making a protected disclosure (‘whistleblowing’) is not subject to the statutory maximum cap.

Another important change occurring after 6 April is that pay in lieu of notice (paying an employee for their notice period rather than having them work it) will now be taxed in all circumstances. It was always the case that if there was no contractual entitlement for an employer to pay in lieu, then the employee could have his notice money tax free. HMRC have now closed this loophole.

If you have any questions on the above topics, please don’t hesitate to get in touch with me!