Cost of redundancy increases

13 October 2008

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This year has seen a further increase in the awards and costs of redundancy. The statutory instrument regarding redundancy came into force on 1 February outlining the new limits.

In a year when many employers have felt the chill wind of economic change and had to contemplate redundancies, the amount of the potential weekly pay has been increased to £330. This equates to a substantial increase in costs for employers contemplating large scale redundancies, even without any enhanced payments. Any employee given notice of redundancy will be entitled to this rate of payment.

The cost of failing to get the dismissal of an employee right has also increased, with compensation now increased from £60,600 to £63,000.

The order also increased the daily rate of guaranteed pay from £19.60 to £20.40. Employers should always be cautious in laying employees off work. If they do not have the contractual right to do so they risk a potential breach of contract claim or even a constructive unfair dismissal claim, so the £20.40 will seem a small sum to pay.

Summary of main changes effective February 2008

Increase/Change	Amount
A week's pay	£330
Statutory redundancy pay (week)	£330
Maximum compensation (unfair dismissal)	£63,000

Since 6 April 2008, the weekly rate of Statutory Sick Pay has been £75.40 and Statutory Maternity/Paternity Pay has increased to £117.18 per week. The earnings threshold for these entitlements is increased to £90.00 per week.

We have rewritten the Employment Guide for 2009 to be easier to use. It will steer you through the employee lifecycle and is packed full of practical guidance and templates to help you to comply with the law.

Click here to find out more.

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