Statutory Redundancy Pay - Further information about the October 2009 increase

Written by Ian Congreave - Filed under: Statutory Redundancy Pay on June 15th, 2009

At the time of Budget 2009, the Government announced that, using powers provided by section 14 of the Work and Families Act 2006, a one-off increase in the cap on the weekly rate of statutory redundancy pay, from £350 to £380, will be made from 1 October 2009.

This exceptional one-off increase is in addition to the statutory annual review of the weekly limit that takes place in February each year. The indexation rules, set out in section 34 of the Employment Relations Act 1999, provide that the current rate is increased or decreased by the year-on-year movement in the Retail Prices Index (RPI) at the previous September, and rounded up to the nearest £10

In a Final Impact Assessment, published by the Department for Business (BERR) on 3 June, the following further information about this increase is provided:

The increase will also apply to other compensation payments that use the same limit, namely
- compensation for non-compliance with flexible working procedures
- the basic and additional awards for unfair dismissal
- compensation where an individual has been unjustifiably disciplined by a trade union
- compensation where an employer has failed to consult with a collective bargaining unit
- compensation in relation to a right not to be excluded or expelled from a union
- compensation for failure by an employer to allow an employee to be accompanied to a disciplinary or grievance hearing
- compensation for failure by an employer to give a statement of employment particulars
- failure of employer to comply with duty to notify employee of date on which he intends employee to retire or of right to make request not to retire on the intended date
- various payments due in the event of insolvency (redundancy pay, arrears of pay, pay in lieu of notice, holiday pay, unpaid compensation for unfair dismissal).
Using powers also provided by section 14 of the Work and Families Act 2006, there will be a one-off suspension of the annual uprating due on 1 February 2010. The RPI in September 2009 is forecast to be 4% lower than in September 2008. In the absence of the October 2009 increase, this would have meant a reduction in the redundancy cap from £350 to £340 (£350 × 96% = £336, rounded up to £340). Instead of a reduction, the £380 will be maintained.