Statutory redundancy pay to increase from 6 April 2016

The maximum amount of statutory redundancy pay and the limit on the amount employment tribunals can award for unfair dismissal increase from 6 April 2016, under new legislation published today.

Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age.

The weekly pay is subject to a maximum amount. From 6 April 2016, this is £479, increasing from £475. This means that the top award of statutory redundancy pay also increases from £14,250 to £14,370.

The maximum statutory redundancy payment increases every year in line with the retail prices index.

Bar Huberman, employment law editor at XpertHR says: “Employers must factor in this increase when considering any redundancies, as it could have a significant impact on the amount they will need to pay out if they are making large-scale redundancies.

“Employers that operate an enhanced redundancy scheme will also need to consider whether or not to make changes to the scheme if it applies an uplift to the maximum amount of a week’s pay.”

The maximum compensatory award for unfair dismissal is also increasing to £78,962 from the current £78,335.

The rise in the unfair dismissal award applies where the effective date of termination is on or after 6 April 2016.

These increases are among a number of adjustments to awards that employment tribunals can make and payments that employers must make.

The new rates are set out in the Employment Rights (Increase of Limits) Order 2016, which comes into force on 6 April 2016.

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