Statutory redundancy pay to increase from 6 April 2017

Photo: WestEnd61/REX/Shutterstock.
Photo: WestEnd61/REX/Shutterstock.

The maximum amount of statutory redundancy pay and the limit on the amount employment tribunals can award for unfair dismissal increase from 6 April 2017.

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 2017, this is £489, increasing from £479. This means that the top award of statutory redundancy pay also increases to £14,670 from £14,370.

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

Qian Mou, employment law editor at XpertHR says: “Although the statutory redundancy pay rate increases each year, it is good practice for employers to double check that the increase has been taken into account for anticipated redundancies.

“Where an employer’s enhanced redundancy policy applies an uplift to the statutory redundancy rate, the increased statutory rates should be incorporated into the policy and reflected in the payment.”

The maximum compensatory award for unfair dismissal is also increasing to £80,541 from the current £78,962.

The rise in the unfair dismissal award applies where the effective date of termination is on or after 6 April 2017.

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 2017, which comes into force on 6 April 2017.

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