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Contemplating redundancies?

If you do it before 6 April 2015, it could cost you less!

Dismissing an employee for whatever reason, including redundancy, is never a nice prospect, even for the hardiest of employers. Aside from the inevitable guilt the individual who actions that dismissal will feel, even at the best of times, dismissing an employee can be a huge drain on a company’s finances.

The situation is worsened every year when the Government announces an annual increase in both the weeks pay cap for redundancy purposes and the maximum compensation award for unfair dismissal. This year is no different and last week the Government announced the following increases:

  • The cap on a weeks pay will rise from £464 to £475
  • The maximum compensatory award for an unfair dismissal claim will rise to the lower of either a years’ gross pay or £78,335 (currently £76,574).
  • The new rates will apply to redundancies and events which give rise to compensation that occur on or after 6 April 2015.

This means that the maximum statutory redundancy payment for employees made redundant on or after 6 April 2015 will increase to £14,250 (previously £13,920), and for high earners unfairly dismissed on or after 6 April 2015, it will be possible for Tribunals to award a total of £92,585 in unfair dismissal compensation (including basic award and compensation award).

This follows the annual increase in statutory payment rates which were announced at the back end of last year. As a reminder, the following increased rates will apply from 5 and 6 April 2015:

  • Statutory Maternity, Paternity and Adoption Pay
    The flat rate will increase from £138.18 to £139.58 per week* from 5 April 2015.

  • Statutory Sick Pay (“SSP”)
    This will increase from £87.55 to £88.45 a week* from 6 April 2015

The new Shared Parental Leave Pay will also be payable at a rate of £139.58 per week*.

If you are considering potential redundancies in your business and would like to speak to one of our employment solicitors call us on 0113 220 6270. Find out more about our employment services here.

 


*to qualify for these statutory payments, employees must meet certain criteria including earning at least the lower earnings limit for a certain period. The lower earnings limit will also increase to a threshold of £112.00 per week from 6 April 2015.

About the Author

Annie Gray

Associate

Primarily acting for employers and senior executives, Annie advise PLC's, private limited companies,…

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