From 1st October 2009, the limit on a weeks pay for the purposes of calculating statutory redundancy payments will increase from £350 to £380. The maximum statutory redundancy payment that an employee may be entitled to receive will therefore rise from £10,500 to £11,400. An employee who is dismissed by reason of redundancy on or after 1st October will be entitled to the higher amount.
Whilst the Trade Union Congress were hoping for a greater increase to a weeks pay to £500 to help those employees being made redundant, the government tried to strike a balance without placing too much of a burden on employers. Whilst the increase may seem modest to employees, it may well cause even further strain on employers struggling through these difficult times and who find themselves with no other choice but to make redundancies.
Some relief can be offered to employers by the fact that the increase on a weeks pay normally takes place in February each year, however, in light of the increase next month, the increase for 2010 has been suspended. The figure of £380 should therefore remain until February 2011.
The increase will also effect other payments calculated on the basis of the statutory limit on a weeks pay such as the basic award for unfair dismissal.
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