Legal Ease

Statutory Redundancy Pay is Due to Increase Again This Year!

Redundancy pay is normally reviewed once a year in February, however, the government announced a statutory rate increase in the 2009 Budget which is effective from 1 October 2009. Therefore, redundancy pay increases from £350 to £380.

The maximum redundancy payout will increase from £10500 to £11,400, i.e. 20 years x 1.5 weeks x £380 for an employee who has 20 weeks service over the age of 41.

However, it seems that the statutory weekly rate of pay for unfair dismissal purposes (which is normally paid at the same rate as statutory redundancy pay) will remain unchanged. As this is unusual it may be remedied when the legislation comes into effect – we will inform you if this happens.

Employers Prevented from Including Tips in Minimum Wage
National Minimum Wage legislation has been amended to stop employers using tips to top up their employees pay in order to meet the national minimum wage. Currently, employers can count service charges and gratuities processed through their payroll towards their obligation to pay the minimum wage but this will change from 1 October 2009.

National Minimum Wage Increases Effective from October 2009
* The hourly rate for adult workers (22 years and older) increases from £5.73 to £5.80
* The hourly rate for 18 to 21 year olds increases from £4.77 to £4.83
* The hourly rate for 16 and 17 year olds increases from £3.53 to £3.57

The Court of Appeal Confirms that Length of Service Can be Used as One of a Number of Selection Criteria
At the end of 2008 the High Court decided that length of service, as long as it is one of a number of selection criteria used in a redundancy process, was capable of being justified even though on the face of it was discriminatory against younger employees. The Court of Appeal has now accepted this decision.

The Court of Appeal confirmed that giving credit for length of service in redundancy selection is not unlawful age discrimination. It was agreed that using length of service was justified in that it was "a proportionate means of achieving a legitimate aim" in accordance with the age discrimination regulations. It is not unlawful because it was a reward for loyalty , helped maintain a stable workforce and fulfilled a business need.