1. Compensation for Loss of Office
2. Statutory Redundancy Payment
3. Damages for Dismissal
4. Payments in Lieu of Notice (PILON)
How much an employee receives by way of compensation for loss of office is very much at the discretion of the employer and will invariably take into account such factors as the amount of money it has available to pay the employee in excess of the statutory minimum entitlement, how long the employee has worked for the employer, the employee's monthly salary and any other factor that may be important to the employer in reaching its decision.
Statutory redundancy pay is however based on a prescribed formula which I refer to later in this article. See further down this article for details on how to calculate this element of the redundancy compensation.
Damages for dismissal refers to compensation for losing one's employment protection rights, which are currently valued by the courts and tribunals at approximately £200 to £400. These employment protection rights are acquired by employees who remain with an employer for a continuous period of 12 months of more.
Finally, to determine payments in lieu of notice, an employee needs to go back to his or her contract of employment. If either the contract is silent on the point or there is no written contract, then the period of notice and the amount that an employee is entitled to in lieu of notice is based on the number of complete years of employment as at the date of termination of employment.
An employee who has worked for a continuous period of between 1 months and 2 years is entitled to one weeks notice and pay. This increases by 1 week after 2 years of continuous employment for every additional year employed. Therefore, after 5 years employment, an employee is entitled to 5 weeks notice and pay; if an employee has been employed for 10 years that employee is entitled to 10 weeks notice and pay. The maximum amount of notice however is limited to 12 weeks, so any period employment beyond 12 years does not entitle an employee for more than 12 weeks notice.
An employer may however only offer an employee as part of a redundancy compromise agreement package an amount equating to items 2 and 4 above, which is the minimum statutory entitlement that all employees with 2 or more years of continuous employment are entitled to.
If an employee is only offered the statutory minimum redundancy entitlement, the employee ought to consider whether it is in fact in his or her best interest to sign a Redundancy Compromise Agreement given that a Redundancy Compromise Agreement is designed to prevent an employee bringing an Employment Tribunal claim. As there may be no added benefit in such circumstances for the employee signing a redundancy compromise agreement, the employee should think carefully before signing such an agreement.
It is particularly advisable in such circumstances, to seek professional legal employment advice on the Redundancy Compromise Agreement.
For more details and how to calculate your statutory minimum entitlement for redundancy click here.
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