Is an employee entitled to contractual redundancy payment and a statutory redundancy payment?
This was considered in the case of Ugradar v Lancashire Care NHS Foundation Trust.
The Claimant in this case was employed by the Trust on Agenda for Change (AfC) terms and conditions of employment. There was a re-organisation within the Trust which impacted the Claimant’s role, and she was placed at risk of redundancy. The Trust offered the Claimant a number of suitable alternative roles which she rejected as unsuitable. The Trust declined to pay her redundancy payment alleging that she had unreasonably refused alternative employment.
The Claimant issued a claim in the Employment Tribunal seeking a redundancy payment,
Paragraph 16.1 of AfC states that “NHS contractual redundancy is an enhancement to an employee’s statutory redundancy entitlement; the statutory payment being offset against any contractual payment.”
The Claimant’s contractual claim was worth £43,949.04, and her statutory entitlement was £5,868.
The Employment Tribunal held that the Claimant was entitled to a redundancy payment and awarded her £25,000, which is the maximum that an Employment Tribunal can award in a breach of contract claim. If she had brought the claim in the High Court she could have recovered £43,949.04. The Employment Tribunal held that her statutory entitlement was included in the contractual entitlement and that the full entitlement was capped.
The Claimant appealed to the Employment Appeal Tribunal (EAT). The EAT held that AfC provides that the statutory payment is to be offset against any contractual payment. This meant that the contractual entitlement, after the offset, was £38,071.04. The cap reduced this to £25,000 but the cap did not affect the statutory claim and the Claimant remained entitled to the statutory payment.
It was noted by the EAT that the statutory cap of £25,000 for a breach of contract claim in the Employment Tribunal had remained unchanged for a significant period time. It further went on to state, that the current cap is capable of producing real injustice, and in this case had the statutory cap been increased in line with inflation the Claimant would not have suffered the loss of having her contractual redundancy pay capped.
This case provides helpful clarification regarding the payments of statutory and contractual redundancy payments in relation to those that work in the NHS and other organisations that have similar enhanced redundancy schemes. If you have any questions or would like any advice on how to undertake a fair redundancy process, and what constitutes suitable alternative employment please contact firstname.lastname@example.org.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.