Pictured above: Rachel Mills, employment lawyer at
Robinsons Solicitors, in St James Court, Friar Gate,
Derby.
Employers who are considering shedding staff are being warned
that it will cost them more from October 1, when the Government
increases the maximum statutory redundancy pay rate by
£30.
Rachel Mills, employment lawyer at Robinsons Solicitors in St
James Court, Derby, said that the new rate, which was announced in
the Spring budget, has been brought in early to compensate the
unusually high numbers of people being made redundant this year
because of the recession.
Statutory redundancy pay is calculated by a prescribed formula
based on length of service - which is capped at 20 years, weekly
pay and an employee's age (with those employees over age 41
entitled to a slightly higher amount).
The figure for weekly pay is currently set at £350, but
from next month it rises to £380. The increase means, for
example, that a 38-year-old employee who is made redundant after
five full years' service would get £1,900, compared to the
current £1,750.
Statutory redundancy pay usually increases every February in
line with the retail prices index, but the new rate will be frozen
for the whole of 2010.
Rachel said: "There is no doubt that the recession has had a
huge effect on the numbers of people being made redundant and the
Government wanted to soften the blow by bringing the increase
forward so that more people can benefit.
"Although employers will face higher costs in the short term,
the limit will not go up again until February 2011, which will at
least offer employers stability in their planning for the whole of
next year and relief from further increases."
As well as statutory redundancy pay, the increased weekly pay
limit will be used to calculate compensation for unfair dismissal
and other claims such as failure to consult on collective
redundancies.
This month also saw an increase in the national minimum wage,
which rises from £5.73 an hour to £5.80 an hour for
workers aged 22 and over. Workers aged from 18 to 21 will get an
extra 6p an hour - their new rate will be £4.83 - while 16 to
17-year-olds will see their pay packets expand from £3.53 an
hour to £3.57.
Robinsons Solicitors is one of the best known law firms
operating in the East Midlands. It is managed by seven partners,
supported by 60 staff, and offers a comprehensive range of legal
services spanning across both the commercial and private client
sectors.