Notice

Recalculation of redundancy-related claims to be carried out

Published 6 August 2014

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1. Overview

The Redundancy Payments Service (RPS) will recalculate relevant redundancy-related claims made from 2007-2011. Any decision to review earlier claims will be based on legal advice and availability of information.

This recalculation exercise applies to wage-related pay only. Redundancy pay was paid correctly so it will not be recalculated.

Wage related payments are the following types of payment received from the Redundancy Payments Service. They are:

  • arrears of pay claims
  • unpaid accrued holiday claims
  • compensation for lack of notice claims
  • protective award payments

Redundancy pay is not classed as a wage related payment.

1.2 What is redundancy pay?

It is a payment made to someone who loses their job by being made redundant. It is not a wage related payment and is not covered by the same rules as wage related payments.

You’ll normally be entitled to statutory redundancy pay if you’re an employee and you’ve been working for your current employer for 2 years or more.

Your claim will not be recalculated as part of this exercise if any of the following relate to your original claim:

  • Claims submitted to RPS after August 2011. These were calculated correctly.
  • Claims for redundancy pay only
  • Claims that have already been assessed and rejected by RPS

When you are made redundant and your employer is insolvent, you are entitled to claim statutory redundancy pay and any payments associated with wages such as holiday pay, arrears of pay and compensation for loss of notice from the RPS.

The amount you receive is limited to a maximum amount per week, known as the legal limit. We have received new legal advice, and have made changes to the way we calculate the wage-related payments. The legal advice is about the way we interpret the part of the Employment Rights Act 1996 that deals with these payments.

We are looking at all relevant claims and will make an extra payment if you were underpaid.

Redundancy pay is not affected by this new legal advice and was paid correctly.

2. Background

The legal advice says that when someone is made redundant part of the way through their working week, the wage-related payments for that part week should be calculated based on a 7 day instead of a 5 day week, as we had previously done.

This isn’t about how many days a week you actually work. It’s about how much of the maximum amount (the legal limit) we pay when you are made redundant part of the way through your working week. To correct any mistakes, we are currently reviewing all relevant claims.

3. Payments and overpayments

Analysis so far indicates about 15% of claims could have been slightly underpaid; it also shows the average payment is £50. We will pay any interest that is due backdated to the date of the original payment.

4. More information

If your claim is affected we will write and let you know that we have recalculated your claim, and that you will get a further payment. You can also ask for a detailed breakdown of the payment, following the recalculation.

If you have any questions about your claim please phone: 0300 678 0015.

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