New enhanced redundancy pay calculator now part of Liveflo
XpertHR Liveflo has been enhanced by the addition of a new redundancy pay calculator permitting the calculation of specified enhanced redundancy payments.
Employers do not contravene the age discrimination provisions of the Equality Act 2010 if they make statutory redundancy payments based on the employee's age and length of service. Under the statutory scheme, half a week's pay is payable for each year of employment during which the employee was aged 21 or under; one week's pay is payable for each year of employment during which the employee was aged between 22 and 40; and one and a half weeks' pay is payable for each year of employment during which the employee was aged 41 or over. The amount of a week's pay is subject to a statutory cap (which rose to £400 on 1 February 2011).
There are also specific provisions in the Act for employers that wish to make enhanced redundancy payments. Provided that their scheme mirrors the statutory scheme with regard to age bands and multipliers, employers may enhance statutory payments by doing one or more of the following:1
- Increasing or removing the cap on a week's pay.
- Multiplying the appropriate amount allowed for each year of employment by a figure of more than one.
- Multiplying the total redundancy payment by a figure of more than one.
For example, an employer might decide to increase the cap on a week's pay to £500, and multiply the appropriate amount allowed for each year of employment by two, resulting in one week's pay for each year of employment at age 21 or under, two weeks' pay for each year of employment between the ages of 22 and 40, and three weeks' pay for each year of employment at age 41 or over. It might then multiply the total redundancy payment by a figure of two.
The new XpertHR redundancy calculator takes a significant step forward from the statutory redundancy payment calculator previously available and allows employers to calculate enhanced redundancy payments in the ways specified under the age discrimination provisions.
When using the calculator, employers are asked if they enhance redundancy payments in one or more of the permitted ways. If their answer is "no", the redundancy payment is calculated on the statutory formula. If they answer "yes", they are asked to provide details of the ways in which their scheme enhances payments, and the redundancy payment is worked out on this basis, with the amount that would have been payable under the statutory scheme also provided for comparison.
- Redundancy pay calculator Use the new XpertHR redundancy pay calculator as part of your Liveflo subscription to work out either a statutory redundancy payment or an enhanced payment calculated in accordance with the provisions in the Equality Act 2010.
Also
Enhanced redundancy payments The XpertHR worked examples section guides employers step by step through the calculation of a selection of enhanced redundancy payments.
1Any other enhanced redundancy payment formula used by an employer would have to be capable of objective justification.
