Danger of Enhanced Redundancy Payments for Employers
Employment Law
Where employers consistently offer enhanced redundancy payments, this can give right to a contractual right for all employees being made redundant to receive similar enhanced payments.
The case of Peacock Stores v Peregrine & Ors (2014) the Employment Appeal Tribunal has found that even where the exact terms of enhanced redundancy payments and their calculation vary from employee to employee and over a period of time, where enhanced payments are consistently made and it is well understood that this is the employer’s accepted practice, a contractual right to enhanced redundancy payments can arise.
Many employers do of course have in place a contractual policy in place for making enhanced redundancy payments, which provides clarity and certainty for both employers and employees when redundancy situations arise. However, employers without such a policy should be wary of making any enhanced redundancy payments in order to avoid future allegations that such enhancement has become a contractual right, thereby significantly increasing the employer’s financial exposure.
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