The statutory redundancy payments scheme allows for higher payments to be made to employees being made redundant if they are older or their length of service with their employer is greater. The government believes that maintaining this approach is justified under EU law because labour market evidence shows that older workers are more likely to be made redundant and have a harder time getting a new job than younger workers.
In addition, they believe that it is right that payments by an individual employer should reflect the commitment made by an employee to that particular employer. The Equality Act therefore contains an exemption for the statutory redundancy scheme, as well as a further exemption linked to the scheme for an employer who wants to make more generous redundancy payments.
The further exemption allows the employer to:
- raise or remove the maximum amount of a week’s pay so that a higher amount of pay is used in the calculation; and/or
- multiply the total amount for each year of employment by a figure of more than one.
The employer may also multiply the final total amount calculated, whether with any of the permitted enhancements or not, by a figure of more than one.
The further exemption also allows an employer to make a redundancy payment to an employee who has taken voluntary redundancy, and an employee with less than two years' continuous employment. In such cases, where no statutory redundancy payment is required, an employer may make a payment equivalent to the statutory minimum payment or, if they so wish, an enhanced payment as above.