Shropshire redundancy levels could soar following hike in compensation payments
The number of redundancies among Shropshire workers in senior positions could soar early in the new year after the Government rubber-stamped an increase in compensation payouts, a county expert warned today.
Paul Bennett, a specialist in employment law, said he had already seen an increase in redundancy work with many employers bringing forward a staff cull to avoid the hike in compensation awards planned for February.
“This change to rates of compensation awards is a headache for employers,” added Mr Bennett, founder of Bennett’s Legal in Shrewsbury.
“It will encourage many to look at making redundancies, where necessary, early in the new year and this time it is those in top end positions which will be most at risk.
“We have already seen an influx in redundancy work and we have also given advice to more executives than usual at this time of year looking to negotiate exit packages.”
The hike in lay-offs will tarnish a positive month for Britain’s unemployed which saw a record drop in the jobless total. Yet a rise in redundancy payments will cause many Shropshire firms to think about laying staff off early.
Explained Paul: “The reason senior-level employees face the axe this time round is that many firms cut back on general staff in 2008-2010 meaning that the top end workers tend to be more at risk now as the business needs - in terms of leadership - have diminished over time.
“Almost every individual we have seen in recent weeks has been a supervisor, manager or director. Whilst we have also seen a handful of office workers who have been made redundant the numbers are clearly leaning towards those with professional qualifications and managerial experience.”
The notable changes to compensation limits will also see the maximum award for unfair dismissal go up from £72,300 to £74,200 while the limit on the amount of a week’s pay for calculating statutory redundancy payments rises from £430 to £450.
“Now that the increases planned to take effect from February 1 have been officially released they will have an impact on decisions currently being made by employers in the county,” Paul continued.
“Bosses have been warned to take account of these changes when calculating compensation awards and redundancy pay-outs.
“The changes only take effect where the date of dismissal takes place on or after February 1 next year meaning it will cost a company more if redundancies are instigated after February 1. An employee would be entitled to more if redundancy takes place after that date and to less if made redundant earlier.”
The minimum basic award in cases where the dismissal was unfair by virtue of health and safety, employee representative, trade union or occupational pension trustee reasons will increase from £5,300 to £5,500.
The changes have been brought in under the Employment Rights (Increase of Limits order 2012).
These annual increases are required in order to keep tribunal compensation limits in line with the Retail Prices Index.
