Thursday, 19 September 2019

Does Redundancy Pay Contribute to the 25k Cap on Contractual Claims?

No according to His Honour David Richardson of the EAT in Uradar v Lancashire Care NHS Foundation Trust [2019] UKEAT 0301_18_2006

The rationale for the decision can be distilled (very briefly) down to the fact that there were two very different causes of action; a statutory AND a contractual claim.

Interestingly, at paragraph 28 the statutory cap is derided for being anachronistic;

As we leave this case we would add the following comment. The statutory cap in the 1994 Order has remained unchanged for a quarter of a century. It seems only necessary to pass a statutory instrument to provide for a higher cap. The powers are now contained in Sections 3, 8 and 41 of the Employment Tribunals Act 1996. This case and the case of Eden to which we have referred, demonstrates that at its present level the cap is capable of producing real injustice. In order to bring the claim for a contractual redundancy payment before a Tribunal with relevant specialist experience, the two employees had to forego substantial parts of their contractual entitlement. If the statutory cap had been increased in line with inflation they would not have suffered these losses. The statutory cap is also out of step with the very much wider powers of the ET and in other areas of its jurisdiction.

Hopefully we shall see an adjustment of the statutory cap soon at least to level in step with inflation.