Increase in SRP weekly pay cap

Quick reminder on how Statutory Redundancy Pay is calculated. Take your employee’s weekly wage, then award:

  • 0.5 week’s pay for each full year of service where age during year less than 22
  • 1.0 week’s pay for each full year of service where age during year is 22 or above, but less than 41
  • 1.5 weeks’ pay for each full year of service where age during year is 41+.

However, there is a cap on the weekly wage that you use for the first part of the calculation. Presently it’s £350, which together with a cap of 20 years makes for a maximum statutory redundancy payment of £10,500. Although the figure increases by £10 or £20 each year, there have been rumblings that it ought to receive more than an inflationary adjustment. Sure enough, as has been widely reported, the chancellor has increased the figure to £380. Currently we don’t know when the change will apply (it requires secondary legislation), or if it will apply to the similar calculation of unfair dismissal basic award.

Watch this space.

(if you’re wondering why the figure has an effect on the budget, it’s because DBERR pick up the tab for insolvent employers who can’t pay the statutory redundancy payment to employees – which will be quite a few of them in the coming months)