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Statutory redundancy pay was not caught by the £25,000 breach of contract cap

20 September 2019 #Employment


In Uradar v Lancashire Care NHS Foundation Trust, the Claimant was made redundant and had a contractual redundancy entitlement of £43,949.04. The Trust refused to pay, claiming she had turned down suitable alternative employment.

A provision in the Claimant’s contract stated this entitlement was inclusive of statutory redundancy pay, in her case calculated at £5,868.00. The contractual redundancy pay therefore totalled £38,071.04.

When the Claimant brought her case to the ET, they awarded her £25,000, which is the current cap on breach of contract claims and held the cap also caught her statutory redundancy pay.  

On appeal to the EAT, the Claimant won £25,000 for non-payment of the contractual redundancy pay, and £5,868.00 for non-payment of her statutory redundancy pay.

The EAT held that the employer had two obligations to the Claimant; one in contract and one in statute, and that the award should be reflective of both. They clarified the cap only applied to a breach of contract claim and did not impact her statutory claim. 

Employers with contractual redundancy schemes should therefore be aware that the cap of £25,000 only applies to contractual redundancy pay and does not extend to the amount owed to employees under statute.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Ciara Duggan

Ciara Duggan
Trainee Solicitor

E: cduggan@clarkslegal.com
T: 020 7539 8052
M: 0778 665 5903

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