The Employment Appeal Tribunal (EAT) has confirmed that separate claims for statutory and contractual redundancy payments can be made in the employment tribunal. That is despite the fact that under national NHS terms and conditions (Agenda for Change) contractual redundancy payments are inclusive of statutory redundancy pay. This ruling mitigates the effect of the £25,000 cap on the compensation employment tribunals can award for contractual claims, but will not result in any additional contractual liability for the NHS.
Mrs Ugradar was made redundant during a re-organisation and later brought an employment tribunal claim. One of the questions the tribunal had to decide was whether Mrs Ugradar was entitled to a statutory redundancy payment (of £5,868) as well as a contractual payment calculated in accordance with Agenda for Change (which came to just under £44,000).
The tribunal originally said the statutory entitlement was “subsumed” into her contractual entitlement because of the set-off provisions in Agenda for Change, and her contractual claim was capped at £25,000. That was all she was entitled to.
The EAT disagreed. It ruled that Mrs Ugradar was entitled to the statutory payment in addition to the contractual payment (capped at £25,000). In other words, the statutory payment fell outside the cap. The EAT did not interpret Agenda for Change as restricting the right to recover the statutory payment, rather as allowing it to be set off against any contractual payment. Had it not been for the £25,000 cap on the tribunal’s jurisdiction, an award would have been made to account for the contractual payment of just over £38,000, when offset against the statutory payment.
The upshot is that a statutory redundancy payment can still be offset against any contractual redundancy payment at the point of payment. This case is really only a warning about how employment tribunals are likely to apportion compensation in claims for unpaid redundancy payments which are brought in the tribunal and exceed £25,000. And of course, a reminder of the very significant contractual benefits that NHS employees are entitled to in the event of redundancy.