The tribunal cap of £25,000 for contractual claims did not apply to prevent an employee being awarded a statutory redundancy payment as well as her contractual redundancy payment.
Mrs Ugradar was employed on Agenda for Change terms and conditions (AfC). She was made redundant, having been offered alternative roles, and her employer asserted that she had unreasonably refused offers of suitable alternative employment and was not therefore entitled to a redundancy payment. She brought a breach of contract claim in the employment tribunal. Her statutory redundancy entitlement was £5,868 and her enhanced contractual redundancy entitlement was £43,949.04. The wording in the relevant AfC term states that "NHS contractual redundancy is an enhancement to an employee's statutory redundancy entitlement; the statutory payment being offset against any contractual payment."
The tribunal upheld Ms Ugradar's claim. Awards for breach of contract claims in the employment tribunal are capped at £25,000. The tribunal held that her statutory redundancy pay was "subsumed" within the contractual claim, so it capped the claims at £25,000, rather that capping the contractual claim at £25,000 and paying the statutory redundancy payment on top of this.
Ms Ugradar successfully appealed to the EAT.
The EAT held that the tribunal had erred in law. The EAT held that AfC provided only that the statutory payment is to be set off against any contractual payment. This meant that the contractual entitlement, after the offset, was £38,071.04. The cap reduced this to £25,000. However, the cap did not affect the statutory claim, and Ms Ugradar was entitled to statutory redundancy on top of this. Even if AfC had provided that her rights to a statutory redundancy payment were restricted, such a provision would have been void.
The EAT commented that the current cap of £25,000 had been set in 1994, and that it had not changed to reflect inflation, and that this can produce real injustice, as demonstrated by this case. The cap can be raised by a statutory instrument.
WHAT DOES THIS MEAN FOR EMPLOYERS?
Employers should be aware that this judgment means that in a tribunal claim, if successful, the employee could be entitled to both the uncapped statutory redundancy payment and a contractual redundancy payment, the latter being subject to the current cap of £25,000.
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