According to the Tribunal Service’s report last week, the number of claims for unfair dismissal, breach of contract and redundancy for 2009-10 was 17% more than the previous year, probably as a result of the credit crunch. Many employers will be keen to avoid joining this unfortunate statistic when carrying out redundancies. One recurring question is whether employers who cap length of service for calculating redundancy payments are being discriminatory on the grounds of age.
In the recent case of Kraft Foods v Hastie, in order to to keep costs down, Kraft capped their generous redundancy payments at what a redundant employee would have earned if he had remained in employment until normal retirement age. This hit the 62 year old Mr Hastie in the pocket, who sued for age discrimination. The EAT held that the cap was justified as Kraft’s aim of preventing employees from receiving a 'windfall' met a legitimate & proportionate aim, which was to compensate for future loss of earnings only.
Those employers who cap redundancy payments based on (say) no more than 12 years service (even if the employee has worked 20 years and is not near retirement) could not rely on that argument. However they generally avoid legal challenges by making payments subject to compromise agreements: Employees seldom turn down reasonably generous payments to chance their arm in the Tribunal.
James Carmody
RECULVER SOLICITORS
Tel: 0207 324 6271 | info@reculversolicitors.co.uk | 12-16 Clerkenwell Road, London EC1M 5PQ*
www.reculversolicitors.co.uk
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