Labour Research January 2012

Law Queries


Q. Our employer has recently started a redundancy consultation. In the last few days it has set out what each individual, whose post is at risk of redundancy, would receive by way of redundancy pay.

A. One of our members is particularly concerned over the calculation. A few months back she moved from a full-time role (which she had held for over 10 years) to a part-time one, and rather than calculate her redundancy pay on the basis of her previous full-time pay, the employer is using her much lower part-time pay. Is this legal?

Unfortunately the employer is entitled to base your member’s redundancy pay on her earnings at the date of the likely redundancy of her post.

In other words, despite the fact that the vast majority of her service occurred in a higher paid role, the employer can very likely get away with paying her on the basis of her part-time earnings and will be under no obligation to pro-rata her earnings levels.

She could argue that the employer’s calculations are discriminatory on the grounds of her gender. However, this is unlikely to succeed in the employment tribunal.

The House of Lords (now the Supreme Court) ruled in Barry v Midland Bank [1999] IRLR 581 that, despite the fact that it was indirectly discriminatory, the employer had good grounds for operating such a redundancy pay policy.