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

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.