Should the redundancy pay calculation include increments that the employee is due to receive during their notice period?
Section 162 of the Employment Rights Act 1996 requires employers to calculate statutory redundancy pay based on the amount of contractual pay at the point the notice of redundancy is issued – the ‘calculation date’. In Leyland Vehicles Ltd v Reston [1981] ICR 403, the EAT confirmed that employers are not obliged to recalculate statutory redundancy pay to take account of changes to contractual pay that are due to take effect after the redundancy notice has been issued. The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 provides councils with the discretion to base redundancy pay on an actual week’s pay. From December 2009, these Regulations also use a week’s pay assessed at the calculation date.
