Some employers, concerned for the welfare of their redundant employees, understandably enhance their redundancy packages over and above the statutory requirements. This is admirable, but employers should be aware that they are potentially setting a precedent they must abide by in the future.

On 25 March 2014, the UK Employment Appeal Tribunal (EAT) confirmed that where an employer has consistently made enhanced redundancy payments to its employees, this conduct could give rise to an implied term in the contract of employment. As such, if an employer fails to provide some of its former employees with enhanced redundancy payments it could be a breach of their employment contracts.

All employers should therefore be clear on their policy regarding redundancy payments and be consistent in its implementation. If possible, express provisions should be drafted into the employment handbook regarding a Company’s redundancy policy (whether enhanced or otherwise) and there should be minimal exceptions to this policy.

If you wish to provide enhanced redundancy packages to your employees you should certainly do so, but be conscious that you may be setting a precedent you have to abide by in the future.

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Insight

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Bermuda

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