Even though they are on the face of it indirect discrimination because of age (since younger employees are likely to lose out, as they will find it harder to build up the longer service), you are allowed to make enhanced redundancy payments based on length of service without having to objectively justify this, so long as they are calculated in the same way as statutory redundancy payments.
- An employer operates a redundancy scheme which provides enhanced redundancy payments based on employees’ actual weekly pay, instead of the (lower) maximum set out in the statutory redundancy scheme. Equality law allows this.
- Using the statutory redundancy scheme formula and the scheme’s maximum weekly wage, another employer calculates every employee’s redundancy entitlement, then applies a multiple of two to the total. Equality law allows this too.
If you have your own contractual redundancy scheme that uses age or length of service in a different way, in other words, is not related to the statutory redundancy scheme, this may be unlawful discrimination unless you can objectively justify what you are doing.
If you think this may apply to you, then you need to take further advice.
Last updated: 19 Feb 2019