Redundancy Pay: Maximum weekly amount

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A decision made on 7 September 2012:

Decision Reference: MD-S-2012-0073
Decision Summary Title :	Redundancy pay – maximum weekly amount		Date of Decision Summary:	5 September 2012
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	NA
Written Report Title :	Redundancy pay – maximum weekly amount		Date of Written Report:	5 September 2012
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Redundancy pay calculation – maximum weekly amount
Decision(s): The Minister decided that the maximum weekly pay for the purpose of calculating a redundancy payment should continue to be £650. The Employment (Redundancy – Maximum Weekly Amount) (Jersey) Order 2011 will continue to apply.
Reason(s) for Decision: The Statistics Unit’s June 2012 report on the Index of Average Earnings reported no change in the level of weekly average earnings in the 12 months since June 2011; the mean weekly earnings figure continues to be £650 per week. The Minister is satisfied that the mean level of weekly earnings continues to be an appropriate indicator for the purpose of calculating a redundancy payment and that £650 should continue to be the maximum value of a weeks’ pay.
Resource Implications: There are no financial or manpower implications arising from the law drafting instructions.
Action required: Policy Principal to advise the Jersey Employment Tribunal and the Jersey Advisory and Conciliation Service of the Minister’s decision.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Redundancy Pay: Maximum weekly amount

Employment Law - Redundancy Pay – Maximum Weekly Amount

The right to receive a redundancy payment for qualifying employees came into force on 1 January 2011. Article 60C of the Employment (Jersey) Law 2003 provides that the amount of a redundancy payment is calculated as follows:

“60C Amount of redundancy payment

(1) The amount of a redundancy payment shall be calculated by allowing one week’s pay for each year of employment during the period, ending with the effective date of termination, in which the employee has been continuously employed.

(2) For the avoidance of doubt, in this Article ‘year’ means a period of 12 calendar months.

(3) For the purposes of paragraph (1), the amount of one week’s pay shall not exceed the amount specified by Order under paragraph (4), or, if no such Order is in force on the effective date of termination, the most recent figure for the average weekly earnings published by the States of Jersey Statistics Unit at least one month before the effective date of termination (disregarding any more recent figure published less than a month before the effective date of termination).

(4) The Minister may, by Order, specify an amount for the purposes of paragraph (3).”

When Article 60C came into force on 1 January 2011, the ‘default’ position (in the absence of a Ministerial Order) applied and the maximum weekly value was the June 2010 average weekly earnings figure of £630, as published by the Statistics Unit in August 2010.

In August 2011, however, the Statistics Unit released two different levels of weekly earnings figures in its June 2011 report on the Index of Average Earnings: a mean average weekly earnings figure of £650 per week and a median average weekly earnings figure of £520 per week.

It was not intended that there should be any uncertainty as to which average earnings figure applies for the purpose of the redundancy pay calculation and the former Minister decided that, until such a time as the Employment Law could be amended, an Order should be made to reflect the policy intent that the mean weekly earnings figure applies. The Employment (Redundancy – Maximum Weekly Amount) (Jersey) Order, 2011, was made on 30 September 2011 which set the maximum weekly value of £650.

The Statistics Unit’s June 2012 report on the Index of Average Earnings reported no change in the level of weekly average earnings in the 12 months since June 2011; the mean weekly earnings figure continues to be £650 per week. Whilst the June 2012 average earnings index of reports that earnings were 1.5 percent higher than in June 2011, the level of weekly earnings derived from the survey is an informative indicator.

The Minister is satisfied that the mean level of weekly earnings continues to be an appropriate indicator for the purpose of calculating a redundancy payment and that £650 should continue to be the maximum value of a weeks’ pay. The Employment (Redundancy – Maximum Weekly Amount) (Jersey) Order, 2011, will therefore continue to apply.

The next report on the level of average weekly earnings is expected to be released by the Statistics Unit in August 2013. Given that the Statistics Unit continues to release both mean and median average earnings figures each year, the Employment Law should be amended to specify that the maximum weekly figure for the purpose of the redundancy pay calculation will always be the mean weekly earnings figure, unless the Minister specifies a different figure by Order.