Ugradar v Lancashire Care NHS Foundation Trust

A contractual redundancy scheme which describes its payment as an enhancement of statutory redundancy pay, with the statutory payment offset against it, does not thereby exclude the separate statutory entitlement. In the absence of a relevant exemption order, a contractual term cannot limit statutory redundancy rights.

Where an employee establishes both entitlements, the statutory payment is set off against the full contractual entitlement. A tribunal's jurisdictional cap on a contractual claim is imposed only after that contractual liability has been assessed. It does not cap or extinguish the separate statutory redundancy payment.

The claimant's post disappeared in a reorganisation. The Employment Tribunal found that the alternative employment offered by the respondent was unsuitable and that the claimant had reasonably refused it.

She was entitled under the NHS Agenda for Change contractual scheme to redundancy pay of £43,949.04. Her contractual claim, brought under the Employment Tribunal's Extension of Jurisdiction (England and Wales) Order 1994, was capped at £25,000. The Tribunal nevertheless rejected her separate statutory redundancy claim, holding that it was subsumed within the contractual entitlement.

The claimant appealed against that rejection. The central issue was whether the contractual enhancement and the jurisdictional cap prevented an additional award of statutory redundancy pay.

1. Appeal allowed. The Employment Tribunal erred in rejecting the statutory redundancy claim. The claimant had both a contractual cause of action and a statutory cause of action. Although the payments overlapped, they were not the same cause of action for the doctrine of merger.

2. Fraser v HLMAD Limited [2006] ICR 1395 did not apply. It concerned a single, indivisible wrongful-dismissal cause of action pursued successively in the Employment Tribunal and the civil courts. Here, the claimant advanced the two distinct claims together. The Tribunal's task was to give effect to the parties' obligations under both contract and statute.

3. The claimant satisfied the conditions for statutory redundancy pay under Part XI of the Employment Rights Act 1996. Since no payment had been made and a timely complaint had been presented, section 163(1) required the Tribunal to determine it. Any contractual exclusion or limitation of that right would have been void under section 203(1), absent an exemption order under section 157; no such order applied.

4. Paragraph 16.1 of the contractual scheme did not restrict the statutory right. It required the statutory payment of £5,868 to be set off against the full contractual liability of £43,949.04, leaving a net contractual sum of £38,081.04. Article 10 of the 1994 Order then limited the contractual award recoverable in the Tribunal to £25,000. The cap did not apply to the separate statutory award.

5. The claimant was therefore entitled to the capped contractual award of £25,000 and, in addition, the statutory redundancy payment.

• Employment Appeal Tribunal: Allowed the claimant's appeal and held that statutory redundancy pay was payable in addition to the capped contractual award.
• Employment Tribunal, Manchester: Judgment of Employment Judge Ross dated 5 September 2018 upheld the contractual redundancy claim subject to the £25,000 cap, but rejected the statutory redundancy claim.