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August 20, 2013
Enhanced redundancy policies are often viewed by employers as being discretionary. However, it’s not unusual for such policies to be implied into employees’ contracts by custom and practice. Determining when this has happened is tricky but a recent case has demonstrated that a wide range of factors need to be considered. If your organisation has faced (or may face) employees making such claims, it’s worth bearing in mind the following guidelines:
- if enhanced redundancy payments have been made frequently over a long period then it more likely the policy will have become contractual;
- if the way that enhanced payments are calculated has typically varied then this will point towards a non-contractual policy;
- if there is widespread knowledge amongst the workforce that they are entitled to an enhanced payment then this suggests the policy may be contractual;
- if the policy uses clear language that it is non-contractual and discretionary then this should be persuasive if it would hard to see how employees could reasonably consider the policy to be contractual;
- if an employment contract expressly states that there is no contractual enhanced redundancy policy then this should significantly reduce the threat of enhanced terms being implied into the contract.