Redundancy dismissal leads to £20,000 award for unpaid wages, notice, and pension deductions

This case highlights the financial risks employers face when they fail to meet basic employment obligations during a redundancy process. The former employee, who had worked for Rayhome Limited for 17 years, was dismissed on 18 January 2022. The company not only failed to give her notice but also stopped paying her wages months before the dismissal, deducted pension contributions without remitting them, and did not pay for her accrued holiday.

What the employer did wrong

Rayhome Limited made several fundamental errors. First, it failed to pay wages for November and December 2021 and the period up to dismissal — a clear case of unauthorised deductions. Second, it deducted pension contributions from the employee's wages over 46 months but never paid them to the pension provider, effectively pocketing the money. Third, it dismissed the employee without notice, triggering a notice pay claim. Finally, it did not pay for 1.4 days of unused holiday.

The tribunal also noted that the employer did not file a response to the claim, which meant the judgment was made in its absence. This underscores the importance of engaging with tribunal proceedings — ignoring a claim does not make it go away.

Why the result matters

For employees facing redundancy, this case is a reminder that statutory rights — including redundancy pay, notice pay, and payment for work already done — are enforceable even if the employer is struggling financially. The total award of £20,231.91 covered all these elements, with the redundancy payment alone amounting to £9,248.00.

Employers should note that failing to pay wages or pension contributions can lead to significant awards, including gross sums for pension deductions that cannot be reduced by tax or National Insurance. The tribunal also made clear that notice pay is a net sum, reflecting the employee's actual loss after accounting for any earnings during the notice period.

For anyone in a similar situation, keeping detailed records of unpaid wages, pension deductions, and holiday entitlement is crucial. The employee in this case represented herself and still succeeded, showing that tribunal claims can be pursued without legal representation when the facts are clear.