TUC calls for £170 rise in redundancy pay

Mar 1 2008 by Iain Laing, The Journal

UNION leaders urged the Government to increase the weekly limit on statutory redundancy pay from £330 to £500 to restore its value.

The TUC said that when the payment limit was first introduced in 1965 it was set at £40, more than twice the then average weekly wage of £19.60.

If the limit had been uprated in line with prices, it would now be worth more than £500, and if it had kept pace with earnings it would be in excess of £1,000, said the union organisation.

TUC general secretary Brendan Barber said: “Now is the right time to start to restore the value of redundancy pay.

“When it was introduced, the big majority of the workforce had all their wages counted when working out their redundancy pay, but now more than half the workforce would lose out.”

Anyone who has worked for the same employer for more than two years is entitled to redundancy pay, which is paid by the Government if the employer goes bust.

It is calculated as half a week’s pay for each year of employment between the ages of 18 to 21, plus one week’s pay for each year of employment between 22 to 40, plus one and a half week’s pay for each year of employment between the age of 41 or over but under 65. No more than 20 years service can be counted.

There is a statutory maximum limit to what counts as a week’s pay -– anything earned in excess of this limit is not counted when working out redundancy pay. This is set annually and is currently £330 per week.