Minimum redundancy pay set to rise

Friday, 6 February 2009 12:00 AM

By politics.co.uk staff

The government is set to raise the minimum redundancy payment in a bid to help counteract the effects of the recession.

At present, the payment stands at one week's pay for every full year's service between the ages of 22 and 41 and one and a half week's pay for older employees.

However, payment is capped at £7,000 and £10,500 respectively as wages above £350 per week and service of more than 20 years are not taken into consideration.

Yesterday, 57 MPs signed a Commons motion urging the government to raise the £350-per-week limit as some 46 per cent of the workforce earns more than that amount.

In the motion, it said: "In the current economic climate, the value of statutory redundancy pay is a real concern for thousands of people."

The Independent reported that the business secretary Lord Mandelson will propose a "big one-off" rise on that limit in his submission to the chancellor before the budget this spring.

Lord Mandelson has yet to find the extra funds required from the Treasury which say he should find the money from his own department.

Lindsay Hoyle, the Labour MP who tabled the motion, said: "There has never been a more appropriate time.

"People at the top of the chain walk away with a £1m cheque in their back pocket, but those at the bottom get a very raw deal.

"Even though the downturn is not their fault, they are thrown on the scrapheap."

Mr Hoyle is set to bring in a backbench bill, to be debated on March 13th which may increase pressure on the government to act.

Tags:
• economy
,
• employment
,
• employment regulations