Time to restore redundancy pay value

The TUC is today (Friday) calling on the Chancellor to increase the weekly limit on statutory redundancy pay from £330 to £500 in the forthcoming Budget as a major step towards restoring the real value of the limit when it was first introduced at £40 in 1965.
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 twenty years service can be counted.
But 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. Official figures show that more than half the working population earn more than this a week (53 per cent). Mean pay is £452 a week, so the current limit is just 73 per cent of average pay. Employers are free to offer more generous terms, and many do.
When redundancy pay was introduced for the first time in 1965 the limit was set at £40, more than twice the average wage (£19.60). If the limit had been uprated in line with prices it would now be a little over £500, and if increased in line with earnings it would now be in excess of £1,000.
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.
'The Government pledged in its manifesto for the last election to boost redundancy and that pledge should be implemented. A one off rise to £500 and a link to earnings rather than prices in future is the minimum we need to see to start to restore some fairness.'