TUC calls for substantial increase in statutory redundancy pay

The TUC has called 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, 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 statutory 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.

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.

The TUC General Secretary has asked that the Government’s manifesto pledge at the last election to boost redundancy should now be implemented, with a one off rise to £500 and a link to earnings rather than prices in the future.