Redundancy shake-up call as TUC challenges government to update law

The TUC has called for major law changes in Alistair Darling’s forthcoming Pre-Budget Report to force employers to pay out more money when making workers redundant.

It wants workers to qualify for redundancy payments sooner, and for higher-paid workers to be entitled to higher payouts.

Under current legislation, workers have to be employed by an organisation for two years before they are entitled to redundancy payments.

Those who qualify are entitled to a week’s pay for every year they were at the employer and aged between 22 and 41. There are lower payments for younger workers, and higher payments for older workers. Only earnings up to £330 per week are taken into account.

The TUC wants workers to qualify after a year with an employer, and for £500 per week of earnings to be counted. It says more than half the working population earns more than the current limit, which has not risen in line with inflation.

Statutory redundancy pay is subject to income tax after the first £30,000, a limit that has remained the same for 20 years, and the TUC is also calling for the tax-free threshold to be raised to £50,000.

It also wants to see the government increase Jobseeker’s Allowance by £15 per week in next week’s Pre-Budget Report.

The benefit for a newly unemployed single person over the age of 25 is currently £60.50 a week. An increase of at least £15 would give real help to the newly unemployed, and provide a fiscal stimulus the economy desperately needs, the TUC has told the government.

General secretary Brendan Barber said: “Putting more money into ordinary people’s pockets must be part of the response to the recession. Tax cuts have a role, but there is an even stronger case for boosting unemployment benefit. It is the quickest way to stimulate the economy and protects the newly unemployed from a catastrophic fall in their income.

“Jobseekers Allowance is less than £10 a day. Going from a typical wage down to this poverty income will be a terrible shock for people losing their job through no fault of their own.”




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