Redundancy pay was first introduced in 1965 at £40 a week – more than twice the average wage of £19.60.
Anyone who has worked for the same employer for more than two years is entitled to redundancy pay, paid for by the government if the employer goes bust.
But there is a statutory maximum limit on what counts as a week’s pay – anything earned in excess of this is not counted when working out redundancy pay. This limit is set annually and currently stands at £330 per week. Official figures show that more than half the working population earn more than this, with mean pay standing at £452 a week.
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 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.
“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.”