Age laws could lead to cuts in redundancy pay

New
laws prohibiting age discrimination in the workplace could lead to cuts in
older workers’ statutory redundancy pay.

Currently,
people aged between 41 and 65 are entitled to one-and-a-half week’s severance
pay for each year of service. But to conform to the new laws, it is likely this
would be cut to one week – the same as for those aged 40 and under.

The
consultation paper, Equality and Diversity: Age Matters, states: "The
weighting of payments in favour of older workers was motivated by a perception
at the time that the adverse effects of being made redundant generally
increased with age.

"However,
younger workers can also be seriously affected by redundancy: they commonly
have young families, large mortgages and, consequently, heavy financial commitments."

Unions
are already balking at the prospect of any cuts, and David Yeandle, deputy
director of employment policy at the Engineering Employers’ Federation,
predicts the issue could spark a political row.

"I
think this is a huge issue. It hasn’t been talked about for 38 years.
Everybody’s views are going to be laid at the table and we will have a big
debate.

"The
Government is going to come under a lot of pressure," he said.

TUC
general secretary, Brendan Barber, said the statutory redundancy rate should be
upgraded for everyone, instead of being downgraded.

"If
there are to be any changes made to redundancy payments as a result of the new
regulations, it should be about taking everyone up to the higher level,"
he said.

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