CBI claims higher redundancy pay limits will cause job cuts

Union calls to increase statutory redundancy pay limits would cause further job losses in the fragile UK economy, according to the CBI.

From February 2009, the maximum weekly pay which can contribute to a redundancy lump sum will increase from £330 to £350. The TUC believes it should be increased to £500.

In a period which has seen thousands of redundancies announced across the UK, Katja Hall, CBI director of employment policy, said the TUC’s call for increased redundancy pay and tax-free lump sum payments would put even more jobs at risk by increasing the financial pressure on distressed businesses at a critical time.

“Employers do not take the decision to lay off staff lightly – the emergence of many different short-term working patterns are evidence of that,” she said. “The focus must be on keeping business working and as many people as possible in jobs.”

The TUC today welcomed the increase in the amount of an employees’ weekly earnings which counts towards statutory redundancy pay from £330 to £350, which takes effect this Sunday (1 February).

However, the TUC claimed £350 is still far lower in real terms than the original value of statutory redundancy pay when it was introduced in 1965.

The union congress has also called for the amount that people receive in redundancy pay before they have to pay tax increased from £30,000 to £50,000. This would have been the current level had the tax threshold increased in line with inflation.

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