Lords act on Personnel Today’s redundancy timebomb warning

The government has written to members of the House of Lords, reassuring them that a “buried” clause in the Work and Families Bill will not lead to a dramatic rise in statutory redundancy pay (SRP).

In January, Personnel Today revealed that Clause 14 of the Bill, which would give the government carte blanche to impose an unlimited increase in SRP, made it through three readings in the House of Commons without receiving any scrutiny.

In reaction to growing employer concerns about the potential cost of the clause – one of the promises made by Labour to trade unions under the Warwick Agreement – Conservative peers Baroness Miller of Hendon, and Baroness Morris of Bolton, have tabled an amendment.

It states that the one-off rise should “not be greater than 110% of the current maximum amount of a week’s pay immediately prior to the date of the order”. At current rates, this would put SRP up from 290 to 319 – far short of union calls for SRP to be doubled.

In a move that will anger unions, government spokesman Lord McKenzie of Luton has sent a letter to members of the House of Lords concerned about the clause, indicating that the government supports limiting the increase.

“I am not prepared to comment on the timing [of the one-off rise in SRP]… but I do not expect it to be increased dramatically,” the letter said.

Baroness Miller said she had tabled the amendment because a big increase in redundancy pay would lead to a “downward spiral” for some companies. “If businesses are making people redundant, then business isn’t booming. If they then have to pay out large sums, it could make business impossible for some of them,” she said.

The amendment will be considered as part of the discussions during the next stage of the Bill at the end of the month.

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