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Budget 2009: Statutory redundancy pay to increase


Statutory redundancy pay will increase from £350 per week to £380 per week under plans announced in the 2009 Budget delivered yesterday. The Chancellor, Alistair Darling, did not confirm a date when the rise was to come into force but said that the measure was necessary to help the increasing number of people being made redundant during the recession.

Statutory redundancy payments are calculated by using a formula that takes into account the employees' age and length of service. This formula results in a number of weeks' pay, which is then multiplied by the employee's weekly pay subject to a maximum of, currently £350 per week. This figure is now set to rise to £380 per week.

The changes are unlikely to be welcomed by employers, which will be faced with greater costs of implementing redundancies in what are already difficult circumstances. The impact will be greater still for those employers who operate enhanced redundancy schemes which use statutory redundancy as a starting point and then multiply the figure to provide an enhanced sum.

The measure may be a comfort to those employees facing a risk of redundancy but trade unions have criticised the increase as being too minimal still. TUC General Secretary Brendan Barber is reported to have said that statutory redundancy pay should be increased to £500 per week in order to provide any real benefit to employees who have lost their job.

If you would like further information about redundancy, please do not hesitate to contact a member of the Employment team.

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