MPs back redundancy payout rises

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Sixty MPs are backing calls for the government to increase payoffs to workers who are made redundant.

The MPs, 52 of them Labour, support Lindsay Hoyle's motion calling on the government to increase the cap on statutory redundancy payouts.

He argues the £7,000 limit - or £10,500 for older workers - has not increased in line with earnings.

At present employers have to offer a week's pay for each full year's service to those between the ages of 22 and 41.

Older workers are offered a week and a half's pay per year - up to a maximum of £350 a week for up to 20 years' service.

But Mr Hoyle, who will raise the issue in a private member's bill in Parliament next month, said the £350 cap represented 56% of average weekly earnings - whereas the original value when the scheme was launched in 1965 was worth 203%.

He also wants statutory redundancy pay to be linked to average earnings rather than inflation.

His motion has been backed by 52 Labour MPs, three Tories, three Lib Dems and two independent MPs so far.

But the government has played down a newspaper report that Lord Mandelson, the business secretary, is planning to put forward his own proposals to raise the minimum amount employers must pay to staff they make redundant.

The Independent reported that ministers were to review payments and were considering a possible one-off rise in the £350-a-week cap.

Mr Hoyle told the BBC the time was right to change the cap: "It's about helping people. If you look at the executives at the top of a company, that walk away with millions of pounds, the fact is the people lower down the chain end up with nothing."

The TUC wants the cap to be raised to £500 a week, taking the maximum payout to about £10,000 for workers aged 22-41 and £15,000 for older staff.

It also wants the tax-free limit for payoffs to be raised. Since 1988, it was £30,000 but the TUC wants the limit raised to £50,000.

The government agreed in its 2005 election manifesto to increase the maximum payout under the statutory redundancy scheme.

A spokesman for the Department for Business, Enterprise and Regulatory Reform said: "There is an existing government commitment to increase the weekly limit on statutory redundancy pay. We are keeping implementation of this under review.

"We are also considering our response to a private member's bill on this matter."