Tribune

by Cary Gee

LABOUR backbenchers have pushed through a Private Member’s Bill demanding an increase in statutory redundancy pay.

Despite the best efforts of Government minister Pat McFadden, who spoke against the bill introduced by Lindsay Hoyle for more than two hours, MPs voted to give the bill a second reading by 85 votes to just 17.

Under current legislation employers are required to pay a week’s pay for every full year’s employment to workers aged 22-41. Older workers receive a week and a half’s pay for each year worked.

However, the statutory payment is currently capped at £350 a week for up to 20 years service, which effectively limits redundancy payments to £7,000 – or £10,000 for older employees.

The Chorley MP introduced his  bill amid fears that statutory pay-outs, which are capped in line with inflation, are decreasing in value as the Retail Price Index falls.

Mr Hoyle said in the Commons debate that the RPI could conceivably drop “below zero”, thus causing the value of redundancy payments to fall accordingly.

Mr Hoyle, who described Government attempts to derail his bill as “quite apalling and underhand”, declared that “there has never been a more pressing time to reform statutory redundancy pay”. MPs from all three main parties agreed with him.

Mr Hoyle contends that the Labour whip’s office sent letters to its members instructing them to vote against the bill – an accusation Mr McFadden strongly denies.

The minister’s insistence that the Government has its own plans, which will address the concerns of the bill’s supporters, fell on deaf ears.

Despite this, the apparent withdrawal of Cabinet level support for the bill in the days leading up to the debate suggests that the Government might be about to publish its own proposals.

Meanwhile, Mr Hoyle, with the backing of trade unions, is arguing that the £350 cap equals just 56 per cent of weekly earnings compared to 203 per cent of earnings when legislation was introduced in 1965.

Unsurprisingly, the Government’s claim that businesses already hard hit by recession do not need further liabilities was backed by employer organisations such as the British Chamber of Commerce, who view the passing of Mr Hoyle’s bill as a “threat”.

Conservative MP Jonathan Djanogly, speaking for the Opposition, insisted that the bill would have “a damaging effect on workers in the longer term”, echoing Mr McFadden’s claim that raising the cap on redundancy payments could increase costs to businesses by £500 million a year.

Lorely Burt, for the Liberal Democrats, said that, while it was the “worst possible time” to introduce the proposed legislation for employers, it was “the best possible time” for employees.

Trade unions, which have been lobbying Labour MPs to support Mr Hoyle’s bill, while reminding them of a Labour manifesto commitment to raise the cap, welcomed the bill’s progression to a second reading but warned that the bill could still be scuppered when it reaches the detailed committee stage.