Increase to statutory redundancy pay limit announced
The Government has announced a one-off increase in a week’s pay for the purposes of calculating the amount of a statutory redundancy payment, from £350 to £380, meaning a maximum potential statutory redundancy payment of £11,400. No date for the increase has been specified.
Since its introduction in 1965, the maximum limit has decreased from 203% of average weekly earnings to only 56% and the increase, announced in the Chancellor’s budget speech, has not gone down well Labour MPs who have been backing the Statutory Redundancy Pay (Amendment) Bill, a  Private Member’s Bill. This Bill proposes that the calculation of statutory redundancy pay (SRP) should be linked to average weekly pay and not inflation.
The increase only applies to SRP. Under S.14 of the Work and Families Act 2006, there is a power to make a one-off increase to the amount of a week’s pay which applies to all the statutory payments that are calculated by reference to a week’s pay, such as the basic award. Therefore, separate legislation will be needed to bring about the increase solely to SRP. No date has been specified as to when the increase will come into force.Â
The Government has also confirmed that it is considering whether to introduce a statutory “floor”, i.e. a minimum week’s pay for the purposes of calculating SRP.
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