Overview

This bill aims to update the statutory redundancy pay system in the UK. It proposes linking the amount of redundancy pay to average weekly earnings, ensuring it keeps pace with changes in the cost of living and wages.

Description

The Statutory Redundancy Pay (Amendment) Bill modifies the calculation of statutory redundancy pay. Currently, the maximum amount payable is fixed. This bill mandates the Secretary of State to create regulations within 12 months to link redundancy pay to average weekly earnings, as published by the Office for National Statistics. These regulations must include a method for calculating this link and will take effect within 12 months of their creation. The link will adjust annually, considering the relative changes in average weekly earnings and the Retail Prices Index (RPI).

Before implementing these regulations, the Secretary of State must consider the desirability of including an annual comparison between the annual rate of change in average weekly earnings and the RPI. Consultation with the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) is also required.

The regulations created under this bill will be subject to parliamentary annulment.

Government Spending

The bill's impact on government spending is not immediately clear. Increased redundancy payments would lead to higher government expenditure, although the exact amount is dependent on the mechanism for linking redundancy pay to average weekly earnings.

Groups Affected

This bill primarily affects:

• Employees: They would potentially receive higher redundancy payments if average weekly earnings rise faster than the current fixed maximum.
• Employers: They would face increased redundancy costs if average weekly earnings increase.
• The Government: The government's spending on redundancy payments would fluctuate depending on changes to average weekly earnings.

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