Budget announces uplift in Redundancy Payments

The Chancellor has announced that the limit on a week’s pay for redundancy payments will be increased to £380. Here is the relevant paragraph from the full budget report:

5.27 To help provide adequate support for individuals who have been made redundant the Government announces a one-off increase in the level of statutory redundancy pay, making the weekly rate £380. The Government is also considering whether to introduce a new ‘floor’ which would set a minimum level for statutory redundancy payment rates, and would legislate on this in the next Parliament.

Let’s leave aside the point about the new floor on redundancy payments – the Chancellor didn’t say that out loud in his speech, and in any event there may well (!) be a different Government in power in the next Parliament.

The thing that puzzles me is just how this uplift will be made. The current limit of £350 is set out in S.227(1) of the Employment Rights Act and the amount is increased each year by an Order issued under S.34 of the Employment Relations Act 1999. However orders under that section are not at the Secretary of State’s discretion. They must be based on an uprating of the awards based on the retail prices index as it stands each September.

So how will this increase be made? When will it be effective from and will it also include the basic award for unfair dismissal? I’ll update this post as the position becomes clear.

UPDATE: It seems that under S.14 of the Work and Families Act 2006 the Gov. can make a once only uplift in the amount of a week’s pay (good old IDS, we’d be lost without you). Let’s wait and see when it actually happens.