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February 2009

Research shows how workers lose out because of the cap on redundancy payments

The Labour Research Department has carried out research looking at the effect of the cap on redundancy pay for unions backing Lindsey Hoyle MP in his attempt to increase the maximum amount that redundant workers can receive through a Private Member's Bill. The research finds that when redundancy pay was first introduced in 1965, fewer than one in 20 employees earned more than the cap. Now six out of ten employees do so. As a result they would not get full compensation for their earnings if they were made redundant. In the vast majority of constituencies (87%) across the country the majority of employees would not get full compensation if they lost their job. The research also finds that none of the UK's major European partners (France, Germany, Italy and Spain) has a cap on earnings similar to that in the UK.

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