Anti-ageism move would cut redundancy pay

The Government was accused of "rank hypocrisy" in its plans to help older workers yesterday after it slipped out proposals to cut statutory redundancy pay for the over-40s.

The Government was accused of "rank hypocrisy" in its plans to help older workers yesterday after it slipped out proposals to cut statutory redundancy pay for the over-40s.

In a move that could cost employees thousands of pounds, people aged between 41 and 65 will see their redundancy cut from one and a half week's pay to one week's pay for each year of service.

The move, which will bring those over 40 into line with their younger colleagues, triggered fury from trade unions, age charities and the Tories and Liberal Democrats.

Labour MPs are also certain to complain about the decision to tear up a scheme that was introduced by Harold Wilson and has been in place unchanged for almost 40 years.

The outcry started as Patricia Hewitt, the Trade and Industry Secretary, struggled to fend off accusations that the Government's anti-ageism proposals would lead to staff being forced to work to 70.

Buried in the proposals published yesterday was a section advocating the end of a higher rate of redundancy for older employees. The document saysthat "it is no longer appropriate for age to be used as a factor in the payment calculation" of redundancy because other moves to outlaw age discrimination would be introduced by 2006.

"The weighting of payments in favour of older workers was motivated by a perception at the time that the adverse effects of being made redundant generally increased with age," it says.

"However, younger workers can also be seriously affected by redundancy: they commonly have young families, large mortgages and consequently heavy financial commitments."

But the TUC general secretary, Brendan Barber, said that there was no reason for the rate not to have been upgraded for everyone instead of being downgraded. "If there are to be any changes made to redundancy payments as a result of the new regulations, any change should be about taking everyone up to the higher level," he said.

Paul Burstow, the Liberal Democrat spokesman on older people, said the proposal underlined just how grudging the Government had been on the issue of age discrimination.

"It's rank hypocrisy," he said. "You can't tackle age discrimination in the workplace by devaluing older workers on the cheap. It sends exactly the wrong signal."

David Willetts, the shadow Work and Pensions Secretary, said: "It's absolutely typical that they have smuggled this out in this way."

Despite the fact that the changes could save companies millions of pounds, even some business groups expressed concern at the idea.

David Yeandle, deputy director of the Engineering Employers Federation, said most firms had shown no enthusiasm for a levelling down even though it could, in theory, cut redundancy costs. "This will open a Pandora's box and create lots of complications for employers," he said.

Jack Frost, spokesman for Help the Aged's Third Age Employment Network, said: "What we are effectively saying is that we are making it cheaper for employers to make older people redundant. The UK already has the third lowest statutory redundancy rate in the EU, and this may take us even lower."