Lindsay Hoyle, the Government's assistant minister for the North West, has tabled the proposal.
But the British Chambers of Commerce (BCC) does not believe this will help firms retain staff. The BCC's director general, David Frost, said: "The additional cost to business that will stem from this Statutory Redundancy Pay (Amendment) Bill will affect those companies struggling the most. Businesses are having cash-flow problems and this will add to that."
And the Forum of Private Business (FPB) claims the increased costs of having to make staff cuts would make it much more difficult for a business owner to turn a struggling company around and leave many businesses with no alternative but to close completely, leading to a further loss of jobs. The Government would then have to pay the additional redundancy costs out of the public purse.
The FPBs chief executive, Phil Orford, added: "The proposal, apparently to protect workers, is misguided because it would increase unemployment by forcing many businesses to close that might have survived had statutory redundancy pay been left alone. Inevitably, this would also increase the burden of social security on the taxpayer and cause a downward spiral of further unemployment and economic deterioration."
House of Commons debates proposed huge increase to statutory redundancy pay
A second reading debate on statutory redundancy pay will take place in the House of Commons today, containing proposals to increase the maximum week's earnings used to calculate redundancy pay by 43%, from 300 to 500.
