Since the prospect of age discrimination legislation first loomed, employers and their lawyers have been curious about how the calculation of redundancy payments would be affected.

The present regime, under which employees receive a week's pay for each year worked (increasing to one-and-a-half weeks' pay for each year over the age of 41) is itself discriminatory on age grounds, as it benefits older employees. It had been widely expected that Parliament would do away with the practice and introduce a single multiplier, with everyone receiving, say, one week's pay for each complete year's service regardless of age.

However, in a statement to Parliament on March 2, the Government surprised everyone. Referring first to discussions with key stakeholders, including the Confederation of British Industry and the Trades Union Congress, the statement went on to say that the Government was concerned that a system using a single multiplier might not meet policy aims and that the system involving more than one multiplier was to continue.

That conclusion was justified on the basis that a worker's employment prospects varied with age, with older workers facing a particularly difficult task in securing new employment - young workers tending not to be out of work for long and those in the middle of the age band coming somewhere in between.

On that basis, said the Government, a system using a single multiplier would leave a significant group of older workers substantially worse off than at present, a situation the Government said it would find unacceptable'.

The redundancy payments scheme has not remained entirely unchanged however, as the lower qualifying age limit of 18 and the upper one of 65 have been removed. So has the rule that saw employees losing a twelfth of their redundancy entitlement for every complete month worked over the age of 64. As we are all living and working longer, they can no longer be justified.

* Stephen Elliott is a solicitor in the employment team of North-East law firm Ward Hadaway. He can be contacted on 0191-204 4000 or by email at stephen.elliott@wardhadaway.com

Published: 14/03/2006