The qualifying period for workers to receive statutory pay should be reduced by half to twelve months, according to the Trades Union Congress (TUC).

Under current UK rules workers must be employed by their company for at least two years to receive statutory redundancy pay. The TUC have claimed that reducing the time limit to twelve months would benefit more than 20m UK workers.

However, business groups have warned that a reduction could damage companies that are already struggling to survive in the current economic climate.

"The proposals would increase unemployment by forcing many businesses to close that might have survived," said Phil Orford, chief executive of the Federation of Private Businesses.