No Image Available

Cath Everett

Read more about Cath Everett

Redundancy payments top £13 billion since recession


Employers have shelled out a huge £13.4 billion in redundancy payments over the last three years following job losses as a result of the recession and subsequent sluggish economic growth.

According to a report by Wedlake Bell, a City law firm that obtained the figures via a Freedom of Information request to Her Majesty’s Revenue & Customs, 2010 saw redundancy payoffs total a “staggering” £4.4 billion, down just 2% on the previous year.
David Israel, Wedlake Bell’s head of employment, said: “The sheer scale of these redundancy payments is staggering. The overall financial and human cost of having to make these redundancies has been massive.”
But while the worst of the cost-cutting in the private sector appeared to have ended, it was now the turn of the public sector to take over, he added.
The report revealed that UK employers paid out an average of £9,362 to each worker they made redundant last year. The figure equated to about 18 weeks’ salary, marginally down from the £9,375 paid out the year before.
Israel said that firms appeared to have been relatively generous to departing staff often on condition that they did not launch unfair dismissal claims. “On average, businesses have been paying far more than the minimum redundancy payments that they are required to pay by law, no doubt in part to avoid any long and drawn-out court proceedings,” he said.
While statutory redundancy pay is capped at £400 per week based on age and number of years of service, the average payout was more like £499.
There were 470,000 redundancies in the year to March, down from 480,000 over the last 12 months, the report found. But it warned that redundancy levels were likely to remain high over the year ahead.
“We may continue to see these high levels of redundancy even as the economy continues its recovery, as businesses may need to use redundancy as they continue to reshape their businesses. Recruitment may be picking up, but these government figures suggest that churn of jobs remains high,” the research said.


Get the latest from HRZone

Subscribe to expert insights on how to create a better workplace for both your business and its people.


Thank you.

Thank you! Your subscription has been confirmed. You'll hear from us soon.