The amount that businesses have paid out in redundancy payments has fallen to the lowest level since the recession. This represents a 10% drop to £3.5bn last year and a 27% drop from the peak of £4.8bn in 2012/13.
The overall number of redundancy payments have also fallen by 10% since 2013/14, from 284,000 to 257,000 last year. UK employers have borne over £21bn in costs due to redundancy programmes over the last five years. The average redundancy pay-out is £13,600,which is almost on a par with last year but much more than in previous years – the average 2012/13 was £11,100. This may suggest that those job cuts are mainly in the public sector, where redundancy payments are typically more generous.
Louise Woodward is an experienced recruitment professional specialising in Accounting & Finance. She comments on this trend, saying “This trend shows that, in general, businesses are switching their focus to expansion rather than savings. Thankfully, the burden on businesses of redundancies is beginning to lift as the pressure to strip out costs tails off.”
This will continue, and the number of redundancy payments is expected to be decidedly lower than the number of actual redundancies, as employees must now complete two years of service before becoming entitled to statutory redundancy pay. Employers replacing permanent staff with temporary staff / contractors also depresses the redundancy payment figures.