The data obtained through a Freedom of Information Act Request to HMRC shows the cost of redundancy payments to UK business is down only 2% on 2010 findings - showing unemployment and cost cutting is still heaping a heavy burden on both the public and private sector.
Wedlake Bell says in the last three years redundancy payments are calculated to have cost UK employers a total of £13.4billion. Wedlake Bell says that average redundancy payments have reached £9,362 per person this year, more than 18 weeks of the median UK salary for full time employees (£499).
This is down just fractionally from £9,375 last year. David Israel, head of employment at Wedlake Bell, 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. "Whilst the worst of the private sector cost cutting appears to be over the public sector has now started to restructure and trim staff levels. 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.
"Even through paying these higher than required redundancy payments, shedding excess staff can still deliver business the required longer term cost savings that they are seeking."
Statutory redundancy pay is capped at £400 per week and based on the employee's age and years of service. Wedlake Bell explains that of the £4.4 billion paid out in redundancy payments this year, £3.8billion (or 86%) was paid to employees tax free. The first £30,000 of redundancy pay can be received tax free by the employee. Approximately £600million of the redundancy payments made over the last year was for an amount in excess of £30,000 per person.
