Ten-year low in redundancy payouts last year
The cost of redundancy payments to UK businesses dropped 28% last year, falling to a decade low of £3.3bn in 2018/19, down from £4.6bn in 2017/18*.
The sharp fall in the amount paid out by UK businesses in redundancy payments suggests the negative impact of Brexit on the economy may not have been as bad as initially feared.
The number of redundancy payments has also dropped to a ten-year low, falling to 180,000 in 2018/19, down from 480,000 in 2008/09* during the credit crunch.
Another factor that may have reduced the number of redundancies is the UK’s tight labour market. Some businesses may have chosen to retain staff they may not need in the short term due to the difficulties in recruiting replacements later.
However, whilst the cost of redundancy payments has dropped, the number of workers losing their jobs in the UK is likely to be higher than shown by HMRC’s figures. This data does not include workers made redundant by their employers after less than two years’ employment, as they are not eligible for redundancy pay nor does it include agency workers laid off or those in the ‘gig’ economy who in some cases are treated as self-employed.
"Brexit has not led to a large wave of redundancies, which will be welcomed by both businesses and workers but we are still in the transitional period and the position may be different this time next year."
Many of the jobs lost in the retail sector in the last year may not have involved a redundancy payment as retail businesses tend to have a high turnover of staff with many part-time employees leaving jobs after a short period.
The value of redundancy payments could rise in the coming months as employers accelerate redundancy processes to avoid higher National Insurance Contribution (NIC) charges. New rules coming into effect on April 6 2020 will mean employers will have to pay NICs on any redundancy and severance payments in excess of £30,000. Some businesses may choose to push through planned job losses before the introduction of these rules.
* Year end April 5 2019. Source: HMRC
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