The number of redundancy payments in the UK has dropped to a 10-year low, falling to 180,000 in 2018/19, down from 480,000 in 2008/9 during the credit crunch.
The cost of redundancy payments to UK businesses also dropped 28% last year, falling to a decade low of £3.3bn ($4.25bn), down from £4.6bn in 2017 to 2018.
Commercial law firm EMW said 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.
Another factor that many 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, EMW said.
However, while 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.
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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.
EMW added that 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 6 April 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.
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Jon Taylor, principal at EMW, said: “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.”
“Of course, these figures don’t necessarily give a 100% complete picture – many people laid off in the last year won’t have received redundancy pay for a variety of reasons. The fall in the total amount of redundancy pay might disguise much higher levels of people being laid off.”
“In addition, gig economy and agency workers who have their contracts terminated are not captured by these figures. As the gig economy and the agency sector grows, this will group is becoming more significant.”