Southampton City Council is to reduce its rate of redundancy pay in order to improve the affordability of restructuring.
The council had offered both voluntary and compulsory redundancy pay levels above the statutory minimum. It previously calculated voluntary redundancy payments at 1.25 the rate for compulsory redundancy, which was also above the statutory minimum.
Going forward, staff will receive statutory minimum payment levels, regardless of the type of redundancy. These are based on an employee’s age and length of service, to a maximum of 20 years. Statutory redundancy pay has a maximum threshold of £19, 290.
The council has calculated that, based on average redundancy costs, it could expect to save £3,088 for a voluntary redundancy and £1,150 for a compulsory redundancy. Some senior employees, however, could see potential redundancy payments halve.
The adoption of statutory redundancy payments has been approved by the council’s governance committee and the organisation is now in conversations with trade unions.
Southampton City Council has confirmed the change to Employee Benefits and was contacted for comment prior to publication.