UK redundancy pay less than half the EU average

Jun 02 2003 by Brian Amble Print This Article

Minimum redundancy pay in the UK is among the lowest in Europe, according to new research by Mercer Human Resource Consulting. France, the Netherlands and UK have the lowest levels, while the most generous levels are given in Spain, Italy, Belgium and Austria.

The comparisons are based on minimum statutory paid notice and severance pay for a white-collar employee aged 40, made redundant after 10 years on a salary of 30,000 Euros.

Based on this example the worker would receive just £5,000 in France and the Netherlands or £5,128 in the UK. A Spanish worker, however, would receive a minimum severance package of £25,464, while in Italy and Belgium an employee would be paid £18,276 and £15,000 respectively.

The average redundancy pay across the EU after 10 years’ service would be £11,163, more than twice the level of the UK.

"Redundancy payments often reflect the labour market culture of the country," said David Formosa, European Principal at Mercer. "Legislation is light in some member states, to allow for a more flexible and competitive labour market. In others, the Government takes a more active role to protect employees."

He added: "It’s unlikely that levels of redundancy pay will be harmonised upwards in the near future. If anything, some countries, for example Germany, are now more concerned with finding ways to introduce more flexibility."

Organisations in the US are not legally required to provide redundancy pay, although many organisations give staff two weeks’ paid notice, the equivalent of 1,235 Euros based on the example above. Redundancy payments are also low in Japan where an employee on the equivalent of 30,000 Euros would receive just 2,308 Euros after 10 years’ service.

"Employers often enhance redundancy pay in countries where statutory entitlements are low," said Mr Formosa. "The US is an exception as, traditionally, little or no redundancy payments are made."