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Potential redundancy numbers up - ONS

ended 15. December 2022

This morning, a report published by the ONS showed the number of potential redundancies reported in the week to 4 December 2022 was 71% above the level in the equivalent week of 2021, while the number of employers proposing redundancies increased by 112% compared with the level in the equivalent week of 2021. We asked HRs, employment lawyers and small business owners for their views.

9 responses from the Newspage community

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Steven Mather
Lawyer & Director at Steven Mather Solicitor
I’ve seen a massive increase in redundancies and particularly the giving of settlement agreements. I’ve had at least 100% more instructions in the past four weeks, a similar level to the beginning of lockdown and at the end of furlough. A settlement agreement is a contract between employer and employee that stops the employee suing the company. In return, the employee usually gets a little more in the way of a pay-off. Settlement agreements are a way for a business to minimise potential employment tribunal claims and still make redundancies, and it means they don’t need to follow the process as fully as they do when making redundancies.
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Sandra Wilson
Owner/Director at Cottrell Moore Limited
This is no surprise. We have had employees demanding WFH and more pay for the past two years in a climate that couldn’t sustain it. Unfortunately, we have become a nation that wants to be ‘bailed out’. This country has been through many a recession and we used to make the most of what we had, cut back, help each other in our local communities and most importantly learn from it. I wonder if the Trade Unions will take heed of these latest ONS figures. I doubt it, but they certainly should.
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Sarah Loates
Director at Loates HR Consultancy
The ONS data published Thursday is based on advanced notification of redundancies. This is where an employer plans to dismiss twenty or more employees within a single workplace, in any 90-day period. Therefore it's likely this would not include some SMEs' redundancy intentions. On the ground, currently, we are seeing SME employers sitting on their hands. The tight labour market means they have forked out a fortune for new employees and strategies to retain staff so SME employers want to hang onto their staff. However, we predict towards the end of Q1 2023, after the Christmas trading period and year-end for some businesses, that SMEs will start reducing their costs via headcount reductions.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This is the first piece of economic data that should shock the government and Bank of England into seeing how bad the situation is going to be. Employment and unemployment data is masking the severity of the economic decline with the availability of low paid jobs abundant in many sectors. This shows that those with jobs should be apprehensive about the coming 12 months, with more than double the amount of employers considering redundancies compared to a year ago. The structure of the labour market in the UK, caused by both Brexit, Covid and a vacuum in government means if you lose a job paying £50,000 per year, you will find a new one paying half of that. It's a desperate equivalent of finding a penny but losing a pound. We desperately need a Chancellor willing to support small business and not penalise them through the tax system.
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Debbie Porter
Managing Director at Destination Digital Marketing
News of mass redundancies is a case of the chickens coming home to roost for the economy. All year the news cycle has been awash with stories of employees demanding higher and higher salaries and benefits. This has been a response to a shallow pool of candidates and the increase in the cost of living, but also ironically a major contributor to the increase in the cost of living. When the wages bill of a business goes up, so must the prices of the products and services of that business, because there is no magic pot of cash to fund this bottom line cost. The Bank of England's inflation strategy is to make many goods and services unaffordable by pushing up borrowing costs, this will then flatten the market and we can build again from a reset cost of living. People's livelihoods are just collateral damage.
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Karen Watkins
Founder at Rowan Consulting
You'd have to have been living in a hole for these numbers to be a surprise to anyone right now. Sadly this is a real indication of where many businesses find themselves. In August 2022, more than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency. Restructuring business is currently making up 70% of our workload and has been for the past four months, with an increase in conversations about "what's next" for a lot of businesses heading into 2023. Small businesses have reached a critical point, having hung on for as long as they can in order to protect their employees, but unless the government takes real steps to sort out the current issues, there's at best a dim light at the end of the tunnel right now. Many companies are being forced into making incredibly difficult but much-needed decisions.
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Lauren Thomas
Economist at Glassdoor
Involuntary redundancies have been rising for the past few months as companies weather economic instability and high inflation. However, we expect redundancy levels to remain below their pre-pandemic norm. And given the extremely high level of current job openings, employers can simply choose to cut back on recruitment rather than lay employees off. Despite this, Glassdoor data tells us workers are worried. Though mentions of layoffs remain far below their peak in 2020, layoff discussion has surged in the past few months, increasing 440 percent year-over-year in November. This indicates the gap between actual redundancies and public perception has widened over the past few months.
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Cheney Hamilton
CEO at The Find Your Flex Group
This report just highlights the need for mass operational model change to businesses in the UK. I presented the case for this to the All Party Parliamentary Group for the Future of Work earlier in the year, highlighting that supporting businesses to become Mutable, would ensure that redundancies could be eliminated and that a flexible resource architecture should legislated for, rather than the absolutely nonsense flexible working legislation that is on the table. Removing fixed costs from business through redundancy is archaic and cruel. Business can and should do better!
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Katie Elliott
Director at HR Katie
At the moment, I am not seeing businesses looking to make redundancies in 2023. However, there has already been a lot of belt-tightening happening in 2022, with sales starting earlier in retail and recruitment decisions being put on hold for service-led businesses. We may well be about to see an about-turn on the candidate-driven market that has been very much in the driving seat for the past couple of years.