The BBC’s 2013/14 annual report showed that the culture of high severance packages was still present in the 12 months up to the end of March, with a total of £2.76m awarded to just twelve former employees – not a bad redundancy package when we compare it to the statutory rates.
Tony Hall, director general since April last year, announced that severance payments would be capped at £150,000 per individual from the 1st September 2013, with the twelve employees receiving payments over that threshold being paid off before the cap came into place. With the report, and specifically the BBC’s response to last year’s ‘payoff scandal’ coming under intense media scrutiny, it does raise awareness of the issues surrounding redundancy payments, and how they can affect your business.
Broadly, redundancy is when an employee is dismissed because there is no longer a genuine need for their job. This may be due to the business changing what it does, changing its processes, moving location, or in the worst case scenario closing down. It’s important to remember that employers must try to find suitable alternative employment within the organisation for employees they’ve made redundant – and that those employees have the right to a trial period in that new role without losing the right to redundancy pay.
In the BBC’s case the redundancies appear to have been calculated based on prior agreements with the former employees, as the £230,000 average that the twelve highest earning outgoing staff received dwarfs the amount legislated by UK employment law. Statutory redundancy payments are calculated by the employee’s age and their length of service, with the total amount of statutory pay not allowed to exceed £13,500, regardless of the employee’s salary at the point they were made redundant. To be eligible for statutory redundancy the employee must have been with the organisation for upward of two years – which appears quite poor when compared to the former BBC director general George Entwistle’s payoff of £470,000, after just 54 days in the role.
Compulsory redundancies should be avoided wherever necessary, be it by offering voluntary redundancy or early retirement packages, laying off contractors and freelancers or restricting recruitment; in short, doing whatever possible to keep your employees employed. It’s not known whether or not the BBC tried as hard as it could to prevent all 413 redundancies from occurring, but given the recent relocation of eight national business divisions to Salford and the well documented licence fee freeze, in place since 2010, the circumstances certainly make mass redundancies likely.
Reflecting this, the number of senior managers earning more than £100,000 fell for the fourth consecutive year (from 232 to 245), and the BBC has announced that it will move the youth-focused BBC3 channel from air to online-only next year. Every redundancy since the introduction of the cap has come in under the £150,000 limit, and the broadcaster will be hoping to maintain that record for the foreseeable future and draw a line under the matter.