Business News

Redundancy Alternative

The Confederation of British Industry (CBI) has made a proposal for an ‘Alternative to Redundancy’ (ATR) scheme which could be introduced as part of a package of measures to reduce job losses.

Under the proposal employers would be able to use current redundancy procedures or place employees on the ATR scheme for a period of up to six months. The employees would not work during the ATR period but could seek employment elsewhere. They would receive an allowance of twice the rate of Job Seekers Allowance, which is currently approximately £50 and £65 a week dependent on age.

The proposal is that half of the allowance would be paid by the government and the other half by the employer. The employees could then go back to work once the ATR period expires or the business improves.

John Cridland, CBI Deputy Director-General, said:

“The worst of the recession may be over, but businesses still face a long convalescence and the dole queues will continue to grow. The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers.

We considered various forms of wage subsidy and support for short-time working, but this approach is better. Businesses will be more able to cope with sharp drops in demand and prepare for recovery, while workers benefit from improved financial support and a door that is kept open for six months.

This is not about businesses ducking their redundancy responsibility – in fact if a scheme runs for six months and a redundancy is still made then the business will end up paying more.”

For information on the calculation of statutory redundancy pay use the Department for Business Innovation and Skills link below.

Internet links: CBI press release and BIS website