Redundancy Cost Model
A per-person and whole-programme cost model covering statutory and enhanced payments, notice, holiday, employer costs and support.
A per-person and whole-programme cost model covering statutory and enhanced payments, notice, holiday, employer costs and support.
When to use it
Alongside the business case, and again once the affected population is confirmed, so the board sees a real number rather than an estimate.
What does a redundancy really cost? A model for the full picture
Most redundancy budgets are wrong in the same direction: too low. Statutory redundancy pay is easy to calculate and easy to fixate on, but it is rarely the largest line. Notice, accrued holiday, employer National Insurance and pension on taxable elements, enhanced terms, settlement payments, legal fees and outplacement all land on the same profit and loss account.
What this cost model covers
The template works at two levels. Per person, it calculates statutory redundancy pay by age band and service, notice or pay in lieu, outstanding holiday, and the employer costs that sit on top. At programme level, it aggregates those figures and adds the costs that only exist once: legal advice, project resource, communications, and outplacement or career transition support for leavers.
Getting the payback honest
A restructure that saves a salary line but loses the person who held a client relationship has not saved what the spreadsheet says. Model the savings against a realistic re-hire risk, the cost of temporary cover during notice periods, and the productivity dip in the team that remains. Boards respond better to a number with a stated confidence range than to one that later moves.
When to run it
Build a first version alongside the Restructure Business Case, then rerun it once the affected population is confirmed after consultation. Numbers move: voluntary applications, redeployment into vacancies and trial periods all change the total. Keep the version history so you can show the board why the figure changed.
A note on the support line
Outplacement is often the first line challenged and the last one people regret funding. It is also one of the cheapest ways to reduce tribunal risk and protect your reputation as an employer, because people who land well rarely litigate. Our guides library covers how to brief and measure a transition programme so the spend is accountable rather than symbolic.
