What does it cost to fire somebody in the UK?

Take-home message: firing people is very cheap.

It is claimed now and again that making it easier to fire people makes it easier to hire them. The logic is that employers do not hire staff because they are worried about the cost of laying them off if business does not go as well as they expect. So an employer’s reasoning is that they would like to expand their business by hiring more people, but the possible costs associated with `making them redundant’ (actually, `dismissing by reason of redundancy’) put them off.

It is easy enough to find out what it costs to dismiss someone by reason of redundancy in the UK. If someone has worked for an employer for less than two years, they have no right to a redundancy payment. After two years service, they have a right to a redundancy payment of one week’s pay per full year worked which is halved for each year worked under age 22. That `week’s pay’ is capped at £464.

So if business has not gone as well as expected and you have to fire someone less than two years after you hired them, it costs nothing.

If business has gone well for a bit, and you have to fire minimum wage staff who have worked for just over two years, it costs £495.20 for the adults, and £201.20 for the under twenties.

In other words, you can fire someone at no cost whatsoever in the first two years. After that, it can cost the same as filling the tank of a big car twice.

Vice-Chancellors’ pay

This is a speech I made at the recent Congress of the University and College Union. It went down well, so I have tried to reconstruct it. If anyone has some notes of it, I’d be grateful for a look to get closer to what I actually said.

Michael Carley, University of Bath, moving Motion 12.

I have in my hand a piece of paper. It’s a great piece of work. I can say this, because I didn’t write it. It’s an analysis of the pay of our Vice-Chancellor. You can get a copy over there, where the South West delegation is sitting. We carefully used the figures in such a way as to show our Vice-Chancellor in the worst possible light. I recommend you try doing the same.

The Vice-Chancellor of the University of Bath is paid two hundred and eighty four thousand pounds per year, figures two, eight, four, and a pension contribution of sixty five thousand. She is paid more per member of staff than even the head of Harvard. She is paid one hundred and fifty pounds per member of staff, which is, oddly enough, last year’s pay rise for the rest of us.

This motion is not about cutting Vice-Chancellors down to size–that’s a happy side effect. It is a motion which aims to restore some balance to universities. Universities essentially run themselves: “whilst the performance of a university may be `moulded’ by the characteristics of its leader, most of the variability is explained by non-leadership factors.” We know this because, ironically, our Vice-Chancellor carries out research on university leadership [pause for hysterical laughter to die down] and she said so in a recent paper. In other words, the Vice-Chancellor makes very little difference.

But we know this. The one thing you can guarantee in a university is that most of the staff are smarter than the boss. All you need to do with most academics is slide a pizza under the door now and again, keep us fed and watered, and let us get on with doing what we love doing. Most of us are eternal students: we went to university because we loved learning and scholarship and we stayed there to work because we still do. We want to do research, develop knowledge, and pass that knowledge on to students. But universities are run by CEOs, by people who think that Alan Sugar is good management.

The aim of this motion is to restore the idea that a Vice-Chancellor is one of us, primus inter pares amongst the academics (only the second use of Latin today, standards are obviously slipping). A Vice-Chancellor, and indeed other senior staff, should be elected by the staff of the university. They should be respected scholars, prepared to take on the job of chairing the committee that does the essential work required for the administration of the university. They should have the same interest as the rest of us in seeing a university run well for the benefit of learning. What we want are the people who are almost reluctant to give up their scholarly work. We want them to be elected because that makes them legitimate–they command the respect of their peers.

We propose that Vice-Chancellors’ pay be capped at ten times that of the lowest paid member of staff [which would still be a salary of about £150,000]. A large difference in pay and incentives leads to a difference in interests: leaders disconnected from the university’s academics do not act in the interest of scholarship. We want to restore the idea of a university being a community of scholars who want to do scholarship. We want our universities run by people like us, not by a bunch of jumped-up Alan Sugars.