KPMG and Deloitte offer enhanced redundancy packages to cut UK headcount

Big Four firms provide redundancy terms exceeding legal minimums amid sector slowdown

KPMG and Deloitte are offering UK staff enhanced redundancy packages as they seek to reduce headcount and cut costs, City AM can reveal.

The two accountancy firms, along with PwC, have increased payouts to employees following a slowdown in the sector's traditional "attrition model," where approximately 15–20% of staff typically resign each year. A tight jobs market has resulted in significantly fewer voluntary departures.

All three firms have been compelled to lay off staff this year. Between KPMG, Deloitte, and most recently PwC, around 600 audit middle-tier roles have been earmarked for redundancy so far in 2025.

KPMG Removes Statutory Cap

In March, it was reported that KPMG UK planned to cut over 500 staff across its auditing and advisory divisions, including approximately 440 assistant manager roles in audit and 120 roles in advisory.

Affected employees were informed of the redundancy consultation that same month, and those who signed settlement agreements have since left the firm.

According to an internal memo seen by City AM, KPMG stated that all affected employees would receive a minimum of eight weeks' basic salary, including any statutory redundancy pay (SRP).

Under English employment law, employees must have at least two years of continuous service to qualify for SRP, but KPMG waived this requirement. The law also calculates SRP using a strict formula based on age and length of service, with the government capping "a week's pay" at £751. However, KPMG removed this statutory cap and calculated payouts based on employees' actual weekly salaries.

The package also included payment in lieu of notice or garden leave where applicable, but stated that employees would not be eligible for any full-year 2026 bonus.

Clare Brennan, employment partner at Hunters Law, explained: "In practice, enhanced redundancy payments are often offered in conjunction with a settlement agreement, giving employees an incentive to waive potential claims in return for a payment that is usually significantly higher than their statutory redundancy entitlement."

However, according to a close KPMG source, some staff who had been with the firm for over eight years were dissatisfied with the offer, as junior staff received packages similar to those of more senior, long-serving employees.

KPMG confirmed that, following a collective consultation with affected staff, it enhanced its redundancy package.

Deloitte Offered Eight Months' Pay

In June, Deloitte was reported to be cutting nearly 200 audit roles as part of a voluntary redundancy round.

At the time, it was understood that up to 175 auditors—including managers and assistant managers—would be affected, representing less than 3% of its audit and assurance business and less than 1% of the UK firm.

Under English law, accepting voluntary redundancy is still legally classified as a dismissal. Therefore, the baseline legal rules governing voluntary packages are based on the same statutory minimums as compulsory redundancies, though employers typically offer enhanced terms to incentivise staff to leave.

City AM understands that Deloitte offered a highly generous package, including eight months of full pay. Those wishing to accept the package were required to do so by 10 July, and if accepted, they would leave the firm by the end of the month.

Deloitte is not the only firm to have offered voluntary redundancies. City AM revealed last week that PwC reduced its audit division through a "small number of targeted voluntary exits."

KPMG and Deloitte were contacted for comment.