Collective Redundancy, Severance Packages, and Psychological Recovery Among Retrenched Workers in the Nigerian Banking Sector

This study analytically investigates collective redundancy processes, the adequacy of severance packages, and psychological recovery trajectories among retrenched workers in Nigerian commercial banks, drawing data from employees affected by bank downsizing exercises in Lagos and Port Harcourt between 2021 and 2024. Mass retrenchments in Nigerian banking, driven by digitalization and branch rationalization, have displaced thousands of workers with largely undocumented psychological and social consequences. A mixed-methods analytical design was employed, combining quantitative surveys with 180 ex-bank employees using the Psychological Recovery Scale with qualitative narratives from 25 purposively selected informants. Cognitive Adaptation Theory and Hobfoll's Conservation of Resources Theory underpin the analytical framework. Quantitative findings reveal that adequacy of severance pay, timeliness of benefit disbursement, and perceived procedural fairness of the retrenchment process are the three strongest predictors of psychological recovery scores at six months post-redundancy. Qualitative narratives reveal that the social stigma of banking sector job loss in Nigeria, where employment in a bank carries significant family and community status implications, significantly compounds psychological distress beyond income loss alone. The study identifies a gap in the literature: no prior Nigerian study has longitudinally modelled psychological recovery from banking sector redundancy, despite the sector's repeated large-scale downsizing episodes. Recommendations include legislating severance benchmarks for the financial services sector, establishing bank-funded retrenchment outplacement services, and post-redundancy psychological support line through the CBN welfare framework. Keywords: collective redundancy, severance packages, psychological recovery, banking sector, retrenchment