Shedding staff cost the Dunedin City Council more than $600,000 in the last year, and more than half the money went to two senior managers.

It was confirmed yesterday the council paid $628,513 in severance payments to 10 departing staff in the 2011-12 year.

The spending included two sizeable lump sum payments - of $214,845 and $167,527 - received by two departing staff during the period.

The Otago Daily Times understands the larger sum went to former council community life general manager Graeme Hall, who spent a decade working for the council.


Former customer services general manager Grant Strang received the smaller amount, after six years' service.

Mr Strang declined to comment, citing a confidentiality agreement, while Mr Hall - who now works for the Otago Regional Council - would only say he remained "very supportive" of the city.

Both men were members of the council's executive management team until opting to take voluntary redundancy late last year, and were said at the time to be in line for six-figure payouts.

Council chief executive Paul Orders yesterday said the overall severance payments reflected the cost of restructuring the organisation under existing contractual arrangements, and could not be avoided.

"There's simply no way around it, but it's an issue you have got to confront."

The payouts would be outweighed by salary savings in time, and it was important to weigh the initial costs against longer-term benefits, he believed.

"It's a cold cost-benefit analysis. It's the business end of being a chief executive," he said.