Millions of pounds may be wasted if human resources (HR) staff do not effectively check employees’ contracts, it has been claimed.

Legal experts in the UK have revealed that up to £100 million was spent last year on payments to failed executives or those who did not impact positively on the company.

Tom Flanagan, employment partner at law firm Pinsent Masons, commented: "Most people would not object to high rewards for those who create wealth and otherwise achieve – but not for simply being there, and certainly not for failure."

Mr Flanagan suggested restructuring the way in which employment contracts are drawn up and giving lower salaries across the board with a scheme to award performance-related bonuses to high achieving staff.

An efficient HR service in a company will directly improve the company’s success and help to increase profits, a study by the Work Foundation and the Institute for Employment Studies has shown.