LONDON, (Reuters) – British insurer Aviva Plc is to cut 2,000jobs and slash redundancy payouts in the process, setting up ashowdown with the country's biggest trade union as it attempts tocut costs and mollify shareholders after a recent investorrevolt.

Chief Executive Mark Wilson said the cuts would equate to around6 percent of the global workforce over the next six months andreflected the group's commitment to deliver more than 400 millionpounds ($609 million) in cost savings by year-end.

Aviva, which employs around 31,200 people, said it would alsooverhaul its redundancy policy for all employees on UK contracts.From May, pay will be capped at 78 weeks of service and fromDecember, staff will only receive two weeks' pay for each year ofservice, rather than a current four weeks' pay.

“I know this is difficult news for our employees but thesechanges are essential,” Wilson said in a statement. “Aviva needs tobecome a more efficient and agile organisation.”

Aviva launched an overhaul of its business last year afterspiralling costs and poor share price performance triggered aninvestor revolt that forced out former CEO Andrew Moss. ChairmanJohn McFarlane subsequently drew up a review promising savings fromthe sale or closure of more than a dozen underperforming unitsacross its insurance and asset management operations.

Britain's largest trade union Unite branded the group's plannedreforms in its redundancy terms “a callous and disgraceful act” onThursday.

“…the UK workforce, which is the backbone of the company, hassuffered job cuts, pay freezes and now faces an attack on theirredundancy terms, when the company is planning more cuts,” NationalOfficerDominic Hook said. “Unite will give staff all thesupport possible to oppose any job losses in the UK and the cuts toredundancy terms.”

Aviva cut 2,500 jobs globally last year and has made annualisedcost savings of 275 million pounds through its efforts so far.

It gave no details on Thursday where the axe would fall but saidit was consulting with relevant staff representatives and wouldprovide further information on the roles affected as soon as thedetail was available.

“(It's) sad news for those affected but Aviva needs to becomemore competitive,” Panmure Gordon analystBarrie Cornes toldReuters. “We would anticipate that a significant number of the2,000 job losses will be lost from the UK, given its significantmarket share here in both life and non-life.”

Wilson, who took the helm in January, slashed the 2012 dividendby more than a quarter in March to repay debt, as the companyreported a 15 percent drop in operating profit to 2.13 billionpounds, broadly in line with forecasts.

Aviva shares were flat at 294.4 pence by 1342 GMT, broadly inline with London's top blue chip companies.