Avoiding The Need For Redundancy

With the effects of the recession still biting, it comes as no surprise that many businesses are still looking at cost-reductions, downsizing and re-organisation. Redundancy has been much discussed in the media in recent years and everyone has been – or knows someone who has been - affected by the credit crunch at some point.

Redundancy is the act of last resort and it’s always best to see what can be managed as an alternative. It makes sense to keep the necessary skills and good people in the business where possible. Effective planning and creative thinking can achieve the results you need and lead to better job security.

Timing is a key factor, so reviewing the options as early as possible is wise to conclude whether redundancy is still imminent, and if so, to begin the consultation process accordingly. A recruitment freeze is one alternative. If recruitment is necessary, a short-term solution can be to fill vacancies in the short term by agency temps. Some organisations implement a policy of flexible working. That is, allowing staff to apply for part time hours, job-sharing or a more flexible approach to start and finish times.

In difficult economic climates, inviting staff to suggest alternative ways of working can not only benefit the company, but produce savings too. Reducing hours and pay has become one of the most common ways for employers to reduce costs in recent times. As this constitutes a contractual variation, it needs to be agreed, even if it is being proposed for such a good cause as avoiding the need for redundancy.

Often staffs are willing to consent – after all a job is better than no job at all. Particularly this will be so if they receive a guarantee that they will not be made compulsorily redundant in the immediate future. Pay cuts without agreement would constitute a fundamental breach of contract.

If you decide to go ahead with this alternative, then it is a good idea to make the change short-term and to review it periodically. If a redundancy is still necessary, then it is wise to tell employees that their redundancy calculation will be made on their original pay, rather than their new reduced wages.

Try to reduce costs which do not directly involve employees. For example, you could reduce your overheads by transferring work onto one site and closing or mothballing the unused property. Additionally, small changes can make a big difference. Try turning off the electrical equipment (that you don’t need) at night, implement recycling projects, sell excess equipment and try negotiating cheaper contracts with suppliers.

Using temporary lay-offs or short term working can also be one way of handling work shortages. A lay-off is where an employee is not provided work by their employer because there is a reduction in the requirement of the work that the employee is entitled to do, and is temporary adjustment.

During this period, the employee still remains employed by the company and accrues service but is not paid for the lay-off. Short time working on the other hand applies when the employee works for some of the week, but is laid off for the rest of it. This employee will be paid for the hours that he actually worked. All of these are considered temporary alternatives to cut costs and avoid the need for redundancy in the short term.

Obviously these will vary considerably depending on the size of your organisation. If you would like to discuss your alternatives with us then please do not hesitate to get in touch. 

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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