In these uncertain economic times, many employers may be under pressure financially. They might be considering what can be done in order to reduce costs.
Redundancy is a tried and tested method for reducing head-count and costs. However, what if you want to retain skilled and experienced, valuable staff and avoid the negative impact on morale that compulsory redundancies can result in? Perhaps your business is going through a ‘slump’ but you do not expect it to last long, or a change in strategy is yet to bear fruit.
Below is a list of top ten tips, setting out some alternatives to redundancies and suggestions as to how an employer can reduce costs whilst aiming to avoid compulsory redundancies.
1) Restricting/reducing external recruitment
Where possible, employers should aim to avoid replacing employees who exit the business.
Employers should consider whether they can fill any internal vacancies by redistributing work amongst existing staff or by accepting internal applicants, before advertising externally.
2) Restricting/banning overtime
This may be an effective way to reduce costs, especially if there is no business requirement for overtime. However, banning or restricting overtime would need to be communicated carefully to employees, and employers would need to explain that it is a means of avoiding compulsory redundancies. Employers will need to take particular care when dealing with employees who have come to rely on the additional pay they receive from working overtime.
If one area of the business is busier than another, it may be possible to retrain an employee with transferable skills to take up a new role on a temporary or permanent basis. It may also be possible to carry out a restructure without the need for any job losses, by redefining existing roles in line with work demands. Any significant changes will need to be agreed in writing with the relevant employee. Any redeployed employees will also need to be given training to ensure that they are properly equipped to perform the new role.
Employers can request volunteers for job-shares. This arrangement enables two (or more) employees to split a full-time job between them, whilst entering into an agreement regarding hours/days of work and split of role/duties. This will evidently cut costs for the business without letting anyone go.
5. Voluntary sabbaticals/career breaks/secondments
Arranging unpaid sabbaticals/career breaks can be a great way to save on the costs of salary for a fixed period of time, whilst retaining valuable staff and giving them the opportunity to do something for themselves such as study, travel or voluntary work.
Similarly, internal or client secondments can work well to either train an employee in a certain area, or provide a specific service to a client. This may help to consolidate client relations and/or develop the employee’s knowledge/skills, ultimately benefiting the employer’s business when the employee returns to their original role.
6. Flexible working requests – Reducing hours/days worked
Employees can be invited to make flexible working requests with a view to reducing their hours or days of work. Or the employer can consider introducing a reduction in hours or days worked for a certain group of employees on a temporary or permanent basis. Employee consent would need to be obtained, in order to mitigate any risk of breach of contract and/or constructive dismissal claims.
7. Early retirement
Offering early retirement could result in vacancies becoming available within the business, which could then be taken up by employees who might have otherwise been at risk of redundancy.
8. Make savings in other areas
Before turning to compulsory redundancies, employers should take care to consider how budgets can be cut and costs can be saved in other areas of the business. For example, can client or entertainment budgets be reduced? Can contracts with suppliers of goods and services be reviewed with a view to reducing costs? And/or can other expenses and outgoings be reduced?
9. Purchase of additional annual leave
Offering employees the opportunity to take extra holiday in exchange for a pro rata reduction in salary, can save some money in the short-term during quiet periods. However, the parameters of this arrangement would need to be set out clearly, in writing.
10. Voluntary redundancy
Although offering voluntary redundancy can take some control away from the employer in terms of selecting roles for redundancy, it is the employer’s final decision as to whether or not to grant an application for voluntary redundancy. Ultimately, offering a voluntary redundancy package might reduce the need to make compulsory redundancies.
In order to protect the employer, care must be taken, the correct process must be followed and the arrangement should be carefully documented, in respect of all of the above options.
If, after exploring the above tips, the requisite cost savings have not been made, then compulsory redundancies may need to be considered. In my next blog on ‘fair redundancies – top 10 tips for employers’, I will set out suggestions for ensuring that a fair redundancy process is followed.