As set out in our earlier article, having to make redundancies can be very daunting.
Not only is it a difficult decision to make, and one which impacts on the lives of your employees, it can also lead to the business losing talented employees and their skills, experience and expertise. Businesses should bear in mind that it can be very difficult to replace this talent when business improves.
Making redundancies can also have a detrimental impact on staff morale and motivation; and the public image of the organisation.
Consequently, finding alternatives to redundancy can offer employers greater short-term and long-term prospects of survival and success.
We have found that the businesses which survive and thrive are those who seek advice at an early stage and who put in place a proper redundancy plan.
A redundancy plan will assist the business in managing each stage of the process and will help it to focus on whether it will in fact be possible to avoid compulsory redundancies. It will also allow the business to ensure that it treats all employees with dignity and respect.
Before making redundancies, businesses should consider the following three strategies:
1. Reducing headcount by:
a) Suspending all recruitment. This is an easy, cost-effective mechanism to reduce organisational costs and expenses;
b) Withdraw job offers, if they have not yet been accepted by the candidate;
c) Ask soon-to-be new joiners to defer their start date;
d) Reduce or let go of temporary, casual or contract workers;
e) Seconding an employee to a client;
f) Redeploying and or retraining employees to do other jobs in your business;
g) Offer voluntary redundancy or voluntary early retirement.
2. Implementing temporary stoppages by:
a) Allowing employees to take sabbaticals;
b) Allowing employees to take periods of unpaid leave;
c) Requiring employees to take their contractual or statutory annual holiday allowance at quiet times;
d) Asking employees to stop working for a short time, or lay them off.
3. Reduce hours and or pay by:
a) Temporarily reducing working hours;
b) Asking employees to agree to part time and or flexible working;
c) Limiting or stopping overtime;
d) Implementing a pay freeze;
e) Withdrawing or cutting down on bonus payments.
The above strategies are not risk free and businesses should ensure that they comply with all of their legal obligations to avoid making expensive mistakes which could end up before an Emplpyment Tribunal.
- If a job offer has been accepted, an employment contract is in place. Consequently, a business will be unable to withdraw the employment offer and, instead, has to terminate the contract. This will be done by giving the contractual notice or making a payment in lieu of notice.
- If a business terminates casual or agency workers, it should ensure that they have not obtained certain employment rights, or that the reason for the termination is not for a discriminatory reason.
- Ensure that any offer for potential early retirement is not discriminatory on the ground of Age.
- Businesses can only implement lay- offs or short term working if they have a contractual right to do so (or if it obtains the employees consent).
- When adopting part-time and/or flexible work measures, ensuring that part-time workers are not discriminated against or treated less favourably than full-time workers.
We will be publishing further information on redundancy over the coming weeks. In the meantime, if you want to have a confidential discussion about this, please do not hesitate to contact our Head of Employment, Charlotte Turnbull at email@example.com or on 020 7220 9130.