Considering redundancy for a struggling business isn't an easy decision. While it can be difficult to afford to pay employees, opting for redundancy can cause a business trouble down the line.
For example, a business looks for alternatives to redundancy yet cannot come to an agreement with an employee. The business has no choice but to select an employee with years of service for redundancy.
The employee that has been made redundant then finds a role at a competitor’s business. This means that all the training a business supplied and the reliability of the employee is now in the hands of a competitor.
Many businesses are seeking to reduce work hours of employees. Some are even abruptly giving employees their notice period.
Naturally, this raises fears in both employees and employers.
This is why many are seeking alternative proposals to redundancy.
What are suitable alternatives to redundancy?
Suitable alternatives to redundancy present options that keep an employee within a business ― even in the face of redundancies.
Some of these may involve short-term solutions. These include offering employees the option to purchase additional annual leave. Others may be long-term options, such as putting promotions or pay rises on hold.
Unfortunately, not all solutions may work for a business. For some, deciding between redundancy and suitable alternative employment may not be possible.
In these cases, lay-offs or short shifts may be the only way for a business to survive.
Of course, some confusion can arise during uncertain times. Considering redundancies can double this confusion.
For example, those concerned about working in the same industry may ask “in the event of redundancy, do I have to apply for an alternative job?”
Unlike leaving a position, restrictive covenants don’t apply to redundancies. Thanks to this, employees can still seek a similar role in the same industry. They can do so even after redundancy.
Employers cannot refer to employment contract clauses if they make an employee redundant. This can count as unfair dismissal and grounds for a potential claim.
Unfair dismissals can result in employers paying both a basic award and a compensatory award.
These costs can vary depending on the employee’s age and time spent at the business. However, it’s not just these costs that can damage a business, but other negative factors too.
- Lower morale for current employees.
- Reputational damage of the business.
- Time lost dealing with claims.
This is why it’s vital to be sure the employee selected for redundancy has been properly decided.
More so, it’s vital to explore all alternative options to redundancy.
Alternative options to redundancy
Some alternatives to redundancy examples include:
- Redeploying and/or retraining employees
- Job shares
- Flexible shifts
- Recruitment freezes
- Overtime freezes
- Voluntary career breaks or redundancy
- Early retirement
Redeploying and retraining employees
A suitable alternative employment plan can include options that are preferable to redundancy.
Redeployment or retraining can help properly redistribute your workforce. They serve as effective alternative work patterns.
Even if a business needs to reduce employee costs for one department, other departments may need extra help.
By redeploying a team member instead of making them redundant, you can benefit both the employee and the business.
If the job is suitable for your team member, they can spend anything from a trial period to a short time working within the new department.
Team members can even opt to stay within a new department full time, if it benefits both the employee and the business.
This method of avoiding compulsory redundancies can fall under a job retention scheme.
In the event of particularly hard times, it is possible for employees to ‘job share’. This splits one employee’s full-time job between two, agreeing to a split in workdays and duties.
Employers can ask employees to volunteer for job sharing.
It is worth noting that job shares must be voluntarily undertaken, an employer cannot split an employee’s hours without their consent.
Employers hoping for employees to engage in job sharing should state that job shares could prevent redundancies.
Working from home, flexible shifts and changing work contracts can help avoid redundancies. Discussing these flexible shift options with employees can establish agreements for reduced work.
These agreements can be either on a temporary basis or on a permanent basis. If an employer is discussing flexible shifts for a group of employees, it should preferably be on a short term basis.
Any long period of shorter shifts and flexible work would likely have long-lasting impacts on a business. Due to this, flexible working should only cut costs for a business trying to avoid redundancies.
When considering flexible shifts, employers must ensure that they have consent from employees. Otherwise, there’s the risk of breaching employees contracts, as per the terms and conditions of their contracts.
One of the simplest ways to avoid redundancies is to stop hiring new employees. After all, it would simply seem contradictory to lose certain employees while gaining new ones.
Sometimes, an employer needs new employees to fill vacancies or make up for a lack of a workforce. This can occur even during the need for redundancies.
However, they would be wise to consider redistributing their existing employees.
By redistributing their existing employees, companies can fill vacancies internally. This will remove the need to hire more employees, which would add more costs to the business.
With redistribution established, employers can keep costs down. Halting or freezing any recruitment efforts will reduce these costs.
At least, they can do until there’s no risk of making employees redundant.
Working reduced hours as an alternative to redundancy means that a team’s workflow will slow down. This is also true when considering putting a freeze on overtime.
Reducing or banning overtime can be effective for cutting costs. This is especially true if there is no business need for this extra work.
If a business has commonly offered overtime, then communication with employees will be important. Reducing or banning overtime can potentially affect some employees more than others.
These employees include those that rely on the extra pay overtime provides.
Clarifying that freezing overtime is necessary to avoid redundancies should be a suitable reason.
Voluntary career breaks or redundancy
In the event that redundancies are unavoidable, there are still alternatives worth considering. These include voluntary breaks for employees.
Unpaid career breaks or sabbaticals can provide a business relief from paying a full year’s salary, whether it’s a single month or longer.
Another option is voluntary secondment. This entails assigning an employee to work on a temporary basis for another organisation. This other organisation would pay the salary, or a wage, for the assigned employee.
Examples of this could include working for a charity or developing skills elsewhere. Either option could make the employee more beneficial to the business when they return.
Finally, an employer can call for any volunteers for redundancy.
This may be a reward of higher redundancy payments. Higher payments than compulsory redundancies could serve as an incentive for volunteers.
This volunteer redundancy may save the business the time and effort spent to determine who should become redundant. However, it is ultimately up to the business whether the volunteer does indeed get made redundant.
Early retirement may be a viable option for a business to consider redundancies. Especially if the business has any employees approaching their retirement.
This could work in tandem with other alternatives to redundancy, such as flexible shifts or job shares. An early retirement phased in by reducing hours could present an employee with a beneficial option.
This is especially true when it’s an alternative to redundancy.
Naturally, any of these options would need the consent and agreement of both the employee and the employer.
Expertise avoiding redundancies
Peninsula understands just how hard it can be to navigate potential redundancies. For 24-hour assistance with these matters, contact our expert HR specialists or call 1890 252 923.