Redundancies are stressful. Reducing staff numbers is the last thing you want to do at difficult times. And nobody wants to make good employees redundant.
You can also face costly legal issues if the process isn’t followed properly.
Making redundancies might be your only option. Thankfully, there are many things to consider first.
There are several alternatives to redundancy, such as:
- Reducing working hours.
- Salary reductions.
- Pay freezes.
- Reorganising job roles.
- Freezing training budgets.
- Withdraw job offers.
- Introduce flexible working.
In this guide, we’ll go into detail to explain the different options that can help to save jobs and keep your business profitable.
Reducing working hours
A decrease in demand can be the cause of financial difficulties. And you can end up paying staff for hours when there’s no work for them.
Employees working reduced hours as an alternative to redundancy allows you to keep your employees and save money.
There are many approaches to reducing working hours if there isn’t enough work. Two common options are:
Short-time working is where you reduce your employees’ hours temporarily. And lay offs are when you temporarily remove an employee from the business.
Both options are temporary measures designed to allow businesses to navigate short term financial difficulties.
In most cases, employees will need to agree to this before you implement any changes. You won’t need to consult them if there is a lay off or short-time working clause in their employment contracts.
Salary reductions and pay freezes
Financial worries don't always come with a decrease in business demand. In those cases, it might not be possible to reduce working hours.
Instead, consider freezing pay or making salary reductions.
Freezing pay means suspending wage increases and stopping bonuses, this is a good way to save what can be large amounts of money.
In periods where those savings aren’t enough, consider making salary reductions.
These alternative proposals to redundancy won’t be popular with staff but might be necessary to ensure everyone keeps their jobs in the long run.
Reductions should affect all employees equally. If they don’t, some employees may feel they have been treated unfairly and leave the company.
As with changing working hours, employees must agree to any changes to salaries and bonuses.
Reorganise job roles
Consider moving people into different roles that will add more value as an alternative to redundancy.
You can take an employee out of a role that is no longer necessary and transfer them into a different part of the business where their skills will be utilised.
For example, a customer-facing role like an account manager, will have many transferable skills that would be useful in a sales role.
This allows you to stop providing offerings that aren’t making money without having to make any redundancies.
You’re required to consider suitable alternative employment before making any redundancies. The employee could claim unfair dismissal if you don’t try to find them another job role.
Your employees will need to agree before you make any changes to the terms and conditions of their employment contract.
Freezing training budgets
Alternative options to redundancy don’t all involve making changes to contracts. Your business likely has money earmarked for different uses, such as staff training.
Training is a great way to develop your team and helps to improve employee engagement, but it could be the difference between having to make redundancies and not.
Create a plan for how long you expect to have to stop training and keep your staff informed.
Withdraw job offers
A business’s financial stability can be greatly affected by the loss of one client. In many cases, you might be in the process of hiring new staff when your situation changes.
In most cases, you should withdraw any job offers and pause recruitment when redundancy is being considered for other employees.
An exception can be made for essential roles within the business, or new recruits that you believe will turn the financial difficulties around.
You need to be careful if you decide to withdraw job offers. If the new employee has accepted your offer, withdrawing could be a breach of contract. Even just a verbal agreement.
The safest approach to withdrawing a job offer is to give the new starter a notice of termination and consider whether any notice pay is due. This may cost you in the short term but will prevent you from increasing your staffing costs each month.
Introduce flexible working arrangements
In some cases, such as in the current COVID-19 pandemic, strict rules on the number of employees who can be in the workplace can cause the need for redundancies.
In these situations, consider if all your employees need to be in the workplace to complete their job. For many computer or telephone-based roles your staff will be able to work from home.
Where home working isn’t possible, and your staff can’t social distance in the workplace, you might be unable to safely reopen your business.
A flexible working arrangement where you stagger shifts will allow you to reduce the number of people in the building at any one time.
Expert support on redundancy with Peninsula
These are all suitable alternatives to redundancy. Examples such as using flexible working patterns, lay offs and pay freezes could help you to stay profitable without letting anyone go.
Unfortunately, sometimes making redundancies is your only way to remain profitable.
There are a lot of rules you need to follow when making someone redundant. Getting it wrong can lead to unfair dismissal claims and costly legal disputes — not something you need in an already difficult situation.
Peninsula has a complete redundancy support service. Our HR experts will guide you through every step of the redundancy process.
Call us on 0800 028 2420 for a free advice call to discuss your redundancy needs and take the first steps back to profitability and business security.