Redundancy – 10 alternatives

It’s true to say that people are often a business’ biggest cost and in addition, the fact that redundancy is a tried and tested method for reducing head-count and costs also means it is the route most commonly considered. However, retaining skilled, experienced and valuable staff for the journey ahead, remains a key issue for future business success.

Industries such as retail, hospitality and tourism found making redundancies in 2020 an inevitable result of the effect of the coronavirus pandemic, although they are now looking to find ways of building their teams since the lifting of government restrictions. However, for industries now being hit with the same financial issues, it is always worth exploring other options before making the decision to reduce headcount. So, what are those options and how can they help your business avoid the threat of redundancies?

Top 10 Alternatives to Redundancy

1. Recruitment Freeze 

Where possible, businesses can avoid replacing employees who leave the business and consider whether vacancies can be filled by redistributing work amongst existing employees or, by accepting internal applicants, before advertising externally.

Notes – It’s a good idea to communicate decisions on a recruitment freeze to candidates already in the recruitment pipeline so that you manage their expectations, maintain business reputation and the retain the opportunity to re-engage with prime candidates in the future, when business has recovered sufficiently for recruitment to restart.

2. Flexible Working Requests 

Inviting employees to voluntarily make flexible working requests, with a view to reducing their hours or days of work can be effective in reducing staffing costs.  

3. Short-term working or Lay-offs

Consider introducing a period of lay-off, or a reduction in hours or days, on a temporary basis, to avoid redundancies where there is little or no current work. 

Note: Unless the contract of employment expressly allows an employer the right to do so, it will be necessary to consult and gain agreement from employees before implementing a period of lay-off or short-time working in order to mitigate any risk of breach of contract and/or constructive dismissal claims. In addition, unless the contract allows unpaid or reduced pay, employees who are laid off, or put on short-time working, are entitled to pay for days they do not work. This is a Statutory Guarantee Payment and is the legal minimum an employer must pay the employee.  ACAS have lots of useful information on lay-offs and short-time working: https://www.acas.org.uk/lay-offs-and-short-time-working

4. Redeployment 

Employees with transferable skills may be able to retrain and take up a new role on a temporary or permanent basis, should there be one area of the business that is busier than another.  It may also be possible to carry out a restructure without the need for job losses, by redefining existing roles in line with work demands. 

Note: Any significant changes in job role need to be agreed in writing with the relevant employee and redeployed employees need to receive training, so they are adequately equipped to perform the new role. Redeployed employees also have the right to a 4-week trial in the new role, to allow them the opportunity to trial whether the role is a suitable alternative for them.

5. Removing Overtime

Reducing or ceasing overtime altogether during periods of reduced demand for work can be a straightforward way of cutting business costs.

Note: Employer communication is key when taking the decision to cut or remove overtime, so that employees are aware it is a means of avoiding compulsory redundancies. Particular care needs to be taken by employers when dealing with employees who may for example, rely on any additional pay they earn from working overtime.

6. Job-share

Employers could request volunteers for job-share. This arrangement can enable two (or more) employees to split a full-time job between them, whilst they would also enter into an agreement regarding hours and days of work and the split of role and duties. 

7. Voluntary Redundancy

Although offering voluntary redundancy is an option, it can take some control away from employers in terms of selecting roles for redundancy. However, it is ultimately the employer’s decision whether or not to grant an application for voluntary redundancy and in the end, offering a voluntary redundancy package may help to reduce the need to make compulsory redundancies.

8. Voluntary Sabbaticals/Career Breaks

Whilst not a commonplace offering, unpaid sabbaticals/career breaks can be a good way to reduce salary costs for a fixed period of time, whilst allowing the business to retain valuable employees, by giving them the opportunity to do something else, such as; study to gain a qualification, travel or voluntary work.  

Note: Employers need to ensure that any temporary change in the employment contract is agreed, documented and employees have the details of the agreed terms in writing.

9. Reduce Agency Costs 

Relying on core employees and cutting freelance, contractors or agency staff cover can be a good option for reducing business costs, especially in times of reduced work demand. 

10. Making Savings in Other Areas

Lastly, before resorting to compulsory redundancies, give consideration to how budgets can be cut and costs saved in other areas of the business e.g., reviewing contracts with suppliers of goods and services and in how other expenses and outgoings can be reduced.

Despite consideration of the above options, for many businesses, making redundancies will become a reality this year, particularly as the Job Retention Scheme is expected to come to an end  in September 2021. 

Planning is an essential part of the redundancy process and employers have a legal obligation to conduct meaningful consultation with employees on any proposed redundancies. In addition, should a business be intending to make 20 or more redundancies, a period of collective consultation with Employee Representation will need to be factored into proceedings. 

If your business needs help to understand the processes and obligations around redundancy, or, you need HR support in this respect, get in touch.