Rethinking Redundancy: Considering the alternatives to dismissal
As the furlough scheme comes to an end, many employers will be considering whether it is going to be viable to continue employing all of their staff and they may be making difficult decisions about whether to make redundancies.
The thing about redundancies is that they are permanent; – once you have dismissed somebody, it is difficult to re-employ them, particularly on the same terms. They are often a short term, rather than long term solution and making them may disadvantage you in the future, for example if your business picks up and you need to hire more staff, you will need to bear the costs associated with that, along with costs which you will have already incurred carrying out the redundancy process. Before making the final decision, it is essential therefore, to consider alternatives to redundancy.
Job Support Scheme
You may wish to place employees on the job support scheme, which involves the employee working at least 33% of their contractual hours, but will be subsidised by both the government and their employer to receive at least 77% of their salaries. The scheme begins on 01 November 2020.
The scheme has its downfalls- you cannot place those on the scheme at risk of redundancy, however, if you believe that your business will pick up within the next six months or so, the scheme is a relatively cheap way of retaining staff and will save you the cost of both the redundancy process and the cost of rehiring later down the line.
Retraining and re-organisation
If one area of your business is doing particularly well, consider redeploying staff who have transferable skills from another less profitable area, consider a reorganisation of roles, or consider retraining existing staff to be able to carry out other roles. If you are going to do this, you should ensure that any plans which you have for redeployment, retraining and reorganisation are thoroughly communicated to the employee and that they are able to fulfil their new role effectively. If you choose to have a reorganisation, it is imperative that the changes are communicated to everyone, including those who are on maternity or sick leave, to avoid any potential discrimination claims.
Flexible working and reduction of hours
If you are looking for ways in which to reduce your employee headcount, you could consider inviting employees to make flexible working requests, make requests to reduce their contractual hours, volunteer to take career breaks or sabbaticals or offer the opportunities for employees to job share. You could also ask employees to take temporary pay cuts or reductions in hours. This may be attractive to those who want to take some time for themselves to travel or study for example, or for those who want to do voluntary work.
These methods are not fool proof- there are no guarantees that employees will take you up on your proposals. That being said, if employees do make changes such as the above, you should ensure, as above, that any contracts are amended appropriately and any changes are well documented to ensure that you avoid any potential employment claims.
Considering reductions in other areas
This may seem like a salient point, but before considering redundancies, consider whether savings can be made elsewhere. You may have long-serving and experienced employees who you want to avoid making redundant, but you may also be in the difficult situation where you feel you have no choice but to make costs savings. Consider if there are areas of your business which you can cut back on; for example, do you have a large client marketing or entertaining budget? Ultimately it is the question of considering long term and short term goals. In the short term you may wish to make costs savings, but long term as business picks up again, you will want to be retaining your employees, as the cost of rehiring and retraining is likely to be significant.
Communication and consultation
As with every employment issue, it is absolutely essential that any changes or proposals in relation to the above alternatives are communicated clearly to the employee and that employees are consulted, asked for their views and given the opportunity to make any suggestions or ask questions. Employers should ensure that they are clear and transparent about their processes to ensure any potential employment claims.
The sad reality is that the job market is tough at the moment and many employees are fearful of losing their jobs. Although the options above may not seem particularly attractive to employees or employers, they are ultimately a better option than the prospect of redundancy.
What is important to recognise is that making redundancies is a fully permanent solution. Short term, we would advise that you consider alternatives, as described above and then only consider redundancy as a last resort.
For advice on the topic covered in this article, contact our employment law experts.
Alana & Molly will also be hosting a free webinar named “Alternatives to Redundancy” on Tuesday 27th October at 4pm via Zoom. More details & register here: Alternatives to redundancy: avoiding the last resort