There are several alternatives to redundancy, many of them could save time and money for all involved. Some advice from employment law experts.
What are the possible alternatives to compulsory redundancy?
Perhaps the most obvious alternative is to seek volunteers for redundancy. Some employees may, depending on their particular circumstances, welcome voluntary redundancy and the payments which will be made as a consequence. Often as an incentive for employees to apply for voluntary redundancy, enhanced terms are offered. This can make it much more attractive for a particular employee to apply for redundancy. However, if there is a desire to cut costs on behalf of the business then this may not be commercially desirable or even viable.
If an employee applies for, and is granted, voluntary redundancy this still amounts to a dismissal in law. As such an employee could raise a claim for unfair dismissal before the Employment Tribunal, but the chances of being successful with such a claim would be extremely low.
Cost of Making Redundancies
The cost of making redundancies, whether voluntary or compulsory, have to be factored in to any decisions as the costs can be significant. Statutory or contractual redundancy pay, notice pay, payment in lieu of accrued but untaken annual leave and any other contractual benefits must be taken into account. In addition, there is the risk of the employees who are dismissed, for a reason relating to redundancy, raising claims before the Employment Tribunal. In addition to direct costs, your business may also lose valuable and skilled employees, who may not wish to return to work for you if your particular business picks up in the future. Accordingly, it is prudent to consider the costs of future recruitment and training of new employees. While cutting costs by making redundancies may make a significant positive difference in the short term, over the medium to longer term, this may not be the case.
What are the other alternatives?
There are many other alternatives to redundancy such as:
- Recruitment freezes
- Pay freezes, or pay cuts
- Pay deferral schemes
- A limit on, or stopping entirely, overtime
- Introducing short term or flexible working
- Reducing the use of agency staff
- Allowing employees to have sabbaticals, or ‘career breaks’
- Seconding employees to particular projects, or even to other employers
The CBI and Harvey Nash have published “Employment Trends 2009: Work patterns in the recession”. The report refers to the challenges facing businesses during the current recession and highlights some of the ways that businesses have been attempting to reduce costs while retaining employees’ jobs where possible.
You can access the report by clicking here.
Taking advice at the earliest stages of redundancy planning will not only ensure that risks can be identified and managed, but will also give you the opportunity to consider whether or not there are any viable alternatives for the business. Whichever path you decide to take Just Employment Law is well placed to advise on the employment law implications.