Off the back of a pandemic, a cost-of-living crisis and the effects of rising inflation, it's understandable that many employers may still be facing financial pressures, and may be considering ways to reduce costs. Redundancy is a common method for cutting headcount and expenses.
However, if you aim to keep skilled, experienced and valuable staff while avoiding the negative impact on morale that compulsory redundancies can cause, it's worth considering whether there are any alternatives to redundancy.
Consider whether the downturn is just temporary, and if you can weather the storm, or if you're waiting out a strategic change that has yet to bring results. In this article, we discuss some alternatives to redundancy that are worth considering, while offering suggestions on how employers can reduce costs to avoid compulsory lay-offs.
1. Redistribute work after a staff member leaves
A good strategy is to avoid hiring new employees to replace those who have left the business. To save costs, consider redistributing some of the tasks among existing staff. You'll need to tread carefully here, because if you give staff too much additional work without an offer of additional pay or benefits, there is the risk that this won't be well received and could lead to disgruntlement. Be open and transparent in your communications with staff.
This approach boosts the skills and capacities of current employees, and can save your company costs associated with recruitment and training. With the additional skills acquired by staff taking on new tasks, it can also create a more versatile and engaged team. By avoiding redundancies, staff morale and loyalty are preserved, contributing to a positive company culture.
2. Stopping overtime
If there isn't a business requirement for overtime, this can be a great way to manage costs. This approach ensures that essential tasks are completed within regular working hours, and promotes a better work-life balance for employees. Improved work-life balance leads to higher job satisfaction and productivity, and should have a positive impact on overall company performance.
Although stopping or restricting overtime is a great way to reduce costs, it does need to be communicated to employees carefully that this measure is an alternative to redundancies. Employers should be receptive to employees who reply on overtime for extra pay, and provide solutions where possible.
3. Redeployment
Is one section of your business busier than the other? If you have an employee with transferable skills, it could be worth retraining them to take a new role within that busier part of the company.
Having a restructure like this should counter any job losses and redundancies, although you'd need to work out a new contract of employment with the employee and agree in writing the changes to their job role. Any re-deployed employees should also be given the necessary training they need to perform their new duties.
4. Unpaid sabbaticals, career breaks or secondments
Offering unpaid sabbaticals or career breaks is another effective way to reduce salary costs for a set period while retaining valuable employees. This approach works well if a business requires more funds for a short term period. It also allows staff to pursue personal interests, such as studying, travelling, or engaging in voluntary work. Internal or client secondments can be beneficial for training employees in specific areas or providing specialised services to clients.
These secondments can strengthen client relationships and enhance the employee's skills and knowledge, ultimately benefiting a business when the employee returns to their original role. The challenge may be however that some workers may not be able to afford taking an unpaid sabbatical, or may not agree to a secondment, and the uptake of such an offer could be low.
5. Reducing hours
Companies that are facing making redundancies could encourage staff to submit flexible working requests to reduce their hours or workdays. Alternatively, employers could propose a reduction in hours or workdays for a specific group of employees, either temporarily or permanently.
To avoid potential breach of contract or constructive dismissal claims, it's essential to obtain employee consent for these changes before you go ahead with them.
6. Offer early retirement
Offering early retirement can be a strategic move in preventing a company from making redundancies by encouraging older employees to voluntarily leave the workforce.
By presenting attractive retirement packages, companies can reduce their payroll expenses and potentially restructure operations without resorting to redundancy. This approach allows companies to streamline their workforce to meet current business needs.
Early retirement offers can also mitigate the legal and morale challenges associated with forced redundancies, fostering a positive workplace culture and maintaining productivity. That said, employers must be prepared to accept that a member of staff may not want to retire early.
7. Offer the purchase of extra leave
Providing employees the option to take additional holiday in exchange for a pro-rata salary reduction can save money in the short term during slow periods, and could preventing having to make people redundant. However, the terms of this arrangement must be clearly defined and documented formally in writing.
8. Cutting costs
Before going ahead with making redundancies, employers must consider whether budgets can be cut and costs saved across all areas of their business. Review your suppliers, reduce entertainment budgets, reduce expenses, or consider automating some roles within the company.
By using automated systems and technologies for example, companies can perform repetitive tasks more quickly and accurately, reducing the need for extra staff. This efficiency not only cuts down on operational costs, but also allows businesses to reallocate human resources to other areas of the business where they will have more value.
9. Voluntary redundancy
Offering voluntary redundancy can always help an employer to reduce the necessity for compulsory redundancies, but it's a conversation that the employee and employer must agree to together. The employer retains the final decision on whether to approve or deny a voluntary redundancy application.
We can help you navigate difficult decisions like making redundancies
Whether you're looking at alternatives to redundancy, or need to make redundancies immediately, our experts at Neathouse Partners can help you through offering suitable alternative employment, associated settlement deals and processes for fair and lawful redundancies.
Get in touch by calling 0333 041 1094 today or use our contact form.
