Redundancies on the Rise: What alternatives are available?
- 12 November 2024
- Employment
As we move into the second half of the year, and with the Labour Government announcing many financial changes which are likely to significantly impact the workforce, many businesses are feeling the pinch and are exploring their options in a bid to save costs.
One option that employers are giving more thought to at present is redundancies. Recently we have witnessed top GPs calling for “urgent assurances” from the health secretary that practices will be exempted from the hike in national insurance employer contributions announced in the Budget whilst some care homes could be forced to close.
While redundancies may sometimes be necessary within a business, employers are encouraged to give serious consideration to alternative cost-saving strategies. Options include:
A reduction in headcount: this may be via a recruitment freeze, deferring new starters, or offering early retirement. This can be accompanied by offering retraining to existing staff to cover the skills that would have been brought in via recruitment or exploring secondments.
A reduction in hours: this may include increasing the availability of part-time or flexible working, or reducing available overtime.
A reduction to benefits: other, more serious options may include a pay freeze, changes to bonus schemes (before doing so employers must consider whether they are discretionary, linked to performance, intended to reward etc), or amending existing policies such as reclaiming expenses. When contemplating such actions, an employer must have regard to its obligations under the relevant contracts of employment (for example, it may not be possible to amend certain terms without employee agreement).
The implementation of cost-saving measures can be a very stressful period for employer and employee alike, and so it is important to ensure that any changes are communicated in good time to employees. An open and transparent approach will help to ensure that trust and morale are maintained and may assist with keeping skilled staff from seeking alternative opportunities.
While redundancies may sometimes be necessary within a business, employers are encouraged to give serious consideration to alternative cost-saving strategies.
It is not, however, always possible to avoid redundancies. If they become necessary, employers must ensure:
Whether you are an employer considering restructuring or redundancies, or you are an employee affected by a redundancy process, our redundancy solicitors would be more than happy to assist with any queries.
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Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.