- 14 June 2023
As we move into the second half of the year, and with the cost-of-living crisis not yet showing signs of easing, 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. Recent research by ACAS suggests that up to a third of employers are considering making redundancies in the next twelve months, with KPMG and REC’s most recent Report on Jobs survey noting a decline in the vacancy growth and an increase in available candidates. Companies such as BT are among the most recent to announce plans to cut jobs, with plans to remove 55,000 roles by 2030.
How to cut costs without making redundancies
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.
Points to consider in a redundancy process
It is not, however, always possible to avoid redundancies. If they become necessary, employers must ensure:
- The process is fair. As ACAS recently commented, the law on redundancy is clear and employers must ensure that they follow a fair process from choosing the selection criteria and who will be in the redundancy pool(s), to conducting the scoring exercises and making the final decisions, including the consideration of suitable alternative roles.
- The consultations are genuine. An employee or union may come up with a viable suggestion or alternative during the consultation stage, which the employer is obligated to take into account. Employees at risk of redundancy should be given the chance to comment on the pool, criteria and method.
- The relevant information is available. By ensuring that employees understand the process and how it will affect them, and communicating any decisions quickly and respectfully, an employer can manage the impact of the process on the workplace and preserve its relationship with its retained employees.
Whether you are an employer considering restructuring or redundancies, or you are an employee affected by a redundancy process, our Employment Team would be more than happy to assist with any queries.
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.
About this article
SubjectRedundancies on the Rise: What alternatives are available?
Published14 June 2023
Read, listen and watch our latest insights
- 27 February 2024
Changing Attitudes to Menopause
We have set out some answers to the frequently asked questions that employers ask when considering how to support a menopausal employee.
- 22 February 2024
Time to take the heat off menopausal women
On 22 February 2024, the EHRC released guidance and resources for employers designed to help employers understand their legal obligations in relation to supporting workers experiencing menopausal symptoms.
- 22 February 2024
Talking Employment Law: What to do if you’re at risk of redundancy
In this podcast, Harry Berryman and Rebecca Dowle, members of the employment team, will talk through the steps that need to be taken for a redundancy to be fair and the range of criteria that can be used when determining which employees will be made redundant.
- 12 February 2024
The World of Work in 2024- What Can HR Expect?
In many senses, 2024 is unlikely to be a year with radical ruptures from those that have gone before it. The significance of 2024 though, is that it is likely to build upon those megatrends impacting the world of work, which have been emerging for some time now and are only likely to strengthen as we move on in time.
- 30 January 2024
Large-scale Redundancies – What to expect as an employee
In today’s uncertain economic environment, it is rare to see a week go by without a major employer announcing redundancies, be they as a result of a restructuring, a contracting business or a merger or acquisition.