4th August 2020

Is Redundancy the only way forward for employers?

Is Redundancy the only way forward for employers?

The reality of redundancy is harsh and stressful for all parties concerned.  Is redundancy the best way forward?  In some cases, for the survival and stability of a business, this may be a good way forward.  There is a downside. The downside is that all important loss of key talent. And, the expenses associated with redundancy payments and notice pay.  Redundancy can also be deemed a short-term measure. Employers may need to replace that lost talent 5 or 6 months later with even more expense. Morale may be affected by those who remain in the workplace.  This is when you need the business to be re-booting itself to come back better than before.

Here are a couple of things for employers to consider – regardless of size.

Reducing the working week

Where impact has been significant, but your business is still able to function, you could open discussions with your staff.  This could be about changing their terms and conditions of employment.  Employers though cannot change employments unilaterally.  Opening the opportunity for discussion and negotiation could prove fruitful for all parties. Importantly, being able to negotiate such a transition means employees remain in employment, albeit on different terms of employment.

Such a change could be reducing the working week from 5 days to 4 or even 3 days.  Of course, it may be that only a 3-day week for example is feasible.  But, savings nonetheless will be made in your business at a time when it is most needed whilst retaining your talent.   And importantly, for employees, their employment rights remain protected but under new employment contracts.  As our biggest asset, employees play their part in the creation and development of an organisation’s success and we should therefore try to retain talent wherever this is practicable for us to do so.

Perhaps, you can provide an incentive of working 3 days but getting paid for 4 days. An overall lower rate of pay, say 80% of current pay which could follow the furlough type of theme.  You may need to consider operations being ramped up again quickly according to the needs of the business. This will require thought as to how it will work.  There are many computations as to how this can work for different businesses.

A reduction in the working week can however have its flaws. So you will need to consider the possibility of a quick uptick in your operations.  This may necessitate a return to a full working week.  Where a change only involves only one or two employees, it may be manageable and still a way in which you can work efficiently longer term. This will not be the case where this involves large numbers of employees. Make sure your contracts are written correctly.

Reduction in Pay

Given the huge influx of people losing their jobs due to redundancy and of course many having been on furlough previously. Another option to consider is a cut in pay.  Some employees will have been receiving 80% for several months.  If faced with redundancy or a cut in their pay, this may be a better option to pursue.

Unpaid Leave

This will not likely apply to very many employees. You may however have some who would be willing to take unpaid leave or a sabbatical for a period of time.

These are simplified examples – they are not new, but they can be ways in which to avert a redundancy situation.

These examples do require care and attention prior to discussion with employees when considering the possibilities of redundancy.

Employees always remember what employers have tried to do to assist them when faced with difficult times and decisions. It is evident that in some situations, redundancy will in fact be the only option available to employers. However employees are more appreciative of situations where employers have tried their best to prevent redundancy with alternative options.

Where a full open discussion has been held with employees, employers will be held in higher regard. Even when redundancy is the only solution.

Remember, failure to follow a fair procedure could render a redundancy process unfair.  This could leave an employer vulnerable to claims for unfair dismissal.