Your employer should take all the steps it reasonably can to avoid the need for redundancies.
Avoiding redundancies helps everyone. For example,
- On a human level, there’s less hardship for staff who would otherwise be made redundant
- On a commercial level, your employer can avoid the cost of redundancies and the loss of experienced staff. This is especially important if the employer subsequently needs to recruit again in six months’ time.
- From a legal point of view, there is less likely to be a dispute if your employer gave proper consideration to how redundancies could be avoided
So what are the alternatives for your employer?
Here are some other options your employer should consider for avoiding redundancies
1. Recruitment freeze and withdrawing job offers
Your employer could decide not to recruit anyone new. As existing employees leave, there is natural attrition. In other words the size of the workforce decreases without your employer having to make anyone redundant.
That saves on recruitment costs and it also means that existing employees can be re-trained to carry out work they may not already be doing.
If your employer has made job offers prior to the redundancy situation, those job offers can be withdrawn, provided the offer hasn’t been accepted. If the offer has been accepted already, the employer can still terminate the employment with the minimum notice.
2. Lay off and short time
Lay off means that the employer stops providing their employees with work for a while and doesn’t pay them. Short time means that the employer can reduce employees’ hours to less than 50% and reduce their pay accordingly.
An employer can only lay you off or reduce your hours if your employment contract allows them to do so. A typical clause would read something like this:
If we do not have enough work for you, we are entitled to place you on short time (which means we can reduce your hours and reduce your salary pro rata) or lay you off (which means we will not provide you with any work, and you are not entitled to any pay except for statutory guarantee payments).
It is a good way for your employer to reduce the wage bill on a temporary basis but the law doesn’t allow your employer to use it as a long-term solution.
3. Reducing Working Hours
An employer can reduce working hours, for example by:
- moving to a 4 day week
- introducing job sharing
- eliminating voluntary overtime
This can only be done if the employees agree. Often employees will agree if it means that they avoid being made redundant.
Usually, the employer will retain the right to revert to normal hours when business picks up. Again, most employees will agree to this because it may avoid redundancies.
4. Salary deferrals
An alternative to asking employees to forego their pay, they could be asked to defer their pay.
For example, the employees could agree to defer payment of 50% of their salary for six months. After six months, that outstanding salary could then be paid in instalments. This helps the employer’s cash flow and may mean that redundancies can be avoided.
An employer could offer staff the possibility of an unpaid sabbatical. This means that they have a break from work, although their employment contract would continue. This will be open for discussion and needs agreement from the employee.
The employer could ask for volunteers who would be willing to agree a sabbatical.
6. Deferring Graduate Job Offers
If your employer takes graduate trainees, they may want to consider delaying the start date for a year. This gives the business opportunity to improve and may mean that they can avoid redundancies.
Your employer should consider whether it can retrain staff in a department where redundancies are needed in order to fill vacancies in another department.
8. Lay off casual workers and agency staff
Laying off casual workers and agency staff is often an effective and much cheaper alternative to redundancy. This is because they don’t have the same employment rights as employees, such as the right to a redundancy payment or, in some circumstances, the right to minimum notice.
9. Offer home working in exchange for a reduction in salary
Many employees discovered the benefits of homeworking during the Coronavirus crisis. These include:
- spending less time travelling
- saving money on commuting
- flexibility with childcare
Your employer may want to consider letting you or other staff work from home in exchange for a reduction in pay. When you take into account the cost savings of working from home, the reduction in pay may not make much difference to you financially anyway.
10. Early Retirement
The company could offer early retirement under a pension scheme for those who volunteer for redundancies. It’s important to ensure that retirement is indeed voluntary – otherwise your employer could be guilty of age discrimination.
11. Voluntary Redundancies
Although voluntary redundancies are not a way of avoiding redundancies altogether, they do avoid the need for compulsory redundancies.
If there are sufficient volunteers, your employer can avoid the redundancy selection procedure, which can be time-consuming and distressing, both for the company and its staff.
Many employers offer enhanced redundancy packages by way of a settlement agreement. If this applies to you, you’ll need to consider whether to accept the settlement agreement or go through the redundancy procedure instead.
Have you been offered a settlement agreement?
If you’ve received an offer of a settlement as an alternative to redundancy, you’ll need to make sure you receive legal advice on it.
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