Guidance for Employers
Alternatives to Redundancy:
What are the options?
Making employees redundant is time consuming, can be costly, can disrupt the work place, can damage a company’s reputation in the market and is legally quite complicated. This post looks at the alternatives to redundancy that could be considered.
Alternatives to Redundancy?
What are the options?
10 May, 2021
by Lianne Lambert
When organisations hit difficult times or need to restructure then a redundancy situation can exist. But, taking employees through a redundancy consultation is not an easy thing to do. There is a strict legal process that you need to follow and it can be very disruptive. Of course, there are situations when it is unavoidable but, there are times when there are some different options that it may be worth exploring.
The areas covered by this post are:
1. Why should you consider alternatives to redundancy?
Well, one very good reason is the fact that you have to! Redundancy legislation is clear on this and before you commence a redundancy process you need to have considered the alternatives. You also need to be able to demonstrate that you’ve done so.
Also, as we said at the beginning, completing a redundancy process in a legally sound way is time consuming, can be expensive and is very disruptive so avoiding it if you can makes commercial sense.
2. What are the alternatives to redundancy if I need to reduce headcount?
If your business has seen a decrease in work and you simply need fewer people in order to meet demand then you need to look at ways that you can reduce headcount. The alternatives to redundancy in this situation are:
Natural headcount reduction – it could be that you’re aware that some people are looking to leave and that their resignations are likely to land on your desk in the coming weeks. If that’s the case, you may be able to wait it out.
Stop using freelance or contract resource – it’s likely you’ll have done this already but it’s worth a check to make sure that you don’t have any work going to freelancers that could be given to permanent team members.
Look at employees who have a short length of service – for employees who have less than two years’ service, subject to any unusual contractual terms, you’re able to bring their employment to an end without needing to go through a redundancy process. You should get some guidance if you’re thinking about doing this but it is a viable alternative to redundancy for a lot of companies.
Look at redeployment – if you need to decrease headcount in one area of your business but have vacancies elsewhere, you should consider redeployment. Do you have anyone in the department where headcount reduction is needed that could fill a different role in your organisation?
Short-time working/lay off – If you think that the decrease in demand is only going to be short term, you could consider looking at short-time working or lay offs. To do this without extensive consultation you will need to have the relevant clauses in your contract. If you don’t have the relevant clauses then it’s still something to be considered but the process will be more complicated. If this is something that you think might be an alternative for you then you should get some professional advice before moving ahead.
3. What are the alternatives to redundancy if I need to reduce costs?
There are times when external forces are at play and the profitability of your business takes a hit and seems like the only option to quickly reduce costs is to reduce the number of employees through a redundancy process and get the people who are left to all work a bit harder or more efficiently.
The first thing we’d flag here is, if you are making people redundant who have been with your business for a long period of time then, it could be quite expensive and a cash drain on your business. It’s worth using the government redundancy pay calculator to check the statutory redundancy payments for your employees – you may be unpleasantly surprised! Another thing to remember is notice periods. Not all employers are aware that, regardless of what notice period is stated in a contract, statutory notice will apply when making redundancies. It’s very normal for people to have a contract that states that notice is one month from each side but this does not comply with UK legislation. Statutory notice is one week per year of service so make sure you take this into consideration when doing your calculations.
If you need to reduce costs quickly, then redundancy is unlikely to deliver what you need. Instead, you could consider negotiating salary reductions with employees, or look for any other areas of your business where you could cut back.
4. What are the alternatives to redundancy if I need to re-structure?
As businesses grow and change the skills and types of people required will also evolve. There can come a time when the people that you have just aren’t the right people to take your business forward and you need to work out what to do.
You should consider whether the employees can be trained in the skills and behaviours that you need. Whilst it can be tempting to take an “out with the old, in with the new approach” you should not undervalue the corporate knowledge that your existing team have. Considering whether there are ways to turn them into the people you need, be that by re-training them or by having some direct conversations regarding their behaviours, is the right thing to do.
If you really can’t see any way to get the change that you need within your existing team then redundancy is most likely going to be the way forward. You do need to get professional guidance here to make sure that a genuine redundancy situation exists and that you’re not really just trying to use redundancy as an alternative to managing poor performance/conduct.
5. Getting Support when Considering Alternatives for Redundancy
There are times when redundancy is the right answer to your business problem but, making sure that you’ve done everything you can to avoid getting there is both legally and commercially the right thing to do.
If you do conclude that redundancy is what’s needed or if you want any help implementing any of the above alternatives to redundancy then do get in touch with us and we’d be more than happy to offer the support your business needs.