When organisations hit difficult times or need to restructure then a redundancy situation can exist. But, taking employees through a redundancy exercise is not an easy thing to do.
When running a redundancy, there is a strict process that you need to follow. There are many legal requirements, and it can be very disruptive. For more information on redundancies, see our comprehensive guide to redundancies.
Of course, there are situations when redundancy is unavoidable. However, there are times when there are some different options that it may be worth exploring.
The areas covered by this post are:
- Why should you look for alternatives to redundancy?
- What are the alternatives to redundancy if I need to reduce headcount?
- What are the alternatives to redundancy if I need to reduce costs?
- What are the alternatives to redundancy if I need to re-structure?
- Getting Support when Considering Alternatives for Redundancy
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. 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. You may be expecting their resignations 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. 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. However, it can be 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, look 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. However, 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. It can seem like the only option to quickly reduce costs is to reduce the number of employees. Then, you 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 there will be a cash requirement in relation to redundancy payments. 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. However, this does not comply with UK legislation if someone has more than 4 years of service. Statutory notice is one week per year of service up to a maximum of twelve weeks. If contractual notice is more than this, then the contractual notice will stand. 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 other cost reduction measure that you could implement.
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 don’t have the right skills to take your business forward.
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 in your existing team. Consider whether there are ways to turn them into the people you need. This could be by re-training them or by having some direct conversations regarding their behaviours.
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. However, 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.
Manager’s Guide to Redundancies
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