Redundancy should always be a last resort for employers and employees will always have an opportunity to discuss and explore with their employer ways of saving their job.
In a series of articles over the coming weeks we are going to set out ways that employers and employees should try to avoid redundancies; there are lots of far more constructive alternatives to consider first.
In this first of three articles we look at alternative ways to reduce the headcount in a work force.
Practical considerations
When considering alternatives to redundancy, employers might find it helpful to take the following factors into account:
When implementing alternatives to redundancies, employers ought to retain enough flexibility to reverse arrangements on short notice, to cater for improved trading conditions
Reducing headcount
In many organisations, employee costs are the highest single item of expenditure. In difficult economic times, the temptation to cut headcount as a quick fix to spiralling expenditure and falling orders can be hard to resist. However, such short-term measures can affect the long-term prosperity of the organisation:
There are other measures which can prove more advantageous.
Restrict recruitment
A recruitment freeze is an easy, cost-effective mechanism to reduce organisational costs and expenses. Combined with natural attrition, this is often the first step employers take in an economic downturn. A recruitment freeze, without more, will not usually have employment law implications.
Withdraw job offers
Withdrawing employment offers before new employees join is also an attractive way to reduce employee headcount. An employer may withdraw an offer of employment at any point before it is accepted, without having to give notice or make a payment in lieu of notice.
Once an offer has been accepted, and any preconditions attached to it met (for example, receipt of references satisfactory to the employer and confirmation of professional qualifications), an employment contract is in place, even if the employee has not yet started work. The employer is unable at this stage to withdraw the employment offer and, instead, has to terminate the contract. This will be done by giving the contractual notice or making a payment in lieu of notice.
Defer new joiners
A softer alternative to withdrawal of job offers is to ask soon-to-be new joiners (for example, graduate recruits or apprentices) to defer their start date by a period of time.
Reduce non-permanent staff
Reducing the number of agency, temporary and casual staff is often a swift and cost-effective strategy. To the extent that such staff are not employees of the organisation, it is often legally simpler (and cheaper) to terminate their engagements than dismissing permanent employees or workers.
Secondment
Another headcount reduction option is to second an employee, either internally within a group, or externally to a client that needs additional resources or expertise (for example, because it has had to make redundancies).
Redeployment and retraining
The job an employee does is, for the most part, an essential term of their employment contract, which can only be varied with the employee’s consent or under an express term of the contract.
Many contracts contain a mobility and/or redeployment clause which allows employers to move employees around the organisation. In any event, an employer will have to exercise its powers reasonably, for example, matching the employee’s skills to the new role or offering retraining.
Early retirement
Employers often offer early retirement under the pension scheme to those who volunteer for redundancies. It is important to ensure that retirement is indeed voluntary, or it could amount to dismissal giving rise to potential claims (in particular age discrimination). Employers are advised to retain discretion as to whether or not they accept a volunteer’s request to retire early, in order to ensure they do not lose valued and experienced staff members.