Five Alternatives to Redundancy

Andrew Willis

Andrew Willis

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08 Jul 2020

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Coronavirus continues to cause issues for businesses across the UK. With financial support via the Job Retention Scheme dwindling, employers are faced with the prospect of making staff redundant. However, this may not be your only option…

Here are five alternative measures you can take before making redundancies:

8th July update: get the Job Retention bonus

Before we get to the five alternatives, you must first consider the latest government incentive to reduce redundancies. On Wednesday 8 July, Chancellor Rishi Sunak announced that employers who retain furloughed staff until January 2021 will receive a £1,000 bonus per employee.

Staff must earn at least £520 a month and be brought back to do ‘proper work’.

Consider if it is possible to keep staff on until at least January. If you can do this, you can get additional funds from the government.

Five alternatives to making staff redundant

1. Reducing working hours

Lockdown may mean you’ve had a decrease in business demand. If this is the case, you’ll simply not have any work for staff to come back to.

One way to solve this issue is to ask staff to work fewer hours in order to help save costs. Employees may not be overly enthusiastic with the prospect of reducing their hours. However, if the alternative is redundancy, they’re more likely to agree.

Remember, you’re not permitted to make such a change by a term in a contract of employment. Staff will need to agree to this change before you can implement it.

2. Freezing training budgets

Some businesses spent a significant amount of money on training. It’s a great way to develop internal talent, but is also something you can afford to cut, temporarily.

Make employees aware of the fact that the change is only temporary. You can resume training once the business is in a healthier place.

However, be cautious if staff are engaged as part of a training contract. Removing the training part of their role could lead to a breach of contract claim.

3. Freezing pay

This is a particularly good option if you offer annual bonuses as a way of rewarding staff. If possible, try not to provide these for the financial year.

But again, it’s worth checking your contracts of employment. If you freeze pay and employees are entitled, by contract, to receive bonuses/benefits, you could be in breach of contract. If you have a discretionary clause, outlining that you will only make these payments if the business need permits it, you could rely on this clause to freeze pay.

If bonuses have been paid regularly for the last few years, you may also encounter an issue. Employees may be able to argue that bonuses are a “custom” or a “practice” due to their frequency. This means they may be entitled to receive it even without a contractual clause.

4. Introducing flexible working arrangements

You may think that redundancies are the only way to help you reduce the number of staff at work. Whether this is for financial reasons, or to ensure social distancing measures. However, flexible working offers an alternative to this.

For example, you could permit staff to work from home on a more permanent basis. Or, you could stagger shifts to reduce numbers in the building at any one time and keep overheads low.

5.Lay-off

Another alternative is placing employees on temporary redundancy. This means you provide them with no work or corresponding pay for a period of time until there is work for them to do.

Without a clause permitting this in their contract, staff will need to agree to be laid-off without pay. Otherwise, you will need to pay them in full. If they have worked for your company for at least a month, they may also be entitled to statutory guarantee pay (SGP). SGP is currently £30 per day for a maximum of five days.

If staff have at least two years’ service, and are laid of for four or six weeks in total, they may be eligible to receive statutory redundancy pay.

Don’t face redundancy alone

If you need further support implementing any of the measures mentioned above, Croner can provide it. Or, if you’ve decided redundancy is the only option, you don’t have to face it alone. Ensure you follow the correct procedure and meet your legal requirements by speaking to a Croner expert on 01455 858 132.

About the Author

Andrew Willis

Andrew Willis is the senior manager of the Litigation and Employment Department and assumes additional responsibility for managing Croner’s office based telephone HR advisory teams, who specialise in employment law, HR and commercial legal advice for small & large organisations across the United Kingdom.

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