Options to consider before making redundancies
In the coming weeks we will be looking at different options open to an employer when it is looking to change employment contracts. We will also be looking at redundancy. However, before getting to the point of making a particular variation or announcing redundancies, it is important to think about alternatives to either approach. We consider a few options here.
- Lay-off/ short-time working – Do you have the contractual right to lay-off your employees, i.e., with no pay other than Statutory Guarantee Pay, or to introduce short-time working at reduced pay? If so, relying on or introducing either of these on a short-term basis might avoid a longer-term or permanent change/ reduction in employee terms and conditions of employment or redundancies.
- Freeze on new recruitment.
- Removal of agency labour.
- More pro-active management of poor performers or employees on long-term sickness absence who are unlikely to be able to return to work for the foreseeable future.
- Early and open communication with employees – For instance, about the current state of the business and potential future changes that might need to be made. What we are suggesting here is not that this is necessarily done to give advance warning of any changes which you have already decided upon, but at a much earlier stage, with a view to inviting suggestions employees may have which could avoid longer-term change. We have had previous experience of clients who had taken this pro-active approach and have found employee groups to often be quite creative in terms of suggesting changes which would be supported on a wider basis across the workforce. This may mean that changes could be implemented by agreement of the employees more easily than if they are considered to be instigated by you, i.e. “You said … we listened …”
- Be upfront with regard to commitment about future redundancies – If a change you might be proposing is to reduce employee terms and conditions to any extent as a way of avoiding a redundancy, it can help to also make a commitment that in the event of any future redundancy arising (either open ended or within a particular period) any redundancy and notice entitlement will be calculated on the basis of the employee’s remuneration prior to the variation.
We accept that some of the above are not necessarily things to consider prior to starting consultation with employees about a contractual variation and/ or redundancy exercise. However, they are all things it is sensible to consider and discuss with employees as part of any consultation process that you are undertaking. Doing this will help you show that you have genuinely explored alternatives to any change that you might ultimately introduce, and to seek to avoid any redundancies which you might ultimately have to make.
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