Five ways to avoid redundancies

by Real Business - Monday, 6th October 2008 -

You’re in a pickle. You desperately need to cut your employee wage bill but you’re reluctant to make redundancies. Fear not. We’ve come up with some alternatives to swinging the scythe.

Flex the force
Control salary bills by introducing flexible working. Over a short-lived difficult period, cutting hours to fit either budget or workload can be cheaper than redundancies. Pitched sensibly, temporary short hours may even be attractive to staff. It will certainly be preferable to redundancy.

Replacing employees with casual workers or contractors can be a useful additional or alternative option if flexible working doesn’t appeal.

Overtime bans
Ending all overtime – or compensating overtime with lieu time off rather than cash – is a cinch to implement. Rarely will employees have a contractual right to overtime. But be warned: those who rely on it may leave.

Get rid of those pricey night shifts
Changing shift patterns so that fewer employees are on expensive night shifts is often considered in conjunction with overtime freezes. Legally, it can be quite tricky – even if there is an apparent contractual right to vary shift patterns. It does require employee consultation and a careful selling exercise.

If an agreement can’t be reached, there are essentially two options: terminating existing contracts and offering new ones with the new shift patterns (which may necessitate collective consultation); or adopting the view that adhering to the new shift patterns is a reasonable instruction and disciplining staff who fail to do so.

Taking a hard line has its risks, though, especially if new work patterns impact on those with childcare responsibilities or certain religious beliefs. Discrimination claims are possibile, so make sure you can prove that changes are essential.

Sabbaticals
Sabbaticals allow employees to take an agreed period of unpaid leave – often up to a year – with arrangements for returning to work agreed in advance. Pros include immediate cost savings, retention of valued employees, and being seen as an accommodating employer.

The employee should understand there can be no guaranteed job available on return – a lot can happen in a few months - but if this is the case you should try to redeploy them elsewhere in the business.

Pay cuts
This is a last resort where redundancies are otherwise inevitable. Salary reductions require employees’ consent, which depends on factors such as how, if at all, employees will get back what they forego; or the severity and proposed length of time of the cut.

Legally, however, it’s the easiest option, because it is agreed with employees. The hurdle is in how the proposal is put across. Our advice? Go for the softly, softly approach.

Graham Paul is an employment law partner at UK law firm Dundas & Wilson.

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