Let’s help the economy recover: six alternatives to compulsory job losses

The past few years have seen unprecedented job losses. News about job cuts has become a regular feature in the media. Nearly everyone has been affected by redundancies in one way or another.

Born of the recession, job losses have the unfortunate propensity of making the recession worse. Less disposable income of the unemployed means less money in the system for business – a self-perpetuating circle of a slagging recovery.

Despite the first signs of spring, the economic climate remains uncertain and some businesses may still be considering redundancies. The purpose of this blog post is to encourage businesses to consider alternatives to compulsory jobs losses. We need to remind ourselves that slashing jobs is not the only way to reduce costs. Initiatives such as pay freezes, voluntary redundancy, lay-off and short-time working, part-time hours and unpaid leave alongside other cost saving measures can get you there, too.

Voluntary redundancy

Unlike a standard redundancy selection carried out by an employer, voluntary redundancy stipulates employees selecting themselves to be made redundant. A request for volunteers is often welcome from the workforce and prevents a dip in morale. Voluntary redundancies made as part of a redundancy process are considered to be redundancy dismissals for the purpose of accrual of redundancy pay. To encourage employees to apply, employers often offer enhanced redundancy payments to employees who volunteer for redundancy.

However, voluntary redundancies must be carried out with care. To ensure continuity of the business it is best to reserve the right to decline an application for a voluntary redundancy. Setting ground rules and criteria for selecting/ refusing applications will prevent problems later down the line.

It is also worth remembering that volunteers are to be added to the total number of proposed redundancies, which may trigger employer’s obligation for collective consultation. Volunteers also need to be included in all consultations as per statutory requirements.

Pay freezes

A pay freeze is exactly what it is says: pay frozen at the current level. Wage freeze is a compact with the workforce to prevent redundancies and ensure the survival of the business.

Lay-off / Short-time Working

Employers are legally obliged to pay the employees in full unless it is specified in the contract of employment or agreed between the parties that the employee can be laid-off without pay or on a reduced pay. Should a lay – off/ short time working clause be present in terms and conditions of employment, an employer can ask employees not to come to work and no pay/ only reduced pay will be due. This is a short-term solution as employees are entitled to make a claim for statutory redundancy pay after either four consecutive weeks or six weeks or more within a 13 week period of being laid-off / placed on short-time working.

Unpaid leave

Encouraging applications from certain staff categories for unpaid leave may help prevent redundancies. It is important to document the arrangements made to prevent any disputes in the future.

Reducing hours

Should reduction in hours be due to diminishing of work of a certain type and the resultant diminishing demand for staff, reducing hours could be dealt with via a redundancy process.

As with selection for redundancy, it is important to set the criteria out in advance and ensure that they are not discriminatory.

Alternatively, a move to part-time hours could be done as a positive exercise, encouraging voluntary applications from staff for a change to be made to their terms and conditions of employment. Please bear in mind that once a change is made, an employee’s consent will need to be obtained to revert the hours back to full time.

These alternatives permanently or temporarily reduce labour costs but do so without damaging jobs security, staff morale or the wider economy. On their own or combined, these alternatives may help prevent redundancies altogether or reduce their negative “footprint” on the organisation and the wider community.

Should you require any assistance in relation to reducing workforce costs or a restructure, please contact Aggy on 07789095897 or info@expansa.co.uk to arrange a free, no obligation chat.

Disclaimer: please note that views and opinions expressed in this article do not constitute a business or legal advice. Please consult your business or legal advisor for advice suited to your individual circumstances.



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