Eleanor Deem says that the need to make financial cuts is a valid reason for redundancy, but employers may find they can reduce the number they make or avoid them altogether.
Yale Town Business
Redundancies can be fairly quick and clean and it may seem simpler to go ahead with making them rather than mess about with different options. For small employers especially, the idea of talking about different contractual changes may seem daunting. They may be concerned about getting the legal side right and extending the process longer than strictly necessary, or may not know it is possible to save costs by negotiating temporary changes.
Using other options to cut costs will help retain skilled and experienced staff. It will make the business more flexible when things pick up again financially, saving on re-recruitment costs, and will almost always be cheaper than redundancies, therefore more effective at saving the costs required. Considering alternative cost-saving measures properly can also go a long way towards retaining goodwill and cooperation among staff at a difficult time for all.
Why not genuinely and openly present them with your problem and seek their views?
If you need to make cost savings, some of the options you could consider include reduced hours, unpaid leave or sabbaticals, early retirement, pay cuts, foregoing benefits and voluntary redundancies. But actually the best bet is to ask staff. You need to consult with them when considering redundancy anyway, but rather than presenting them with a proposed outcome and ticking the legal box of consultation, why not genuinely and openly present them with your problem and seek their views?
There might be several people who fancy reducing their hours, or taking some unpaid leave, but have just never asked for it. People may be content to take a pay cut if it means no redundancies, or may come up with cost-saving ideas that you had not thought of.
It is not always possible to agree the changes suggested, and it might add a week or two to your redundancy schedule, but even if none of the options raised are possible, the open dialogue you have conducted and the fact that you are seen to have made every effort to avoid redundancies will stand you in good stead with your staff.
If there are suggestions you can use, the key is to make sure you do it properly and think about all the details. For example, define periods of unpaid leave properly. If changes to pay or other terms and conditions are being considered, before going ahead make sure you decide whether they are permanent, whether you can guarantee a return to previous conditions, timescales for doing this and consider the impact on other terms.
Make sure things like holiday accrual (full or pro rata), pension contributions (still making at same rate or reduced) and review dates are all negotiated and decided before agreement to any change.
If pay cuts are agreed, if at all possible make sure these go hand in hand with an appropriate cut in hours as well. If the alternative is redundancy, there is usually a little ‘give’ in the number of hours required.
Be fair. If two people are doing the same job and only one volunteers to take a pay cut without reduced hours, that is clearly not fair.
Make sure negotiated changes are confirmed and drafted properly in writing to avoid any dispute or confusion. Taking professional advice should make sure you have all these bases covered, and although there will be fees involved, with the additional cost savings you can make, and the saving on redundancy payments, this will be money well spent.
Having to make changes in your workforce for financial reasons is always hard, and responsible employers always want to do it as fairly as possible. But by taking some time to think about other cost-saving options and genuinely and openly consulting with your staff on the best way forward, you will avoid redundancies if possible, earn goodwill from your staff and maintain flexibility for your business in challenging economic times.
Eleanor Deem is Managing Director of face2face HR.
www.face2facehr.com