Hot topic: Redundancy should be a last resort – here are some alternatives

The cost-of-living crisis is one of the biggest challenges facing employers today. While many employers are doing what they can to support their people, they are also battling rising operational costs.

With no end in sight of these challenges, making redundancies may be the only option for some employers to cope with the ongoing impact of the crisis.

Here’s some advice from our team on the alternatives to redundancy and what to do if you find yourself without another option:

Introducing a hire freeze

While this may only work in certain areas of your business, putting a freeze on new recruitment creates a natural pause that stops your company from hiring during this tough period and creating any new costs. This process may be able to help you focus on potentially restructuring departments without letting anyone go.

Consider redeployment

Before you make a decision about redundancy, consider if there are any other areas that could benefit from support. If so, then it can be better to transfer people – which doesn’t have to be permanent. This can also be a great way of boosting someone’s career or helping them to expand their skill-set which can go a long way to improve their engagement.

Reduce overhead costs

With many businesses embracing the ability to work from home, or a mixture of at home and the office, it’s an opportunity for costs to be reduced. Costs of food and drink may be reduced – kitchen and bathroom products too. You can also expect a reduction in printing, stationery, heating and lighting. If employees are not all in the office at the same time, hot desking may be an option, and therefore a potential reduction in office space required.

Flexible or part-time working

Job flexibility can help you to cut costs without cutting people loose. Job-sharing for example, helps you to retain staff while giving them a better work-life balance and avoids losing valuable people with important skills.

With the day one right to flexible working likely to happen, more employees may come forward and submit requests to change their hours or job share.

Unpaid leave/sabbaticals

If feasible, you may wish to offer your employees the opportunity to take unpaid leave or a sabbatical as a way to cut costs for a short time.

With sabbatical leave, there is usually an understanding that during the period of the sabbatical, which is typically between 3 months and a year, the employment contract remains in place and the employee returns to a role with the organisation at the end of the sabbatical leave.

When redundancies are unavoidable:

Have a clear plan

A November 2022 report from CIPD shows 16% of businesses are planning redundancies this year. Hopefully you won’t have to use one, but a clear and compliant redundancy process will help reduce some of the anxieties involved, for managers and employees, if you do have to take difficult decisions.

For a redundancy to be genuine, you should ensure that your process and decision making criteria is fair. The selection criteria you use should be objective and fairly applied and you must be able to demonstrate that the employee’s job will no longer exist. The redundancy process is complex, and you need to be conducting the process legally. We recommend seeking HR support if you are unsure of employee rights or are concerned about an employee making a claim.

Communicate as early as possible

In anticipation of a recession, your employees and their families will be very worried, nervous and scared, and this can make it hard for them to feel safe and focus on their work.

As an employer you’ll need to communicate a clear plan of action to help alleviate some of their fears. Keeping employees up to date with any workplace changes, expectations and their own performance not only keeps them on track but also reduces feelings of stress and anxiety – after all, there is nothing worse than being kept in the dark and often it’s better to feel informed, even if the news isn’t good.

The more you communicate with your employees, the more likely they are to share not just concerns but also ideas and thoughts with you, making for much stronger working relationships and a healthier overall company culture.

If you have reached the point where you do need to consider redundancy, you should communicate as openly and as early as possible. Consultation with individual employees is fundamental to the fairness of any dismissal for redundancy.

Keeping people informed at all stages of your thoughts and ideas and allowing them to make suggestions and give their feedback, will help to keep them engaged in the process.

Consider your remaining employees

One aspect of redundancy that is often overlooked is the impact on team members that remain – sometimes referred to as “Survivor Syndrome”. Those who remain at the company often feel guilty that they have kept their jobs and can display behaviour such as low morale, increased stress and lower productivity.

These people will be feeling the effects of the change so you should focus on ensuring that they are doing ok.

For those feeling like they might be ‘next’, extra support is key to tackle survivor syndrome. If you have access to an Employee Assistance Programme (EAP), a good idea is to remind them of the details. Also keep employees up to date on any opportunities for training and promotion, this is likely to keep them engaged and reassure them their position is secure. Making sure employees feel like a valued member of the team is important at this time.

Prepare for employee responses

Be prepared for an emotional or difficult response from employees made redundant and from the staff who remain. Your teams will find it easier to get through a tough time if they know why decisions are being made, and that they have been made in a fair and considerate way. Mishandled redundancies are a huge risk to a business, leading to potential problems such as low morale, conflict and damaged reputation.

Employees should always be given the right to appeal against a decision to make them redundant.

It is important to know as much as you can to prepare yourself and your business if you need to make redundancies. Approaching this with sensitivity and understanding, will be beneficial to your people.

If you are unable to find any alternatives to redundancy, we recommend seeking HR support to ensure you are conducting the process fairly and legally.

Contact the Reality HR team at info@realityhr.co.uk if you have any concerns or questions around the redundancy process.