What to consider before making redundancies

When facing financial difficulties or a downturn in business, the prospect of making redundancies can be daunting. However, before resorting to this drastic measure, employers should explore alternative strategies to avoid redundancies altogether. 

In this blog, I’ll discuss several steps to consider before making redundancies. 

• Review Finances and Cut Costs

Take a close look at your company’s finances and identify areas where you can cut back on expenses. This could include:

• Cancelling unnecessary subscriptions
• Reducing office space
• Scaling back on outsourcing and freelance work

Every little bit of savings helps, and as part of the consultation you’ll need to demonstrate what else you have done to avoid redundancies.

• Freeze Recruitment and Redistribute Workloads

If you have open positions or roles that need to be filled, consider freezing recruitment and redistributing the work among your existing team. This allows you to maintain your workforce without bringing on new hires.

• Encourage Use of Annual Leave

If the business slowdown is likely to be temporary, ask employees to use up their accrued annual leave during quieter periods. Remember that you can enforce annual leave with double the notice period. For example, if you want them to take a week off, you’d need to give two weeks’ notice. This can help reduce payroll costs without resorting to permanent redundancies.

• Utilise the short time and lay off clause in your contract

You might have a short time/layoff clause in your employment contract. This gives you the contractual right to temporarily reduce hours or provide no hours. There are some rules around time limits for this, however, it could work on a very short-term basis. The downside is that once you do this, the employee’s faith and trust in you may be diminished, and it may lead to poor morale and upset. But potentially a better alternative to redundancy.

1. Collaborate with Employees on Solutions

Engage your team and work together to find creative solutions. Options to explore could include:

• Sabbaticals
• Reduced work hours
• Unpaid leave, such as parental leave

Often sharing the situation early with the team, can lead to them all pulling together to help.

6. Consider Short-Service Employees

When redundancies are unavoidable, review your workforce and look at the employees with the shortest service history first. This can help minimise the impact on your longer-serving, more experienced staff. However, be cautious not to compromise your best talent.

Conclusion

By being proactive and exploring these alternative measures, you may be able to avoid the need for redundancies altogether and preserve your valuable workforce. If redundancies do become necessary, it’s crucial to follow a fair and lawful process.