Gazette Business
Redundancy: Is there an alternative?
9:07am Friday 17th February 2012
IN these difficult economic times employers may feel they have no option but to make employees redundant.
Though following a fair process and seeking professional advice can reduce the risk of unfair dismissal claims, redundancy payments can still be expensive.
There are also the indirect costs to consider, including the management time spent implementing the process, damage to staff morale, and recruiting replacements when work picks up again.
In light of these problems, employers may wish to explore other ways of reducing staff costs, including: Cutting new recruitment: new recruitment can be frozen and, provided they have not yet been accepted, job offers can be withdrawn.
Even if the offer has been accepted and a contract of employment signed, new joiners may agree to defer their start date.
Temporary stoppages: employees’ contracts may allow for lay-offs during periods of low demand, or for temporary short-time working.
If not, it may be possible to consult staff on these changes and obtain their express agreement.
Though an attractive short-term option, employers should be aware that if these arrangements continue for an extended period, employees may be able to treat themselves as redundant and seek a redundancy payment.
Reduced hours: this will be a change to employees' contracts of employment.
It is, therefore, important that their express, written agreement to the change is obtained.
Otherwise, there may be a risk of a claim for unlawful deductions from wages, or a breach of contract giving rise to a constructive, unfair dismissal claim.
Though this is a detrimental change for employees, many will agree to it if it allows jobs to be preserved.
Secondments: seconding an employee, either internally to another group company or externally to a client, will reduce headcount whilst also increasing employees’ expertise and enhancing client relationships.
For external secondments, it is advisable to enter into a formal secondment agreement with the employee and the client.
Withdrawing benefits and bonuses: Employers may be able to withdraw non-contractual benefits and discretionary bonuses.
Care should be taken, however, as such bonuses and benefits can become contractual if they are provided consistently for a number of years.
n Ashfords LLP is Authorised and Regulated by the Solicitors Regulation Authority. The information in this note is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances. Links to other sites and resources provided by third parties are included for your information only. We have no control over the content and accept no responsibility for them.