Redundancies are not the only answer for businesses needing to cut costs
When “the going gets tough” in business, it’s crucial to be prepared for difficult decisions that may have to be made. Some businesses may need to reassess their outgoing costs, looking at potential changes they need to make to staffing and resources and redundancies may be a real possibility.
We’ve already shared our “just in case” toolkit for businesses who may be navigating difficult times, as we understand that making staff redundant isn’t always the best option for every business; and it certainly isn’t the first nor only solution.
There are multiple alternatives for businesses considering redundancies – which should always be used as a last resort. What’s more, the process is not often cheap and even rumours of redundancies can damage team morale, making the decision one not to be taken lightly.
All business leaders and HR managers must educate themselves on the options available to them when “the going gets tough” to ensure that all decisions are carefully considered, and do not fall foul of any rules and expectations that may leave them open to Tribunal claims.
Our Employment Law Partner Danielle Ayres has shared her top 5 tips for businesses that may have to make difficult decisions with the ever-changing and challenging business landscape.
Jump to section:
- 1. Follow the right process
- 2. Understand your options
- 3. Implement a clear communication strategy
- 4. Understanding how to change employees’ contractual terms of employment
- 5. Take legal advice
1. Follow the right process
It goes without saying, but any business owner or HR professional must ensure that any decision they take regarding their staff’s employment arrangements whether it’s laying off employees, changing their working patterns, moving them to different business areas, or, in a worst-case scenario, making redundancies must follow a fair and proper process.
If your business has any policies in place of its own, such as lay off, redundancy, or changing terms, these should also be considered and followed.
We explain the details around how employers should handle in our “just in case” toolkit, but some key takeaways include:
- Communicating with employees that the business may be struggling and, if redundancies are a possibility, explaining why
- Adhering to any required timelines for consulting with employees
- Ensuring open and transparent communication with Trade Unions or employee representatives, where necessary and appropriate
- Securing agreement from affected employees regarding any changes to the contractual terms of employment
2. Understand your options
Redundancies are not the only answer for businesses needing to cut costs, and there are several alternatives available, all of which we explain in more detail in our “just in case” toolkit.
- Reducing days and/or hours of work for some/all staff
- Voluntary redundancy
- Lay offs/career breaks
- Limiting/banning overtime
Businesses should consider all available options before making any decisions, identifying the solution that works best for both the business and their employees.
3. Implement a clear communication strategy
It can be difficult to handle challenging scenarios within business, particularly when it comes to communicating with staff. Have a clear and transparent communication plan in place, ensuring that everyone who is affected is invited to meetings, allowed to ask questions, and kept fully up to date with key information, to avoid any miscommunication. Include all affected staff, including those on maternity/parental leave and sick leave. This will also assist in keeping staff morale up and not causing unnecessary anxiety.
4. Understanding how to change employees’ contractual terms of employment
Employers may choose to change an employee’s terms of employment, such as reducing their working days/hours and arrangements. Employers may have a clause in their employment contracts, which gives them the right to change the conditions of employment, at any time, usually on reasonable notice.
Without this clause, it may be difficult to kick-start a process to change terms, however, it can still be done. Consultation and notice will be required to reach an agreement. We share more about this in our online guide which you can read here.
5. Take legal advice
You don’t want to put time and effort into ensuring that you think you have done all that is necessary, only to find out that you have not ticked all the boxes required in relation to a particular process, whether that be laying staff off, changing their terms and conditions or making them redundant.
It’s always advisable that you take legal advice at the first available opportunity to discuss options and the best way to approach it.
No one wants to think about “when the going gets tough” but being prepared can help ease some of the stress, if and when the time comes.
At our Primas HR Hub roundtable events, we’ll be exploring several workplace scenarios associated with “when the going gets tough” equipping business leaders and HR experts with the information and advice they need to navigate complex situations.