Redundancy: is this your only option?

HR experts Croner Consulting look at redundancy and explain the alternatives you can consider, and the pitfalls to avoid

To manage and survive the current climate, many practices are considering the route of redundancy. Getting the redundancy process right is crucial, as is keeping a record of the steps you take and considerations you make.

But before you reach a decision about redundancies, have you considered the alternatives that could save you from beginning this process?

Reduce working hours

It may be an option to ask your staff to work fewer hours in order to help save costs. While employees may not be overly enthusiastic with the prospect of reducing their hours, if redundancy is the alternative, they are more likely to agree.

Remember, you’re not permitted to make such a change by a term in a contract of employment. Staff will need to agree to this change before you can implement it.

Freeze training budgets

Training is key for staff development but is also something you may afford to temporarily cut.

Make employees aware of the fact that the change is only temporary. You can resume training once the business is in a healthier place.

However, be cautious if staff are engaged as part of a training contract. Removing the training part of their role could lead to a breach of contract claim.

Freeze pay

This is a possible option if you offer annual bonuses as a way of rewarding staff. If possible, try not to provide these for the financial year.

But again, it’s worth checking your contracts of employment. If you freeze pay and employees are entitled, by contract, to receive bonuses or benefits, you could be in breach of contract. If you have a discretionary clause, outlining that you will only make these payments if the business need permits it, you could rely on this clause to freeze pay.

If bonuses have been paid regularly for the last few years, you may also encounter an issue. Employees may be able to argue that bonuses are a custom or a practice due to their frequency. This means they may be entitled to receive it even without a contractual clause.

Introduce flexible working arrangements

You may think that redundancies are the only way to help you reduce the number of staff at work. Whether this is for financial reasons, or to ensure social distancing measures. However, flexible working offers an alternative to this.

For example, you could permit staff to work from home on a more permanent basis. Or you could stagger shifts to reduce numbers in the building at any one time and keep overheads low.

Lay off – shortage of work

Another alternative is placing employees on temporary redundancy. This means you provide them with no work or corresponding pay for a period of time until there is work for them to do.

Without a clause permitting this in their contract, staff will need to agree to be laid off without pay. Otherwise, you will need to pay them in full. If they have worked for your company for at least a month, they may also be entitled to statutory guarantee pay (SGP). SGP is currently £30 per day for a maximum of five days.

If staff have at least two years’ service, and are laid off for four or six weeks in total, they may be eligible to receive statutory redundancy pay.

It is important to explore these avenues on a case-by-case basis. For expert guidance, speak to an adviser. As part of your Medical Protection membership, you have free access to Croner’s HR and employment law advice line.