As we approach the end of the furlough scheme and move towards the recently announced Job Support Scheme, it seems a good time to talk about avoiding redundancies.
An obvious first step is to look at what cost savings need to be made. The second step is to look at what actions could be taken to reduce those costs. Options to consider include:
- Reviewing other costs such as office space, for example. Is there a break clause in your lease? Could you negotiate a better deal with your landlord?
- Review employee benefits.
- Job Support Scheme which starts on 1st November. Information available at the time of writing is that the scheme is applicable to any employee, even if they haven’t previously been furloughed so long as they were on the payroll and a submission was made to the HMRC on or before 23rd September 2020. Details can be found on https://www.gov.uk/government/publications/job-support-scheme
- Discontinuing contracts of external consultants and agency workers who are carrying out work that could be done by existing staff.
- Reviewing processes. For example diverting more resource into sales and fee earning work rather than administration.
- Withdraw job offers or terminate with minimum notice.
- Laying off. Review existing employment contracts to find out if you have a lay off clause.
- Short time working as a temporary measure. Again this would depend on the wording in the employment contract.
- Reducing hours. For example reducing everyone’s hours by a certain percentage with the intention to avoid redundancy.
- Pay cut. This might mean staying on the same hours but agreeing to take a percentage pay cut.
- Voluntary sabbaticals. This would involve asking if anyone wanted to volunteer to take an unpaid break.
- Voluntary early retirement.
Many of the above suggestions would involve making a change to the employment contract. If necessary professional advice should be taken before doing this.
If, after considering all options, redundancy proposals are unavoidable, a fair process must be followed. This starts with being sure that any proposed dismissals are truly by reason of redundancy and, therefore, one of the fair reasons for dismissal.
The statutory definition of redundancy states that one or more of the following three circumstances must apply:
- Business closure.
- Workplace closure. (this could be the closure or relocation of one office or shop)
- Diminished requirements of the business for employees to do work of a particular kind.