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What can employers do to avoid redundancies?
With the Coronavirus Job Retention Scheme due to close at the end of October, employers may already be considering if job losses could be on the horizon, and if steps can be taken to avoid job losses. Many large employers, such as British Airways, Hays Travel and WH Smith have already announced job cuts. Citizens Advice has said it has seen an increase in demand for redundancy advice, and ACAS reported that calls to its redundancy advice line nearly tripled in June and July. Unfortunately, with Government support to businesses diminishing and with the continuing effect that the coronavirus pandemic is having on business, the next few months are unlikely to be much different. A recent research study has even suggested that as many as one in three UK employers expect to make staff redundant between July and September.
But what can employers do to avoid redundancies. There are lots of options which employers could, and should, have in mind before taking the decision to make compulsory redundancies. Whilst we know that many employers will be considering ways of avoiding dismissals if possible, we thought it may help to set out some examples below:
- Agreeing flexible working with employees such as working reduced hours or job shares;
- If contracts of employment permit it, asking employees for a short period to stop working (temporary lay-off) or work reduced hours (short time working);
- Reducing overtime, or stopping it altogether;
- Providing retraining for employees to do other jobs within the organisation;
- Offering voluntary redundancy or early retirement to all employees; and
- Putting a freeze on recruitment.
As well as these options potentially having the positive effect of avoiding compulsory redundancies, from an employer’s perspective, it is important that the above options, as well as any other alternatives to redundancy, are seen to considered when conducting a fair redundancy process. This is because should an employee bring a claim to an employment tribunal, a tribunal would look at what efforts the employer made to pursue alternatives to redundancy.
Employers should also take note that they will receive a bonus of £1,000 for each employee who has been or is brought back from furlough leave who they retain through until the end of January 2021. We know that employees must have earned above the National Insurance lower earnings limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021 and that the bonus payments will be made from February 2021. Although not a huge sum, this will likely be a helpful cash injection to many businesses who having been struggling during the pandemic.
Making redundancies is often a challenging time for all concerned, and with employees potentially struggling to find new employment in a difficult job market, loss of earnings’ awards for successful unfair dismissal claims are likely to be more significant, and employees may be more likely to challenge the dismissal. Careful planning and management, particularly exploring ways to avoid or reduce redundancies, is therefore recommended before embarking on a redundancy exercise.