Redundancy is not the only option

Simon Kite, a partner at chartered accountants Saffery Champness, offers some tips on how to cut costs but avoid the redundancy route.

Many SMEs will have to control staffing costs over the coming months. Here are some options to explore if your company is one of those looking to make efficiencies.

Less rigidity
A review of your flexible working policy can be a useful tool in mitigating the effects of the credit crunch, as these arrangements can help save money while preserving your talent pool. This can involve things such as compressed hours, job-sharing and shift work.

New roles
Retraining employees in conjunction with freezing recruitment can be a practical option for managing labour resources. It is advisable to offer all alternative work available to affected employees and let the employee decide what is suitable, as they will be willing to accept a less well-paid job.

Cap hours
Restricting overtime is an obvious short-term solution to cutting costs. However, employers should check their company’s contractual position on overtime, as any variation detrimental to the employee could give rise to “breach of contract” claims.

Relocate staff
If your business has operations in a variety of geographic locations, and there is demand at a different site, transferring employees may be an option worth exploring. In order to do this, you need to have a mobility clause included in contracts, permitting you to move your employees to a different workplace.

Voluntary retirement
For employers with an occupational pension scheme, offering early retirement to employees is another possible option. However, caution needs to be exercised to avoid discrimination claims.

Letting people go
If, after looking at the alternative options, you decide that redundancy is the only solution, then you should consider asking for volunteers in order to mitigate the need to make compulsory redundancies.

Cover yourself
Finally, keep a record of the alternative steps your company has taken. Even if your company ends up making redundancies, evidence that you have explored and exhausted all options will assist in demonstrating that you have met the legal consultation requirements. This will help to avoid any costly and time-consuming legal action.

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Business costs

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