Business growth

Employer discussing with employee

12 Alternatives to Making Redundancies

12 Alternatives to Making Redundancies 2560 1707 Claire Antony

Unpredictable customer demand and uncertainty feel very much a part of everyday life at the moment. For many businesses, staff costs are the single largest expenditure, so balancing spend against output is a key consideration – particularly in sectors where the order book is a lesser-known quantity – and the topic of redundancies is often discussed.

Many businesses may find themselves looking at what they need to do to adapt and help to safeguard their future. This is no mean feat.

So what can you do to reduce costs and avoid a situation where a headcount reduction via redundancy is necessary? First let’s start with options.

12 Alternatives to Making Redundancies

  1. Compulsory holiday
  2. Overtime ban
  3. Career breaks
  4. Unpaid leave
  5. Lay off
  6. Short time working
  7. Recruitment freeze
  8. Natural attrition
  9. Flexible or part-time working
  10. Cross-training
  11. Policy changes
  12. Pay cuts or pay freezes

1. Compulsory holiday

You can ask staff to take holiday in downtimes which not only helps control work distribution but also helps the operation during busier periods by ensuing a full headcount is available and hopefully means the need for overtime is minimised.

Be careful how this is applied though.  If there is minimal leave to take later in the year, burnt out staff can be a real problem as they are not as effective and could result in unwanted turnover.  As one of the most highly prized employee benefits, limiting the scope for personal choice in how this is used may have a devaluing effect. Mandated leave is also likely to impact the cost and location of a holiday, or whether the employee is able to spend that time with friends and loved ones.

Ensure correct notice is given to take holiday – either follow contractual terms or your company policy. In the absence of this, the general rule is that notice twice as long as the leave to be taken should be given i.e two weeks’ notice to be given for one weeks’ leave.

 

2. Overtime ban

Stopping overtime where non contractual is simply a matter of transparent communications. Where you are specific about which areas of the business this applies to, why and the timeframe, it’s more likely people will understand and buy into this measure.

However, if this is contractual or if you suspect this might be considered contractual through customer and practice (i.e clear history of this being used frequently or with known rules etc) it will be necessary to agree this prior to application.

If contractual, it is advisable to get any agreement to vary this term in writing.

 

3. Career breaks

Arguably more practical in larger organisations or for more senior employees who are more likely to have larger savings pots to rely on.  Nevertheless, don’t make assumptions!   You are unlikely to know the ins and outs of personal finances so remember to offer to all.

Career breaks allow people to remain an employee, but they agree to receive no pay during the career break.  It’s a policy matter whether they continue to receive other benefits, such as company car, health care etc.

If you are considering this, a top tip is to reserve the right to turn down volunteers to avoid a situation where it negatively impacts key parts of the operation.

 

4. Unpaid leave

Usually, a few weeks or a month is needed to see the benefit of this option in reducing wage costs.

In all cases it’s necessary to get the employee’s agreement, so better to ask for volunteers in the first instance.

This is a good short-term measure which may suit both parties while also protecting employment.  While not legally required, it’s best practice to put any agreement in writing.

Employer discussing with employee

5. Lay-off

Lay-off is when an employer takes an employee off work and off pay for at least one working day. Effectively it’s sending the employee home temporarily. It is used as a response to a lack of work, and again, an alternative to making redundancies.

There is a statutory scheme for lay-off, but a lay-off clause in the employment contract is required in order to implement this. That said, if you have no existing contractual right, you can ask people to agree to this.  Often if it is known this is a last resort and that more permanent solutions, such as redundancies, may need to be considered, you may have some employees accept.

Invoking a lay off is a specialist area of HR and we would advise you seek professional support if considering this.

6. Short-time working

Short-time working is similar to lay-off, but rather than providing no work, the employer provides some, reduced, work. So, in effect is reducing employees’ working hours.

As with lay-offs, an express clause in the employment contract is required in order to implement short-time working. If you have no existing contractual right, you can ask people to agree to short-time working.

Employees who put on short-time working or lay-off are entitled to pay for days they do no work at all. This is called statutory guarantee pay and is the legal minimum an employer must pay.

Statutory guarantee pay is £30 a day for 5 days in any 3-month period. Employees who usually earn less than £30 a day will get their usual daily rate.  The maximum an employee is entitled to is £150.

If an employee works part time, their entitlement is worked out in proportion to their part-time hours.

Employees can however apply for redundancy and claim redundancy pay if they’ve been laid off or put on short-time working and receive less than half a week’s pay for:

  • four or more weeks in a row
  • six or more weeks in a 13-week period

So while this can be a very low cost solution, it really is a last resort before needing to commence compulsory redundancies.  Equally, the specific rules and criteria above can be quite complex to navigate particularly where larger groups of the workforce are involved.

It is therefore always advisable to seek professional advice if you are considering this option.

 

7. Recruitment freeze

By applying a recruitment freeze no additional costs are added to the pay bill but care in application is required, as a blanket ban is a fairly blunt tool.

Critical positions which service customers or is a key source for chasing debt or generating higher levels of demand are likely to still be needed. So while hiring during difficult times might initially seem counterintuitive, it may be vital to you staying afloat.

If budget is really tight, consider the potential of redeploying people from one area of the business to another.  Time now saved not having to recruit could be better spent, retraining and upskilling existing employees. Also, continuing to invest in workforce skills is a far more powerful message so don’t miss the opportunity to communicate this.

 

8. Natural attrition

Natural attrition is voluntary leavers over the course of a year.

Over the past few years, UK turnover has sat around 15% per annum though this varies hugely dependant on sector. So if you are planning to strategically downsize your business, would you consider cutting more than this percent of your workforce?

If you don’t feel confident about the number and reason for leavers establishing your natural attrition rate is certainly data you need to know to help make a more informed decision.

Allowing attrition to happen organically should be considered one of the least risky options, and removes the angst around more compulsory options, however by not backfilling roles it may mean heavier workloads for others.

It also means you have far less control in determining where job losses take place.   Explaining why you are not backfilling and recognising the reality of this decision (bigger workloads) for the team, will at least show you have weighed up all the options.

Also bear in mind, movement in the jobs market has slowed as people take a more cautious approach during these uncertain times.  So if action is needed now, it might be prudent to consider other options.

 

9. Flexible or part-time working

For many, one of the benefits the pandemic has brought is a reprioritisation of personal and social lives.  Coupled with the fact many employees have now by necessity experienced a range of flexible working arrangements, perhaps due to self-isolation, childcare or other needs.  Flexible working options such as part-time, compressed hours, varied start and finish times now feel much more achievable.

Just as views on where people prefer to work have altered, so have perceptions around the amount of time needing to be spent focused on work.

Again, don’t make assumptions here. You may now have a much greater pool of people who would consider this suitable for them.

Business discussing options

10. Cross-training or multi-skilling

As mentioned above, a recruitment freeze is preferable to entering into a redundancy situation. However, you might still need to cover certain tasks, and cross-training or multi-skilling your existing employees could help.

Bear in mind it’s a perfectly legitimate expectation that by increasing knowledge and skills, multi-skilled employees are more valuable.  So you should expect some form of recompense may be needed.

Again, think about the low-cost solutions.  The pandemic has certainly taught us that flexi time, hybrid or home-working can work.  Failing that, a future bonus or incentive if certain performance targets or outcomes are met is perhaps another carrot to help get buy-in for this option.

 

11. Policy changes

Some company policies are contractual or have become contractual over time through customer and practice. Key ones to look at here are sick pay, overtime, redundancy, expenses, and training.

If these are no longer viable due to the costs involved, discussions with your employees are helpful (even if not legally required) so they understand why the change is necessary and feel included in the decision-making process.

Being open and honest about alternatives i.e salary cuts or potential job losses will also help people to contextualise the predicament.  The principle of prioritising all other areas first to save money rather than electing for headcount reductions is hard to disagree with.

 

12. Pay cuts or pay freezes

You will need express consent from people to implement a pay cut. Otherwise, you risk a breach of contract and unlawful deduction of wages claim.

If you can’t persuade people to agree, you can give notice to end the existing contract and rehire on new terms.  This is a dismissal in law so dependent on the employee’s length of service, there may be a risk of an unfair dismissal claim.  But as long as there is a sound business reason (as judged by a reasonable employer) this is likely to be deemed as what’s known as a “some other substantial reason” dismissal, which can be a fair and legal reason for ending employment.

Again, where unpopular measures are being considered, think about sweetening the deal in some way –  working from home, flexible start and finish times are often highly prized by employees.

As this option will only offer a future saving, short-term immediate measures may also need to be considered in conjunction if cashflow is particularly precarious.

 

How to approach redundancy with employees

Now let’s talk about approach.  It goes without saying meeting your legal obligations is the minimum that’s required.  But how these options are handled could be the difference between success and failure.

Being well prepared with facts and data, as well as approaching things with honesty and transparency is a good starting point.  You’ll get far more acceptance and understanding where you level with your employees.

It’s also important to note, none of these options come without some form of downside.  Whether that’s an immediate negative impact on morale or potential for creating turnover among some of your best talent further down the line – particularly if things don’t return to previously experienced levels.

Putting yourself in their shoes will help you anticipate likely questions and should enable you to present a clearer picture of what needs to change and why, without glossing over the impact on individuals.

Sufficient details such as when and how long for will also help add reassurance measures are temporary, rather than a full-scale shift in culture/policy or watering down of the employee offering.

Finally, there is a balance to be had between being transparent and unsettling people.  If adopting any of these measures will genuinely prevent future job losses, then say so.  If on the other hand it is more hopeful optimism before inevitable job cuts, a more dogmatic approach may be required.

About the author

Claire Antony Growth Partners

Claire Antony HR Business Partner at Growth Partners

Claire holds a depth and breadth of experience in HR, having operated in standalone roles supporting senior leaders, as well as leading HR/payroll teams operating at Board level. Working across a variety of sectors, from micro businesses to multinational blue-chips, Claire is passionate about finding solutions to help business succeed in their goals.

Business growth solutions

When you’re investing time into running your successful business, it can become difficult to keep on top of everything. Contact the team at Growth Partners today to find out more about our all-in-one solution for payroll, pensions, benefits, wellbeing, and employee engagement services.

To chat to Claire Antony about this topic, email claire.antony@growthpartnersplc.co.uk or call 0116 340 3116

6 Ways to Grow Your Business

6 Ways to Grow Your SME – a free seminar

6 Ways to Grow Your SME – a free seminar 1800 1200 Growth Partners

As the East Midlands’ employee engagement specialists, we’ll be running an employee engagement seminar at the region’s largest B2B expo.

More than 500 business owners are expected to attend the Midlands Business Expo on Wednesday 6 October 2021 to meet organisations providing services to help them grow.  As part of the free event, we’ll be holding a seminar to help business leaders grow their business and increase employee engagement.

The 6 Ways to Grow Your SME Through Employee Engagement seminar will be led by our CEO of Employer Services, Scott Read, who is a results-driven business leader with a track record in helping employers strategise key business growth through enhancing employee engagement and communication. The seminar will explore the link between employee engagement and business growth, giving you six takeaways to implement within your organisation immediately.

Scott Read Growth Partners speaks at Midlands Business Expo

Scott Read Growth Partners speaks at Midlands Business Expo

Scott Read said:

“We’re looking forward to meeting business leaders from across the region to talk about their plans for business growth. We know so many SMEs have exciting plans to grow, after what’s been a tough 18 months and we welcome the opportunity to be able to help with their journeys. With the right direction, focus and commitment, employee engagement can genuinely drive positive returns in staff retention, productivity and profitability.”

There will also be an opportunity to chat to a business growth consultant at our exhibition stand and arrange a free employee engagement consultation.

The 30-minute seminar will take place at 10am on Wednesday 6 October at the King Power Stadium, Leicester.  You can register for your free ticket through the Midlands Business Expo website

Midlands Business Expo at King Power

As an employee engagement company, we’re on a mission to help make employers’ and employees’ lives easier. You can book a free demo of our all-in-one solution for payroll, pensions, benefits, wellbeing and employee engagement services here.

SMART Employment

How SMART Employment is Changing the Game for UK Businesses

How SMART Employment is Changing the Game for UK Businesses 1182 770 Growth Partners

Some companies have it so easy. Engaged employees, high retention rates, increased productivity and most importantly, increased profitability.

You may look at them enviously, wondering how exactly is it that they achieve this outstanding balance without breaking their bank accounts? But what if we told you it was one of the easiest solutions you could make in your business. By becoming a SMART employer, you yourself could become the company you aspire to be.

Having everything in one place, easily accessible and efficient for all those employed.

But what is this SMART employment model that is benefitting so many? And how can you become a part of it? What is it?

What is the SMART Employment model?

SMART Employment has been around for a while, you just haven’t noticed it. Unlike traditional HR outsourcing companies, SMART Employment takes an aggregated approach to business support, handling all HR and employee-focused functions such as PayrollBenefitsRecruitment and more.

Essentially it takes away all the laborious admin tasks that are related to the basic HR functions, combines it with some amazing employee benefit tools, to make a one-source function that employers can use to improve their overall company strategy. Employers will have more time, money and energy to focus on their employees, making sure they are getting the best out of them whilst ensuring a good work-life balance.

Why it works

Would you rather pay a bunch of separate costs for different services, that may or may not work together, or where one is more engaging than the other – and you still do admin work just to get them all organised for your employees to use? Or would you rather pay one cost, for one platform where all the services are already integrated and work in harmony?

The latter is why the SMART Employment model works so effectively. We aggregate all services so it’s one easy fee for multiple services.

It’s been found that employees who are more engaged are 27% more likely to demonstrate ‘excellent’ performance. This work ethic will then directly affect your profitability in a positive way.

So why wouldn’t you get involved in SMART Employment? It’s the obvious answer to many decision makers’ problems and will improve overall productivity and performance in the business in the long run.

Why our portal is the best

Being one of the leading providers of SMART Employment, we can confidently say that we have everything running on a tight ship and know what we’re talking about. We provide our clients with a single sign-on app where the employees can access everything wherever and whenever they want to.

On the app, you can get access to;

As well as this, employers will also be provided with HR Support including occupational health, legal advice and support on recruitment.

Like to know more about how SMART Employment can grow your business? Contact Growth Partners today on 0116 340 3116 or book a free consultation here. Additionally, you may have some questions regarding payroll… If this is you, our payroll specialists at Growth Partners have provided an FAQ post which answers 14 most asked questions when it comes to understanding payroll.

Social Media: It’s time to get connected

Social Media: It’s time to get connected 1500 770 Growth Partners

The easiest way to connect to your network?

One of the most disruptive resources created?

Whatever your opinion is on social media, you cannot deny that its popularity has grown and, whether you like it or not, it’s the way forward for today’s businesses.

Over the years, there has been a big discussion on the benefits of using social media within a business context. It is associated with millennials, with the stereotype that those generations who came before them find it harder to utilise to the best of its ability.

People are constantly on their phones. Be it tweeting, posting photos on Instagram or letting their Facebook friends know that in two hours they are about to board their flight to Greece for a two-week holiday (and they are super excited!).

But how can this be useful to employers?

Surely, it’s just teenagers looking to see who can get the most likes on a photo rather than a corporate resource?

If you think like this, you need to look at your business strategy – and fast. Without utilising social media, you will be massively behind your competition and therefore will not reach your goals as quickly as you would like. It’s been found that 80% of users follow at least one business profile and considering that there are 3.484 million people on social media, this is a potential reach of 2.787 million people that could be seeing your posts!

Still not convinced?

Below are some key reasons why we believe you should embrace social media in your company, to be the top in your sector:

1) Brand awareness is increased

As said before, people are constantly on their phones. If you are posting content regularly, this then means they have a chance of seeing your stuff constantly. This is awesome for brand awareness, as even though they may not actively engage in what you are putting out there, their subconscious will remember seeing your name from somewhere. In conversation, people may mention your brand and with it comes the ‘oh yeah I’ve heard of them, I’ve seen their logo somewhere’ and boom. There you have it. Those audiences who you unintended to reach are now aware of your brand and as we all know – word of mouth is the best kind of marketing.

This doesn’t even consider those people who are already actively engaging. Liking your posts, commenting and sharing will not only increase their engagement and loyalty with the brand, but also give you a team of brand ambassadors. And the best part? They’re free!

2) There’s a human behind the product

The most frustrating thing must be when something doesn’t work, and you can’t speak to someone. The amount of times I have spent scrolling through a website getting more and more frustrated because there just isn’t a phone number, and then when you find one you are on the phone for 30 minutes going through all the automated menus! So, customers have turned to social media. Tweeting companies to sort their problems out – they normally get a reply straight away. By allowing yourself to be involved in this process, your company becomes more humanized and customers can relate to you better. You’re there on the frontline with them and more importantly, you understand their struggles.

3) Generate leads… and therefore increase profits

If the previous two points still haven’t swayed your mind – this one should. If you are a good business manager, you will try anything to increase your lead generation and if this means jumping on the social media band wagon so be it! The best thing about your business getting on social media – is that other businesses are also on there. It’s the best-known secret, connecting and sharing ideas with those who you potentially want to do business with will build your relationship. This will then make it easier for your sales guys and gals to do their job and secure you more leads!

4) Reputation management

Nowadays, if something is a hot topic people will go to social media to discuss it. This includes when things go wrong. Imagine, your company is involved in something that isn’t what you want to be involved in. Twitter blows up, comments/mentions/opinions all over the place and if you’re not on social media? You can’t manage what is said about you. However, if you are online, you could reply to customers queries and put forward your voice on the subject. This means you can ‘firefight’ effectively and avoid your company being in disrepute. Alternatively – if you have some great news you can also join in with your audience by sharing and celebrating it with them!

5) Engagement levels increased

All the above leads into one thing – engagement. With engagement, comes increased sales and improved brand awareness. So effectively it’s a continuous cycle. You post frequently on your socials, you get people to become aware of your brand, your audience engages in your posts through liking/commenting/sharing and you therefore get more people enquiring about your product. It’s as simple as that.

Is your business working too hard?

Is your business working too hard? 1500 770 Growth Partners

Good is fine, sure. It’s safe and nice. Static, unexciting. Great though, ‘great’ is all about mounting potential. Moving on up. In today’s current climate, where reports of the economy going down the pan are as rampant as they are conflicting, it can be difficult for small businesses to find adequate support to reach this higher tier of potential.

“Don’t be afraid to give up the good to go for the great.”

Or so the old saying goes by the epitome of success, John D. Rockefeller himself

Last year, the number of businesses that survived dropped by 27,000, making it the first year-on-year fall since the year 2000 (BEIS). It’s the prevailing worry of any responsible entrepreneur looking to kickstart a business venture: timing. When’s the best time to capitalise on a good idea, to take the plunge, and with the political climate being in its current shape, it seems the worry is as prevalent as ever.

But taking the plunge doesn’t have to be a gamble. The SMART Employment model, new to the UK, is changing the game for business owners looking to grow. If you’re a small business trying to get ahead, it might sound strange, but now is the time to pause. To take stock and review. Running headfirst into the storm you plan to create is never smart strategy. Especially if you’re carrying last year’s baggage.

As with Rockefeller’s opening line, the leap from ‘good’ to ‘great’ demands that you first work out what’s holding you back. What is your business baggage? What functions take up more time than they’re worth, cost more than they should?

A recent report by Sage revealed that the average small business spends 120 hours a year on admin and 5.6% of staff time wrapped up in back-office tasks. If this rings true for a business like yours, the question to ask is how to cut back on wasted energy and productivity lulls? If you’d be in better shape without the burden of the paperwork-heavy must-dos like Payroll, Pensions, the HR remit tasks, then why hold onto them?

Like to know more about how SMART Employment can grow your business, contact Growth Partners today on 0116 340 3116.

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