The recent outlook from the Office for National Statistics certainly paints a bleak picture for our jobs markets: unemployment creeping up to 4.1% of the working population, and around 700,000 fewer people on payroll compared to March this year. Trade Unions have said ‘redundancy floodgates will open’ once the furlough scheme closes on the 31st October.
Our employment law team are certainly feeling the brunt of all this with the amount of redundancy, settlement and COT3 agreements they are dealing with. Coupled with this, employment tribunal claims are rising as employees are just looking to provide for themselves and their families. Times will continue to be hard whilst the economy struggles and people keep losing their jobs. Redundancy comes with a cost for everyone, employee and employer alike, and does nothing for relationships and good mental health.
Where cost savings are necessary, job losses are not always the answer. There are many other options for Employers to consider that avoid costly redundancy programmes whilst preserving the employment relationships with the people they have often invested in, nurtured, promoted and often become friends with. The financial ramifications of redundancy are painful, but so are the emotional costs.
With a well-structured contract of employment, a good relationship between owners and staff and a great deal of reciprocal trust, then a number of short-term options may in turn be better long-term solutions for everyone:
- Short-time working saves on wages, but also preserves income for the employee at a much higher level than job seekers allowance and unemployment. Employees often like this, and it can ultimately improve productivity. However, it can cause trouble getting them back to full time working, when the need arises.
- Sabbaticals give the employer and employee a great opportunity to maintain an employment connection, while affording monetary, wellbeing and aspirational flexibility for both parties.
- Deferred bonuses and pay increases and possibly reducing pension contributions (if you can) are other options. These may be a temporary step, and if communicated in the right manner then employees are likely to accept these steps, as opposed to redundancy.
- Need to recruit, then go ahead! There is no better time given the amount of people looking for work. Just think about how you do this. Free jobsites can often help.
- Secondments to associated business who are in need of human skills can be looked upon either on a temporary or permanent basis.
- Look at your working arrangements, can you increase home working and so reduce workspace costs, transport allowances, environmental impacts and utility bills? If this is an option, even if it’s only for part of the workforce, then consider arrangements for IT, meetings and communications by getting a home working policy drawn up.
- Redundancy may still be necessary, so first enquire about anyone who would take voluntary terms. You never know, this might be a win-win situation that could overcome the need for stressful compulsory job losses.
It’s truly worth spending some time to consider if compulsory redundancies can be overcome. The costs are both financial and emotional for everyone involved.
The Government recognises that there is a rocky road ahead, and have pledged to pay employers a £1,000 bonus for each employee who remain in employment, if they have been furloughed this year and are still on payroll come the end of January 2021. If any of the above strategies work for you, then the bonus is a nice additional incentive.
Our Employment Law team understand these situations, given most of them have been Employers, Directors, and Managers in the past. Let them guide and help you through these difficult times, by calling them on 03456 122 144. We know they can reduce stress, and save money. Believe me, we have been through these same thoughts.