Coronavirus: Five things to consider before making staff redundant

By Kate Palmer, Associate Director of Advisory at Peninsula

With the coronavirus pandemic causing significant issues for businesses across the UK, many employers may be faced with the genuine prospect of making staff redundant. In fact, according to the latest Labour Market Outlook compiled by the CIPD and the Adecco group, more than a fifth (22%) of organisations are planning redundancies in the three months to July 2020. Before going forward with this, there are some key areas to bear in mind.

1. Reducing working hours

Due to a decrease in business demand, consider if staff could be asked to work fewer hours to help the company save costs. However, bear in mind that if the employer is not permitted to make such a change by a term in a contract of employment, which is unlikely, staff will need to agree to the change. Although they may not be overly enthusiastic at the prospect of reducing their hours at first, they may be willing to accept to it if the alternative is redundancy.

2. Freezing training budgets

If the company is spending large amounts of money on training, another way to save costs is to stop training provisions temporarily. Although modern-day workers value the opportunity for development in their roles, it should be made clear that this is only temporary until the business is in a healthier situation. Employers should take care if staff are engaged as part of a training contract, as removing the training part of their role could lead to a breach of contract claim.

3. Freezing pay 

Many companies may offer annual bonuses as a way of rewarding staff and keeping their morale high. Another cost-cutting option could be to try and not provide these in this particular financial year. However, if employees are entitled by contract to benefit from this, not providing these payments could again be a breach of the contract. That said, if there is a discretionary clause in there, which outlines that these payments will only be made if business need permits it, employers could seek to rely on this It should also be remembered that if bonuses have been paid for the last few years, employees may be able to argue that they have received the bonuses enough times to establish a custom or practice, meaning they could be entitled to receive it this year even without a contractual clause.

4. Introducing flexible working arrangements

Employers may be considering if redundancy procedures can help them to reduce the number of staff that will be in the workplace, and therefore assist in social distancing measures. However, flexible working offers an alternative to this. For example, staff could be permitted to work from home on a more permanent basis, or shifts could be staggered to reduce numbers in the building at any one time.

5. Voluntary redundancy

If employers wish to proceed with a redundancy procedure, they will need to ensure that they follow the correct process. One key aspect of this is demonstrating that alternatives to compulsory redundancies have been considered, which can include offering voluntary redundancy to staff. This invites staff to put themselves forward for redundancy and therefore help employees who do not wish to be made redundant avoid this. Ultimately, it is down to employers who they permit to be made redundant. They should be prepared to consider these requests.