No company wants to lose its hard-found talent. Losing employees can cripple a team, slow down workflows, and even permanently damage a company.
This is why redundancies should serve as the last resort. There are other avenues to explore before choosing who to make redundant. This is true even if redundancies are due to financial difficulties or hard times.
It’s in a company’s best interests to consider any possible alternatives to redundancies. This makes the already uncomfortable redundancy selection process easier. It also makes life easier for employees.
Legally speaking, it’s essential too. A company should avoid any negative consequences from failing to handle legal issues. To do so, they should consider alternative proposals to redundancy.
Consequences of mishandling alternatives to redundancy
If an employee made redundant feels that it is an unfair decision, they can bring their grievances to an employment tribunal. If a tribunal finds that a company didn’t explore any alternatives to a redundancy, they will award the employee.
This can vary from reinstating their employment to charging large fines to pay for compensation for the employee. The former option puts a company back at square one, needing to begin a redundancy selection process. The latter option simply costs the company more.
This is a damaging result at the best of times, let alone when a company is experiencing financial difficulties.
What are suitable alternatives to redundancy?
Suitable alternatives to redundancy are options that avoid redundancies. These options aim to keep an employee within a business.
Even if the need for redundancies is a financial issue, alternatives still provide solutions that cut costs.
Suitable alternatives vary in length of use. Some are more short term solutions rather than large changes for long term solutions.
A business with financial issues should not use redundancies as major solutions to major problems.
Alternatives to redundancies are suitable for companies running during unavoidable issues. These issues include universal problems like the COVID pandemic.
Why consider alternative options to redundancy
Companies have plenty of reasons to pursue alternative options to redundancy. This includes retaining talent.
Some companies should consider that losing employees can result in direct competitors recruiting them.
If an employee leaves their role, restrictive covenants apply. However, employers cannot refer to these or contract clauses if they choose to make an employee redundant.
If they do, the employee can claim unfair dismissal. An employment tribunal will likely agree with this and impose fines on a company. These fines can include both a basic award and a compensatory award for the employee.
While the fines themselves are damaging to a company, they are not the only damages a company can expect.
Other negative factors include:
- Lower morale for current employees
- Damaged reputation of the company
- Time lost dealing with tribunal
Even considering redundancies has negative ramifications. This makes considering alternatives options to redundancy are even more important.
Alternative options to redundancy
Employers must agree on any alternative with the employee. Discuss alternative options to redundancy with employees, especially when making collective redundancies.
This provides opportunities to express their thoughts and feelings towards the alternatives. Failure to offer them these opportunities or to enact them without consent can merit an employment tribunal.
Alternatives to redundancy examples include:
- Redeploying and/or retraining employees
- Job shares
- Flexible shifts
- Recruitment freezes
- Overtime freezes
- Voluntary career breaks or redundancy
- Early retirement
Redeploying and retraining employees
If a department loses employees, an alternative to redundancies is redeploying other employees.
Redeployment or retraining can help properly redistribute your workforce. They serve as effective alternative work patterns.
This alternative doesn’t need to be permanent or full time. The employee can try a trial period or a short time working within the new department.
Employees can even decide to stay within a new department full time. This can benefit both the employee and the company.
This method of avoiding compulsory redundancies can fall under a job retention scheme.
An alternative that employers can request volunteers, job sharing splits one employee’s full-time job between two. The two employees will then agree to a split in workdays and duties.
This alternative essentially removes the costs of one employee whilst retaining two employees.
When asking for volunteers, employers should state that job shares could prevent redundancies.
Flexible shifts can include employees working from home and changing work contracts. This can lower the costs of running a physical site, such as an office building. Employers can choose to make these agreements either temporary or permanent. However, permanent changes will require changes to employee contracts.
A logical alternative to any redundancy is to prevent hiring new employees. If an employer needs employees to fill vacancies or make up for a lack of a workforce, there are better alternatives. For example, redeploying and retraining.
By redistributing their existing employees, companies can fill vacancies internally. This will remove the need to hire more employees, which would add more costs to the business.
Working reduced hours as an alternative to redundancy can also mean putting a freeze on overtime. By reducing or banning overtime, a company can effectively reduce working hours and cut costs.
However, if a company has commonly offered overtime in the past, it is vital that clear communication explains why there is a freeze on overtime.
Some employees may rely on the extra pay overtime provides. Make it clear that freezing overtime is necessary to avoid redundancies.
Voluntary alternatives to redundancy
Even if redundancies are unavoidable, there are alternatives worth considering. These include voluntary breaks for employees and requesting volunteers for redundancy.
Voluntary career breaks
Examples of voluntary career breaks include unpaid career breaks or sabbaticals.
These voluntary breaks can provide a company relief from paying a full year’s salary. These cut costs can last for any length agreed by the employee and the employer, such as a single month.
Another alternative to redundancies is voluntary redundancy. Employers can call for any volunteers, which may reward higher redundancy payments.
These higher payments than compulsory redundancies make voluntary redundancy appealing for volunteers. It also saves the company time, effort, and money deciding who to make redundant.
Early retirement may be a viable alternative to redundancies. This is particularly true for any employees nearing their retirement.
Early retirement also often works together with other suitable alternatives to redundancy. These alternatives include flexible shifts or job shares.
Get help with alternatives to redundancy with BrightHR
For both a company and its employees, alternatives to redundancies are preferable to redundancies.
Unfortunately, not all solutions may work for a business. For some, deciding between redundancy and suitable alternative employment may not be possible.
In these cases, layoffs or short shifts may be the only way for a business to survive.
BrightHR understands how difficult considering redundancies are for companies. Our expert team has helped many different companies handle redundancies by using our redundancy navigator tool.
To see how else BrightHR can help, book a demo today, or call our team of specialists on 0800 783 2806.