Cutting Cost’s Without Redundancies
ways to cut cost

Cutting Cost’s Without Redundancies

Companies make strategic decisions to ensure the success and performance of the business, and sometimes this means having to make changes in the company.

Redundancies can be a difficult process to go through and one that should be handled with care and transparency. When carrying out redundancies employers must be able to demonstrate a sound business case and follow a fair process.

You should always demonstrate that all other options have been considered prior to compulsory redundancies being made.

One of these options may then eradicate the need for any or all redundancies. Please see Wurkplace’s guide on the Redundancy process 

Identifying other options also helps the organisation retain their staff; their skills, expertise, and knowledge to support the business in moving forward.

So, with this in mind, what other options are available to businesses to avoid redundancies whilst still needing to cut staff costs?

 

Offering Voluntary Redundancy

 

Although, technically, you are still making redundancies, offering voluntary redundancy can help you avoid going down the whole redundancy process.

This should be offered to all (even people on leave such as maternity or sickness) and you should not pressure any employee to take voluntary redundancy otherwise you may face claims of discrimination.

This way, employees opting for voluntary redundancy will receive a redundancy payment if they have over 2 years of service.

The company will have reduced staff costs going forward and the other employees will remain motivated and engaged in the company.

 

Limit or Stop Overtime

 

Reducing costs through overtime payments may be a possibility.

If moving forward with this it is important to review contracts of employment to ensure that there are no breaches of contractual clauses.

It is also important that you are transparent with your employees about why this is happening and if the company’s financial state and workload pick up that overtime is offered again.

 

Lay Off and Short Time Working

 

If employees have a layoff or short-time working clause within their contract of employment companies can look to temporarily send employees home or reduce their work hours.

A lay-off occurs when an employee is off work for at least 1 working day, short-time working is when an employee’s hours are cut.

A layoff or short time working can only be unpaid if there is a specific clause in the contract, or an agreement is made between employer and employee.

It is advised to get any change in writing.

There is no time limit for how long an employee can be laid off however, there are statutory guaranteed payments set by the Government that must be paid to employees.

Statutory guarantee pay is £31 a day for 5 days in any 3-month period.

The maximum an employee is entitled to be £155.

Employees who usually earn less than £31 a day will get their usual daily rate. (As of February 2023)

You should also be aware that employees can apply for redundancy should they be laid off for a specific time.

Please see Government guidance for more information.

 

Sabbaticals

 

A sabbatical is when employees take an unpaid period of leave, but their contract of employment and length of service continues.

For example, if an employee wants to go traveling.

Holidays do not accrue in a sabbatical any other benefits or bonuses also cease.

Sabbaticals will not only reduce staff costs for a period of time but it will make your employees more loyal to a company that respects personal goals as well as professional ones.

 

Reduction in Salary

 

In times of financial strain or restructuring, employers may find it necessary to explore the option of implementing salary reductions as a cost-saving measure.

However, it’s crucial for businesses to approach this decision carefully and ethically. Before implementing any salary cuts, employers should engage in transparent communication with their employees, explaining the reasons behind the proposed reductions and the potential impact on the organization.

Consultation with employees is essential, and employers should seek to reach a mutual agreement through meaningful dialogue and negotiation. This collaborative approach helps to foster trust and understanding between employers and employees, reducing the risk of morale issues or legal disputes.

Moreover, to avoid any contractual breaches or claims of constructive dismissal, it’s imperative for employers to ensure that any changes to employee compensation are conducted in compliance with employment laws and contractual agreements.

By prioritizing open communication, fairness, and legal compliance, employers can navigate salary reductions with sensitivity and integrity, mitigating potential risks and maintaining positive relationships with their workforce.”

 

Recruitment Freezes

 

Having a recruitment freeze will of course reduce additional staff costs however, you can then look at succession plans in your company.

This will allow employees to redeploy and be promoted into roles when other employees naturally leave the company.

This is more of a process to meet long-term goals instead of a short-term solution.

 

Job Sharing

Do you think that someone your employees would benefit from part-time work instead of full-time?

Having a job share can be beneficial in reducing costs and it can also allow employees to have a better work/life balance.

Employees should request this and never be forced into going part-time.

 

Many of the options above rely on employers seeking agreement with employees. Some also need contractual changes whereby consultations are compulsory.

It’s important that you communicate effectively any change proposed by being fair and transparent. Being open and honest about situations with employees is half the battle. Being understanding and emotive is the other.

Ensure that you should not be discriminating against anyone in any change that you make otherwise you may face claims against you.

Importantly, after the change, you should be communicating how this has benefitted the company and reassure employees otherwise they may be fearful of the jobs

 

How Wurkplace can help 

 

Here at Wurkplace we already have several charities that we work with.

We understand the sector, the amazing work done but also the challenges faced.

We have a variety of documents to hand ready to go (saving you time) and we can advise on case-specific queries.

We also have consultants who have expertise in recruitment, training, and policy drafting.

Here at Wurkplace, we have experienced and skilled consultants who can provide you with specific advice.

Legal changes and upcoming changes along with an array of template documents, so half the work is done for you!

If you need support or guidance, talk to one of our experts today – You can use our easy online contact form, or give us a call at 0330 400 5490.

 

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