Written by Melanie Pimenta and

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As we move into the second half of the year, and with the cost-of-living crisis not yet showing signs of easing, many businesses are feeling the pinch and are exploring their options in a bid to save costs.

One option that employers are giving more thought to at present is redundancies. Recent research by ACAS suggests that up to a third of employers are considering making redundancies in the next twelve months, with KPMG and REC’s most recent Report on Jobs survey noting a decline in the vacancy growth and an increase in available candidates. Companies such as BT are among the most recent to announce plans to cut jobs, with plans to remove 55,000 roles by 2030.

How to cut costs without making redundancies

While redundancies may sometimes be necessary within a business, employers are encouraged to give serious consideration to alternative cost-saving strategies. Options include:

A reduction in headcount: this may be via a recruitment freeze, deferring new starters, or offering early retirement. This can be accompanied by offering retraining to existing staff to cover the skills that would have been brought in via recruitment or exploring secondments.
A reduction in hours: this may include increasing the availability of part-time or flexible working, or reducing available overtime.

A reduction to benefits: other, more serious options may include a pay freeze, changes to bonus schemes (before doing so employers must consider whether they are discretionary, linked to performance, intended to reward etc), or amending existing policies such as reclaiming expenses. When contemplating such actions, an employer must have regard to its obligations under the relevant contracts of employment (for example, it may not be possible to amend certain terms without employee agreement).

The implementation of cost-saving measures can be a very stressful period for employer and employee alike, and so it is important to ensure that any changes are communicated in good time to employees. An open and transparent approach will help to ensure that trust and morale are maintained and may assist with keeping skilled staff from seeking alternative opportunities.

Points to consider in a redundancy process

It is not, however, always possible to avoid redundancies. If they become necessary, employers must ensure:

The process is fair. As ACAS recently commented, the law on redundancy is clear and employers must ensure that they follow a fair process from choosing the selection criteria and who will be in the redundancy pool(s), to conducting the scoring exercises and making the final decisions, including the consideration of suitable alternative roles.
The consultations are genuine. An employee or union may come up with a viable suggestion or alternative during the consultation stage, which the employer is obligated to take into account. Employees at risk of redundancy should be given the chance to comment on the pool, criteria and method.

The relevant information is available. By ensuring that employees understand the process and how it will affect them, and communicating any decisions quickly and respectfully, an employer can manage the impact of the process on the workplace and preserve its relationship with its retained employees.

Whether you are an employer considering restructuring or redundancies, or you are an employee affected by a redundancy process, our Employment Team would be more than happy to assist with any queries.