Redundancy is not the only option
Nov 03 2008
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Many SMEs will have to control staffing costs over the coming months. Smallbusiness.co.uk has teamed up with Simon Kite, a partner at chartered accountants Saffery Champness, to offer some tips on how to cut costs and avoid the redundancy route
Less rigidity
A review of your flexible working policy can be a useful tool in mitigating the effects of the credit crunch, as these arrangements can help save money while preserving your talent pool. This can involve things such as compressed hours, job-sharing and shift work.
New roles
Retraining employees in conjunction with freezing recruitment can be a practical option for managing labour resources. It is advisable to offer all alternative work available to affected employees and let the employee decide what is suitable, as they will be willing to accept a less well-paid job.
Cap hours
Restricting overtime is an obvious short-term solution to cutting costs. However, employers should check their company’s contractual position on overtime, as any variation detrimental to the employee could give rise to “breach of contract” claims.
Relocate staff
If your business has operations in a variety of geographic locations, and there is demand at a different site, transferring employees may be an option worth exploring. In order to do this, you need to have a mobility clause included in contracts, permitting you to move your employees to a different workplace.
Voluntary retirement
For employers with an occupational pension scheme, offering early retirement to employees is another possible option. However, caution needs to be exercised to avoid discrimination claims.
Letting people go
If, after looking at the alternative options, you decide that redundancy is the only solution, then you should consider asking for volunteers in order to mitigate the need to make compulsory redundancies.
Cover yourself
Finally, keep a record of the alternative steps your company has taken. Even if your company ends up making redundancies, evidence that you have explored and exhausted all options will assist in demonstrating that you have met the legal consultation requirements. This will help to avoid any costly and time-consuming legal action.
Comment by J P
Monday 23rd March 2009Another alternative for companies who are considering employing staff and therefore do not want to have to be in a position over the next year or so to make people redundant is to look at outsourcing key functions/ activities. I run a company called Perfect Assistants (www.perfectassistants.com ) and our business model allows companies to take advantage of not having to employ staff and as such consider cutting them in times of financial rationalisation. We provide virtual assistants under the Perfect Assistants banner to many companies throughout the UK and help them capitalise on cost-effective solutions to surviving the recession. The traditional temp/ perm solution is going to be outdated very soon and as the legislation changes to reflect more flexibility and obligations for home working, virtual assistants working from home are going to be more and more common. It also means that you have a flexible source of additional help as and when you need it; this is often a problem many companies face as sickness rates rise. Please visit www.perfectassistants.com if you would like to investigate an outsourced solution.
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