22nd Dec 2020

Exploring cost saving measures and alternatives to redundancy

There’s no doubting that Covid-19 is having a devastating impact on many businesses and their staff. Challenges to working practices, disrupted supply chains and weakening demand in certain sectors, are leading many employers to consider redundancy as the only survival option.  However, it’s not. 

Here are some of the cost saving measures that your business can consider and implement (if not already done) to help retain your staff, and hopefully avoid you having to press the redundancy button:

1) Continuing to work from home.  Where possible and subject to business needs, allow staff to do this.  This can offer flexibility and if managed properly, increased productivity. Ensure that your home working policy (including the employee’s obligations around confidentiality) are reviewed kept up to date.  

2) Temporary redeployment or retraining of staff into other areas of the business.  This may be needed to meet supply and demand, where certain areas, teams or services are busier than others, so other staff could be redeployed or retrained to help with this. 

3) Use the extended furlough scheme.  This has been extended from 1 November, currently through to 31 March 2021.  The scheme is open to employees on any type of contract (including fixed term and zero hours) and there’s no requirement for either the employer, or employee to have previously used the scheme.  It allows your business to pay employees up to 80% of their usual pay for any works not worked (up to a maximum of £2,500 per month).  Any hours worked should be paid at the normal contractual rate.

4) Pay freeze and/or defer payment of bonuses.  Depending on what your employment contracts state, consider freezing any pay increases and/or deferring the payment of an bonuses to a later date, subject to the business improving performance or achieving certain milestones.

5) Short time working or lay off. Again, depending on what your employment contract allows for, a reduction in hours and less pay, or lay off of the employee for a period of time with no pay, could be considered as a way of saving costs. 

With all the above, good communication, transparency, and where needed, consultation and the agreement of your staff in implementing these changes is recommended - to minimise the risk of push back from employees and worst case, claims being brought.   

We’re able to help and support your business with workforce planning, how to best implement these cost saving measures, and if the button needs to be pressed, advise you through the redundancy process. 

Mike Patterson is a head of Berwins' industry recognised employment team.

Our dedicated and friendly team is here to help. If you have a matter you would like to discuss in confidence, please get in touch by calling 01423 509 000 or use our contact form online and we will get back to you as soon as possible.

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