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Alternatives to redundancies have benefits

Written by: Chris Watson

Article Overview: The overall cost with redundancies is far more than just the initial redundancy pay an employee receives. You will need to add costs for the recruitment when you require staff again and the cost of training new recruits to have them reach the development stage your redundant staff were at prior to being made redundant. How do you place a cost on this? Then there are the negatives that come from any business making redundancies which includes low morale within the workforce which inevitably reduces production, performance and service. Good quality staff can leave for alternative employment due to the uncertainty which may happen after you have reduced to the number of staff you felt appropriate as they have been offered employment from interviews taken during the redundancy process. What is the cost of this?

Alternatives to redundancies have benefits

The overall cost with redundancies is far more than just the initial redundancy pay an employee receives. You will need to add costs for the recruitment when you require staff again and the cost of training new recruits to have them reach the development stage your redundant staff were at prior to being made redundant. How do you place a cost on this?

Then there are the negatives that come from any business making redundancies which includes low morale within the workforce which inevitably reduces production, performance and service. Good quality staff can leave for alternative employment due to the uncertainty which may happen after you have reduced to the number of staff you felt appropriate as they have been offered employment from interviews taken during the redundancy process. What is the cost of this?

Two alternatives to redundancy that can reduce all the associated costs that go with it are:

Salary reductions
By way of consultation and agreement you and your employees may find reducing existing salaries for an agreed period of time a more beneficial solution to a short or medium term problem. If for example you need a reduction in employment costs of £100,000 per annum and you have 50 employees that equates to £2,000 per annum each on average. Your employees may feel much more comfortable with this solution.

Reducing hours
Again through consultation and with agreement reducing hours per week could also be a better solution than redundancy for all parties. It would also steer you as an employer away from all the associated costs that go with redundancy. If we take the same 50 employee example with an average hourly rate of £10 and a working week of 37.5 hours, then reduce it by 7.5 hours per week or £75 per week per employee the saving over the same one year period equates to £195,000.

Both alternatives also give a saving in employers NI in addition to the amounts given in the eaxmples.

It would appear that in the current downturn and so much news of redundancies employers are not carefully reviewing all their options to deal with the situation.

Ask yourself this, when the market changes and an upturn begins which employers will be best suited to making the most from the situation, those who made redundancies and then have to start recruiting or those who thought out alternatives and are in a position to capitalise?

Think long and hard before you make redundancy your only option!

Related Articles
  The HR Headache of Making People Redundant
  Scarcity And The Next Best Alternative
  Alternatives to Redundancy Reviewing the Options
  Improving Morale After Redundancies
  Support for Businesses and Their Staff in Times of Redundancy

Article Tags: beneficial solution, better solution, consultation, development stage, downturn, employment costs, hourly rate, low morale, new recruits, period of time, production performance, quality staff, recruitment, redundancies, redundancy, salaries, salary reductions, uncertainty, workforce



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