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Redundancy, is there another option?

Redundancy, is there another option?

As lockdown eases businesses face very real fears of recession or being rocked for a second time with another lockdown. These fears are causing business leaders in some of the UK’s biggest industries to warn of mass redundancies. 

The government has tried to prevent the seemingly inevitable reality of redundancies in the UK, with its grants and Furlough Schemes, but can redundancies be avoided by looking at other potential cost-cutting methods? After all, redundancy should be the last resort.

Pay Cuts

First of all, we must stress that pay cuts (depending on the employment contract you have in place) must be agreed with an employee and the relevant changes to the contracts of employment can then be made and signed by both parties. 

Implementing a pay cut could be a way for a company to reduce overheads in a relatively short amount of time, without losing manpower to keep the business running efficiently. 

Ensuring that you correctly communicate why you are implementing pay cuts is imperative. At the end of the day, you are asking your staff to take a pay cut to avoid redundancies among them. 

Be aware and prepared for the questions you may face;

  • How long is this cut for?
  • When can we review this change?
  • Can I negotiate the pay cut? 
  • Must I take this pay cut?

Has this cut been proposed to all members of staff? 

As we mentioned before, communication is key during this process. If all staff know and trust that the reasons behind this proposed request are not only to financially benefit the business and keep it profitable but to benefit them personally and keep as many of the staff in employment, the request will more likely be accepted.

You could think about offering clauses in the pay cuts, either with a time limit of the cut or maybe directly aligning it with the company’s performance. 

An example of this might be – 

The impact of Covid-19 has seen an x% decrease in revenue. When we get back to x% we will revert the pay cut. 

This may have other benefits such as improvements in performance as all staff want to drive the company back to where it was financially. 

We would also suggest that you show that these cuts are affecting company directors or high-level staff and lead from the top. 

If you have any questions regarding any of the points made above, please do not hesitate to contact us. We are here for you and your business whenever you may need us.

Crosby HR

Call us: 01942 294 333

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Email us: [email protected]