The Government’s recent announcement on a phasing out of lockdown brings a return to the workplace – and perhaps a return to at least some normality – within sight. The Coronavirus Job Retention Scheme has provided support to employers to keep their workforce and avoid redundancies but that is due to terminate at the end of September 2021.
What will employers do then? According to the latest quarterly CIPD Labour Market Outlook survey published this week there has been a sharp fall in the number of employers expecting to make redundancies in the next three months from 30% in November 2020 down to 20% now. The survey shows some big variations between industry sectors – for example, percentages for hospitality and finance are at 27% and 25% retail while business services is only at 13%. If those expectations are correct then, with around 7million people currently on furlough under the Scheme, whichever end of the spectrum you look at, the numbers of people expected to lose their jobs is look very high.
Redundancy is an obvious strategy if a business is suffering a downturn in economic performance and prospects but is it the only one? Here are some alternatives to redundancies which may help you retain your talent for when business emerges from the current crisis and at the same time contain your costs.
Alternatives to Redundancies for Employers
Replace salary with participation
If you have been using the furlough system and so obtained employee consent to the reduced salary, an alternative to restoring pre-furlough salaries and so increasing fixed wage overhead may be to offer a form of participation in the business in lieu of salary. There are many types of scheme available and by no means all mean any loss of control – an important issue for smaller owner-managed businesses. Some schemes also have very favourable tax treatment. As well as providing an additional element of reward to compensate for the loss of part of salary there are clear advantages in increasing employee engagement and productivity.
This can come in many shapes and forms but falls broadly into six categories:
- Working at home
- Compressed hours
- Reduced hours
- Job sharing
- Term time working
Lockdown has seen a huge increase in homeworking through necessity. The low level of homeworking before the COVID-19 crisis suggested that it was not a form of flexible working that had a particularly high approval rating amongst employers.
Most of the feedback since lockdown, however, suggests that this has changed. Generally, employers report favourable outcomes while employees similarly regard it as having been a positive experience, 68% saying they feel they have been either more or equally productive from home (Personnel Today 16 April 2020).
As and when lockdown is released to the extent that employers are free to require employees to return to the workplace it must be expected that an increased number of requests under the Flexible Working Regulations to continue working from home will be made. If, in practice, home-working has worked well over lockdown then, although this will vary by industry sector, it may difficult for employers to refuse requests by reference to one of the prescribed reasons in the Regulations.
Quite apart from the employee benefit side to this, there may well be significant commercial benefits to the employer. Commercial premises are expensive and, if significant property cost savings can be made by moving, for example, to a “hot desking” system, then the positive experience of homeworking during lockdown may well result in opportunities to cut the organisation’s overhead in another way.
There are many other possibilities. Job sharing, for example, may enable salaries overhead savings to be made while still retaining people in some form of remunerative work. For those with child caring responsibilities term-time working may be introduced so that all contractual holiday entitlement is used during periods when children are of school and salary reduced to take account of the additional time off.
Changes to workforce management
There are then a number of strategies which collectively can make a considerable difference to employment costs but still enable you to retain valued employees:
- Sabbaticals – career breaks which may be unpaid or partially funded
- Early retirement – where pension schemes offer this as an option
- Additional holiday purchase – leave in excess of contractual/statutory entitlement is received in exchange for a corresponding reduction in salary
- Lay off/short time working – employees are not required to attend for work or are put on reduced hours: this is available only where there is a term permitting this in the contract, though if not it may be possible to agree if redundancy is the only option
- Voluntary redundancy – if reduction in the workforce is the only option then first seeking volunteers is generally regarded as a good business policy
How can we help?
Abbiss Cadres’ multi-disciplinary team comprises a range of highly experienced practitioners in various disciplines united by their commitment to helping employers make the most of their people. We can:
- help you devise your workforce strategy for coming out of lockdown and emerging into a post- pandemic world
- advise on the employment law aspects
- offer constructive challenge and support during implementation
- provide coaching for your senior team
- advise on structure and taxation of share ownership and other incentive schemes
- aid in strategy creation for alternatives to redundancies
Please get in touch with us today to discuss your business’ needs and how we can help.