What is redundancy?

Redundancy is when an employer no longer requires anyone to perform an existing employee’s job. One of the reasons may be due to a significant downturn in business but it could also occur due to economic downturn, restructuring as well as both internal and external changes. 

Redundancy is not a reflection on an employee’s performance or ability, often it is due to financial difficulties and businesses may need to find ways to reduce costs as a result. Reducing the number of employees is often one of the first options they turn to.

Redundancy can be a cost-effective way to reduce wage costs, but it should only be considered as a last resort after all other avenues have been explored. 

What are some suitable alternatives to redundancy?

Understanding redundancy is crucial for both employers and employees. If your business is currently weathering the storm after an unforeseen series of events, here are five alternatives to redundancy you can choose for your team and the legal implications that come with each. 

1. Restrict new offers of employment

One option for organisations looking to cut costs without losing employees is to restrict the number of new employees they take on. 

Redundancies can create an air of unease in the workplace and can hurt morale therefore not taking on new hires is far less tumultuous than removing existing employees. A restriction on recruitment is one way to keep costs low but this is only a feasible option should you expect business to pick up in the coming months. 

2. Retraining and redeployment 

If your business is experiencing a reduction in business and the workload is decreasing but a recruitment freeze isn’t feasible, short-term retraining and redeployment can help ease the pressure. 

This involves retraining existing employees for different roles within the organisation allowing you to retain talent while adapting to the ever-changing business landscape. 

While hopefully a temporary measure, this will provide your employees with an alternative to redundancy allowing them to carry out work and also help support them financially. 

3. Early retirement as a voluntary option 

Early retirement is the process whereby employees close to retirement age can volunteer for redundancy under the pension scheme. This process can only be entered voluntarily else you may find yourself at risk of an age discrimination dispute. 

4. Unpaid leave or sabbaticals 

If you are experiencing a period of reduced business, offering your employees the option of unpaid leave or sabbaticals can help ease the financial pressure. If you are experiencing an upturn in business shortly, this could be a feasible option but note that employee consent is required here and in the case of sabbaticals, this type of leave should be voluntary. If you decide to go down this path, ensure that these new arrangements are formally recorded.

5. Overtime Bans 

Commonly, employers can’t force employees to take periods of unpaid leave but you can stop offering employees overtime. This will depend on whether your employees are contractually entitled to overtime. If they are, you will need to get employee consent in order to ban overtime. 

If the redundancy alternatives are not feasible

If your business has to proceed with dismissing an employee due to redundancy, it is essential to communicate this decision clearly. 

Download our redundancy notice letter now.

How Employment Hero Can Help Your Business with Redundancy 

Employment Hero is the world’s first integrated HR and payroll system that offers invaluable support during redundancy processes. By utilising Employment Hero’s centralised platform, you have access to tools and resources that can streamline the redundancy process and create a supportive environment for both employers and employees. 

Our template serves as a starting point for communicating redundancy decisions and can be tailored to reflect the specific circumstances and ensure compliance with legal obligations. By approaching redundancy with care and consideration, employers can help mitigate the impact on affected employees.