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An Employer?s Tough Choices: Redundancy, Flexible Working, Lay Offs or Short Time Working

  • 10:41:47 am on April 4, 2009 | # | 0
    Tags: contracts, documents, employment, Legal

    Unemployment is making all of the headlines at the moment, and over a million more job losses are expected in the next year or so. Managers around the country are frantically consulting employment contracts and legal documents, looking at redundancy procedures and assessing just how many staff they need to lose in order to keep their business afloat.

    Sometimes, redundancy is the only option you have left in order to balance the books, but there can be alternatives. Profiled below are four of the main options that managers have if they are looking to cut costs within the workforce.

    Redundancy

    What Is It? An employee?s position is deemed surplus to requirements, and the employee is made redundant. If they have been employed for more then two years, they are entitled to statutory redundancy pay, and a strict redundancy procedure must be followed.

    Pros: Superfluous employees are removed, allowing the business to retain staff in the more profitable areas of the company.

    Cons: You lose a fully trained employee permanently, and cannot rehire someone to replace them in their position. There are also some very specific procedures to follow when making a redundancy; if you violate these, you could face a substantial payout for wrongful or unfair dismissal. Numerous redundancies can also seriously affect company morale.

    Flexible Working

    What is it? Flexible working covers a wide range of working practices aimed at providing more choice and flexibility to employees in the workplace, and some of these (such as working from home, reducing hours or implementing a job share) can also act as cost cutting measures for a business.

    Pros: If you just need to reduce costs slightly, flexible working can help cut costs whilst retaining your staff on a full time or nearly full time basis. Many modern employment contracts include some kind of provision for flexible working.

    Cons: Even if an employee works from home or trims down their hours slightly, it may not be enough of a reduction in costs to justify retaining them in their position.

    Lay Off

    What is it? An employee has their position suspend temporarily if their work will be superfluous for a period of time.

    Pros: If you are anticipating a brief lull in business, a lay off can be the perfect way to trim costs temporarily without permanently losing valuable members of staff.

    Cons: Your employee may not be able to afford to be out of work for too long ? if the drop in business lasts longer than anticipated, they may seek employment elsewhere.

    Short Time Working

    What is it? In short time working, an employee has their hours reduced below one half of their normal working hours.

    Pros: Staff can continue to work and be paid (unlike with a lay off) making this an excellent choice if you can?t afford to retain someone full time, but still need them to contribute on a part time basis, or hope to be able to return them to full time status at some point in the future.

    Cons: Once again, short time working may be financially unsustainable for an employee if it goes on for any length of time.

    Iain Mackintosh is the Managing Director of Simply-Docs. The firm provides over 1100 UK documents covering all aspects of business from holiday entitlement to comprehensive employment contracts .

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