Slinging the axe

Employers faced with making workers redundant have several alternatives

Tom Flanagan
Tom Flanagan

While the UK economy may not be technically in recession, it certainly has not recovered from the global slowdown as well or quickly as was hoped. Indeed, it is still teetering on the brink.

Many employers are facing the inevitability of redundancies, taking the view that they have done all they can to avoid them and that staff reductions are now the only viable option.

But are they? This may be a good time to review the options of what might be called recession-based ­employee relations tactics while looking at the way some of the options have changed, as well as casting an eye over the key elements of a ­redundancy exercise.

There are several flexible working arrangements that could be deployed in principle, but whether they will work for each business depends on such things as: the size and structure of the company; the resources ­available; contracts of employment; relationships with employees; time-scale of financial need and the steps being considered; the rights affected by the proposed changes; and the ­necessity to act.

From small- to large-scale actions, possibilities could range from: wage restraint; reductions in overtime; ­laying off temps or consultants; ­reduced hours; early retirement; a menu of possible actions, including time off without pay, reductions in pay or a temporary change to other benefits; corporate restructuring; and either selling a loss-making part or, more subtly, outsourcing it to an experienced service provider in an attempt to preserve the business and employment while making a return.

Since the start of the crunch there have been some changes in the law that might influence these choices.

The Agency Workers Regulations would not prevent laying off temps at the outset, but with those who qualify for protection – after 12 weeks in the same assignment – there may be some restraints on changing terms.

The default retirement age has been abolished. Following a Supreme Court judgment in January an ­individual employer may be able to justify having its own retirement age, but in the absence of that a discussion about retirement could lead to an age discrimination claim.

Meanwhile, the seminal case of Bateman v Asda (2010) in the ­Employment Appeal Tribunal has opened the door for employers to change terms of employment, particularly by having an effective variation clause in employment contracts. This is important because many recession-based tactics could involve the changing of employment terms.

If all else fails, remember that ­redundancy is a dismissal – we talk about ’making someone redundant’. Redundancy is a matter of fact – someone either is or is not redundant, and any such dismissal should be carried out fairly and reasonably in all circumstances.