26 January 2018

I am going to experience financial difficulties due to Carillion’s liquidation and think I need to make redundancies to save costs: what options do I have?

Many employers will look to make redundancies to save costs in the short term, however, there are a number of other options to consider in order that you keep the right skills and experience within the business so that you can survive the present difficulties whilst creating prospects for the future.  Not all options will be suitable for each business so you will need to carefully consider what is right for you and your business as a whole.

  • Reduce your headcount through other means such as implementing a recruitment freeze, withdrawing job offers or deferring new joiners, reducing non-permanent staff such as agency workers or casual staff, or offering early retirement packages.
  • Implement reduction of working hours or temporary stoppages through offering sabbaticals, requiring your staff to take statutory holidays or periods of unpaid leave, implement short-time working and/or lay-off, or implementing an overtime ban.
  • Consider how you can reduce remuneration through implementation of a pay freeze, temporary reduction in pay and/or cessation of benefits, or seek to change pension arrangements.

As with any changes to terms and conditions of employment you need to check your current contracts and policies as well as securing the employees’ consent.   However if you explain clearly why you are seeking to adopt one, or more, of these options in order to save jobs and the overall impact on what you are trying to achieve it is more likely to be positively achieved.

If however, regardless of implementing one or more of these options, you may still need to think about restructuring your business to ensure that you can weather the storm and ensure you remain agile for the future.

If you need to restructure and as a result need to make redundancies remember that you need to:

  • Review your current structure and job roles and map these to your proposed new structure
  • Inform and consult with the affected employees either on an individual, or collective, basis
  • Review and consider alternatives to redundancy which could lead you to re-considering the options detailed above
  • Calculate and notify potential redundant workers what financial payments they are legally entitled to, including statutory and/or contractual redundancy payments, notice payments and accrued but untaken holiday payments

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About the Author
Sam Payne, Partner, Head of Restructuring & Insolvency Team
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