Gordons research reveals Yorkshire businesses unsure of alternatives to redundancy
Over half of Yorkshire businesses will immediately resort to freezing pay as an alternative strategy to making redundancies, according to research carried out by the employment department of Leeds and Bradford law firm Gordons.
The survey of decision makers within 120 organisations located throughout the county was undertaken both during a Gordons employment law update seminar held in Bradford and online using the business social networking website, LinkedIn.
Philip Paget, head of employment at Gordons, said: “The majority of decision makers felt that a pay freeze was the best alternative to redundancy. However, the issue with freezing pay is that it does not get to the heart of the matter, namely that the business needs to reduce its costs to stay afloat.
“Just over 30 per cent of respondents recommended reducing working hours, something which BT has recently suggested to its employees. Interestingly, no one proposed a pay reduction as an alternative to redundancy and this demonstrates the strength of feeling against this course of action. Its implementation can lead to reputational damage as was recently experienced by British Airways when it attempted to deal with the need to cut employee costs by proposing this measure.”
Comments from LinkedIn members, including those in Yorkshire business networks, showed innovative thinking around redundancy issues including the concept of rolling layoffs. This would involve splitting the workforce into four equal groups and laying off each group for two weeks at a time leading to a reduction in the overall salary bill of 25 per cent.
Philip commented: “Businesses need to look at any given employment law situation and seek to manage the risk from a financial and reputational perspective. When faced with a situation that, on the face of it, calls for redundancy there are often alternative ways to identify and minimise the risk. For example, consultation with staff and obtaining staff ideas is essential, not just to be fair, but because your staff are often the best source of solutions.
“Changes to hours of work and alterations to benefits packages are just some of the ways to achieve desired savings. Management can also consider introducing job share schemes or sabbaticals for employees where they are paid a percentage of their salary for an agreed period of time.”
By looking at these creative alternatives to redundancy, employers can be seen by their employees and external audiences including suppliers, customers and the media to be actively trying to create manageable solutions. This will bolster the perception of the company amongst its stakeholders and - if the ultimate decision is that redundancies have to be made – will protect its reputation.
Philip said: “By actively seeking alternatives to making redundancies companies can create a beneficial position for the business. On a very basic level, there will be no redundancy costs. Skilled employees will also remain in place so that when recovery occurs, the business is best placed to capitalise.
“This research has shown that although many Yorkshire business people see a pay freeze as the next best alternative to redundancy, there are also those that will think laterally to minimise the financial and reputational risk to their organisation. By undertaking the right course of action in relation to potential redundancies, management can place their businesses in a stronger position to take advantage of economic recovery.”
If you would like to discuss how your business could benefit from alternative strategies to redundancy contact Philip Paget on 0113 227 0100 or email philip.paget@gordonsllp.com.
Published: 29th March 2010
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