5 ways to avoid compulsory redundancies

Making compulsory redundancies is rarely a simple business decision. Employers never want to lose valuable talent, and layoffs can leave skills gaps at a time the business needs them most to pivot or recover. Redundancy payments add up quickly, and the wider impact on staff morale, engagement and employer brand can be hard to repair.

HR professionals are often tasked with finding solutions that preserve headcount while also delivering the savings needed. So here are some practical alternatives you can explore first.

1. Freeze recruitment and reduce the use of contractors
   Sometimes cost savings can be achieved without affecting current staff — your first consideration should be to pause new hiring and consider trimming contractor use.
2. Offer voluntary redundancy
   Inviting employees to step forward voluntarily can soften the blow. This gives people more control over their exit and can weed out the ones who are most committed to stay. Be clear about the terms and retain the right to decline volunteers in business-critical roles.
3. Consider cutting hours, pay or responsibilities
   You may be able to reduce costs by asking staff to agree to amend their hours, pay, or duties. Where agreement isn’t possible and the business case is compelling, the “fire and rehire” route could be a last resort. Tread carefully if you opt for this way forward as there’s now a Statutory Code of Practice in place and non-compliance could lead to tribunal claims and compensation uplifts. The Employment Rights Bill proposes to ban the practice of “fire and rehire” unless the business’s imminent survival is at stake.
4. Offer unpaid sabbaticals or career breaks
   This can be a win-win solution, allowing your business breathing space from personnel costs while also offering some employees the opportunity to grow and develop. Offering short-term unpaid leave can give you the time to recover without losing good staff permanently.
5. Consider job sharing or reduced hours
   Offering part-time working or job shares can achieve cost savings while retaining talent and flexibility. This is another option that often suits both the employer and employees seeking better work-life balance.

By thinking creatively and engaging early with employees, HR can often find workable alternatives that protect both their people and the business.

Further reading

• Could alternative employment be better than redundancy? – Hunter Law
• Code of Practice on “fire and rehire” in force – Hunter Law
• EAT stresses the need for proper consultation in redundancy cases – Hunter Law
• Redundancy is on the rise: 9 essentials for employers – Hunter Law