By Daniel Pollard - 26 October 2020
UK employers consulted with staff on nearly half a million redundancies during the pandemic - roughly 1.5% of the working population. The true number will have been much higher as small-scale redundancies are not captured by government statistics. The furlough scheme will have given many employers an opportunity to pause but as the scheme comes to an end, employers face some tough choices.
Over recent months we have seen a huge amount of creativity from our clients in finding ways to minimise redundancies. Over the next couple of weeks we will share 12 possible strategies adopted by our clients and some thoughts of our own to help reduce cost without compulsory lay-offs.
6. Voluntary Exit Package
Ok, we hooked you in on the basis that this article wasn’t about redundancies (i.e. reductions in force). But hear us out!
To our mind, there is a huge difference between compulsory and voluntary redundancies, from a cultural, practical and legal perspective.
Considering some of the concerns:
The biggest attraction though is that redundancy payments of up to £30,000 can usually be free of UK income taxes. That means that it is significantly less expensive to pay a months’ severance than a months' wages.
Some employers are offering voluntary redundancy also in conjunction with preferential re-employment policies. Provided the redundancy is not a “sham” there are no legal issues with policies that favour former staff but advice should be taken on the detail. These policies have the great advantage for employers of being able to re-hire skilled staff and to employees to quickly reintegrate with the workforce.
For all 12 ways to reduce HR costs without redundancies click here.