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How to avoid Compulsory Redundancies

We wrote recently about how the liquidation of a large company can have potential indirect consequences for small and medium businesses. Through no fault of their own, a small or medium sized business can suddenly find that cash flow is drastically affected.

Often, in those circumstances, the knee jerk reaction is to look at ways to reduce outgoings and one of the simplest ways to do that is to reduce staff.  Many small businesses are reporting that following the collapse of Carillion they may have no alternative but to look at making staff redundant.

It is however worth considering that there are ways to avoid making compulsory redundancies, which can sometimes be costly in the short term.

Before you conclude that redundancies are necessary, consider the following options –

Invite applications for voluntary redundancy

Voluntary redundancies may mean you do not have to make any compulsory redundancies. Applications will need to be carefully considered ensuring the right skills are retained for the current and future needs to the business, and of course applications can be rejected.

Invite applications for early retirement

Potentially this can create vacancies in the business which could be filled by staff who may otherwise be made redundant.

Introduce a restriction or ban on overtime

An overtime ban can obviously bring about a reduction in the wage bill

Eliminate the use of agency staff, self employed contractors and casual labour

Eliminating the use of temporary staff can mean the risk of redundancy for permanent staff can be reduced.

Invite applications from staff for flexible working

This may include staff agreeing to a reduction of hours, staff agreeing job shares or staff agreeing a short term reduction of hours.

Offer a sabbatical or career break

Assuming the sabbatical is unpaid this can result in a reduction of wages in the short to medium term.

This article was written as part of a series following the collapse of Carillion, to see the complete collection please click here

If you need advice about compulsory redundancies please contact our Employment Team on 0113 350 4030 or email hello@scesolicitors.co.uk.

If you would like to be kept up to date with employment law and dispute resolution updates, please subscribe to our monthly newsletter.

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SCE Solicitors is a boutique employment law practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.


Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation.

Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.
Richard Newstead

Latest posts by Richard Newstead (see all)

Richard Newstead

Richard qualified as a Legal Executive over 20 years ago and has significant experience in Employment law and Litigation. Richard acts for both employers and employees drafting and advising on settlement agreements, contracts of employment, consultancy agreements, directors service agreements and general workplace policies. He acts for commercial clients in the employment tribunal dealing with unfair dismissals, constructive dismissals and claims for discrimination.

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