ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Alternatives to Redundancy

Updated on June 5, 2012

Every year employees hoped and expected a pay rise, and for some, eagerly anticipated the size of the bonus and how to spend it. Today’s recession in many parts of the Western world means such hopes maybe misplaced and the expectation unrealistic.

The recession means it is not uncommon for employees to receive a redundancy notice or a letter to confirm the start of a consultation period prior to the redundancy announcement rather than getting notification of a pay rise.

Redundancies are driven by the need to cut costs for a company to survive as a going concern, increase productivity, drive up profits or ward off predators looking for a takeover.

Although making employees redundant can appear an expedient solution to a severe problem, it can be an expensive option. There are many associated costs – the total cost of redundancy payments, time involved in the process, loss of skills to the company and restructuring remaining roles.

Demanding more thought, imagination or creativity than swinging the axe to cut jobs, is investigating options to avoid or limit redundancies.

Nissan, based at Sunderland - Northern England, set out to protect the working week for their employees. When the economic crisis first hit the company at the end of 2008 there was a surplus of stock. This meant they had to halt production. They adopted an innovative approach to avoid redundancies.

Lucy Banwell, Communications Manager at Nissan says, “Initially, when the crisis first hit us at the end of 2008, we took a number of non production days so we stopped production. But, rather than send people home without pay we introduced a variety of vocational training days to help employees with their job.

We introduced a Temporary Economic Crisis Flexibility agreement. This meant that if an employee took a day off, rather than take holiday from their holiday allowance they would ‘bank the hours up’. When the crisis improved later on in 2009, whenever they worked overtime this would be deducted from the time off banked previously. For example, if they took a day’s holiday they would put 8 hours in the ‘bank’. And, in the following year when the situation improved, because of the Government’s scrappage scheme, if the employee worked five hours overtime rather than getting paid for this the pay would come out of the time banked earlier”.

Banwell noted that their competitors opted to send their employees home on half pay but Nissan sought to protect the working week.

Tim Briggs, an Online Business Consultant also agrees getting employees to take a pay cut can avoid or limit redundancies. Briggs suggests, “Reducing working hours, or the number of days worked per week. Asking people to take a salary cut across the board and therefore being able to keep them on rather than having to make some people redundant. Getting rid of bonuses and again using the saved bonus money to ensure that people don't have to be got rid of”.

This may be easier said than done. What can start off with the best intentions - limit or avoid redundancies, could end up with unintended consequences.

A company may propose radical options to secure its survival, proposing that employees take a pay cut rather than get a pay rise. Where the company meets little resistance to its proposal for making pay cuts, there isn’t a problem. Where there is resistance problems can begin.


Ideally, the company should embark on a PR exercise to sell its proposal and make it palatable for employees to take a pay cut so the company can survive”. For example, the UK's British Airways airline company sweetened the bitter pill their pilots had to swallow of accepting a pay cut by offering them equity in the company. This gave the pilots a stake in the company and the prospect of sharing in the company’s recovery.

An employee's pay is a condition of the employment contract. A contract of employment is a legally binding agreement and once it is made, both parties are bound by its terms and neither can alter those terms without the agreement of the other. To pay less than is agreed in the contract requires the genuine consent of an employee. If both parties do not agree the change and the employer unilaterally reduces an employee’s pay, a claim for breach of contract and/or unlawful deduction of wages may follow”.

There are alternatives to redundancy but both parties need to watch out that what appears to be the light at the end of the tunnel doesn't turn out to be a train bringing along a quagmire of litigation.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://hubpages.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)