Alternatives to redundancy

When times are tough, sometimes redundancy is the only option available for cutting costs, reports Steve Peacock

The current economic difficulties have impacted not only the banking and business sectors, but all areas of society too, and that includes the education sector. Independent schools are neither vast commercial operations that can draw on internal resources to see them through nor are they reliant on public funding – and so have been doubly affected by the financial crisis. The most prevalent problem facing heads and the management of independent schools is that a depressed economy and the wave of redundancies that have inevitably followed have led to decreased numbers of pupils attending leading, of course, to reduced funding.

While many headteachers hope this is only a short-term problem, it does raise the problem of cutting budgets and staff numbers to cope with reduced funds. The retention of experienced and valuable staff that might not easily be replaced once the economy picks up is a vital concern, but to what extent are there viable alternative measures to redundancy?

During a difficult economic climate, it is best to be as open with your staff as is reasonably possible. If you are offering alternatives to redundancy, such as part-time work with an associated pay cut, use hard figures to demonstrate the likely job saving. The more open you are with staff, the more likely that they will understand your predicament and intentions and engage with you in agreeing solutions. Everyone is aware of the difficult economic climate and your staff may agree to options which they would not normally do, to ensure that their jobs remain secure (at least, for the time being). Some of the alternatives you may also consider include:

Recruitment freezes
Offering vacancies that are available or that you can reasonably make to internal candidates, even if this will involve them retraining, will be greatly appreciated by your existing staff.

Withdrawing job offers
You may withdraw an offer of employment to retain your current staff at any point before the offer is accepted, without having to give notice or make a payment in lieu of notice. Once an offer has been accepted, however, an employee should be given their notice or a payment in lieu and this can be expensive.

Redeployment and retraining
These are often considered as alternatives to redundancy. In some cases, employees may have flexibility clauses which enable you to put them in to new roles. In other cases, employees’ consent will need to be obtained. Taking the opportunity to retrain members of staff and equip them with transferrable skills will benefit both the school and the employee in the long run.

Reducing hours and consequent pay
Reducing hours and pay is difficult. An employer who pays less than their employees are contractually entitled to could face resignations and claims for breach of contract or unlawful deductions from wages. You must therefore always obtain consent from employees by discussing with them the financial impact and, particularly, how jobs will be saved.

Freezing pay
Provided your employment contracts do not entitle your employees to a guaranteed annual increase in pay but just to a review of salary, it is legally permissible to freeze pay. Employers need to be aware of the impact that this can have on employee morale, however. Frank discussions with your staff will ensure they feel fully informed and included in all decisions on funding and budgets. Such discussions are also likely to reduce the possibility of staff bringing claims against you should you eventually be forced to let them go.

Steve Peacock is a partner in the employment team at law firm Weightmans LLP. Steve can be contacted on steve.peacock@weightmans.com

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