Tuesday, 5 June 2012

Redundancies or Layoffs, Can You Avoid Them?

The day every business owner dreads, other than the arrival of the tax bill, is letting staff go i.e. making one or more of their employees redundant. This isn’t a decision taken lightly. But there are options worth exploring that could make the bitter pill of redundancy easier to swallow.

Redundancies, Ideas to Avoid Them

Here are some ideas:

• Offer employees a sabbatical

A sabbatical is one way companies can reduce the payroll bill if the cost threatens their survival. Some employees may be looking to take time off to travel the world or even spend time at home with family. Sabbaticals are a great option to consider as they are always unpaid. However, most employees will want some safeguard that they will have a job on their return should they accept the option to go on a sabbatical.

• Natural wastage

During difficult times some employees may wish to resign. Halting any further recruitment to replace employees that leave may safeguard the jobs of remaining employees. But, this needs to be balanced against the extra workload that will result.

• End all temporary contracts

Although these have a fixed termination date, there is flexibility to end them sooner depending on the wording of the contract. Nissan for example, had to remove a third of a shift and right size 1200 jobs from Christmas 2009. They were able to end 400 temporary contracts immediately.

More controversial suggestions:

Suggest a paycut. There will be resistance. But, employees may realise that this is their only chance of continued employment. You could sweeten the bitter pill of a paycut by offering employees equity in the business if you really want them to stay and contribute to your business.

Exploring alternatives to a layoff can help your business survive until the business environment improves.

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