U.K. firms shift focus to voluntary redundancies

Also more likely to freeze pay, grant unpaid absences, cut benefits: Survey
|hrreporter.com|Last Updated: 06/26/2012

Businesses in the United Kingdom are three times more likely to encourage voluntary redundancies during the next 12 months compared to two years ago, according to a report by law firm Irwin Mitchell.

One-third of businesses had made compulsory redundancies in the last year, with 75 per cent of those also using a range of alternative cost-saving techniques, found the survey of more than 320 senior business decision-makers.

Seven out of 10 firms said they are “less confident” or expect “no improvement” in the U.K. economy in 2012 and 18 per cent said they are “quite likely” or “very likely” to make compulsory redundancies during the same period.

Out of those businesses stating they needed to reduce their employee cost base over the next 12 months, 55 per cent said they would introduce a voluntary redundancy program. This compares to 16 per cent of companies that did the same during the last two years.

In addition, firms are more likely to cut down the use of agency workers, freeze pay, grant unpaid absences, remove other benefits such as bonuses and reduce staff hours in the next 12 months compared to two years ago, found Irwin Mitchell.

“Businesses have been using more inventive solutions than redundancy when tackling staff costs but more now seem to be focused on some form of redundancy program. Perhaps this is an indication that they think that they have now exhausted alternative solutions,” said Tom Flanagan, Irwin Mitchell’s national head of employment.

“Nevertheless, there are signs of more inventive thinking. Many alternatives can involve changes to employment contracts but well-planned and executed change programs can succeed.”

Other key findings of the survey:

•78 per cent of firms said they had saved jobs as a result of implementing cost-saving restructuring techniques.

•44 per cent said they would or might have restructured differently if they had the opportunity again, but this was largely on the basis that they would like to have done more and acted more quickly.

•Outside of compulsory redundancies, the most popular method used to reduce the employee cost base during the last two years was freezing pay rises.

•Freezing pay rises is expected to be even more prevalent in the next 12 months.

Add Comment

  • *
  • *
  • *
  • *