Reducing the size of your workforce

Reducing the size of your workforce


Sadly the current economic squeeze created by the pandemic is resulting in a lack of demand for the products and services of some businesses. Inevitably to survive this businesses are having to reduce their cost base – including employee costs.

The actions that SME owners take needs careful consideration and all options should be explored. Redundancy may be inevitable but other options are worth exploring.

These include temporary lay-off’s and short time working. Both of these routes require employee consultation and consent given they cannot be ‘imposed’. One of the benefits of exploring this approach is that once demand for products and services increases the team remains intact and recruitment costs are avoided.

The Government has also announced a raft of employment support initiatives. These are now changing on a regular basis but should be considered to determine whether employment continues to be viable all be it with Government support.

If the challenge faced by the business is more concerning then redundancy is a fair reason for terminating employment. A process of communication and consultation needs to be embarked upon and legally the process will need to be seen as being ‘fair’. Larger employers making more than 20 people redundant within a 90 day period, need to embark upon a process of ‘collective consultation.’

Redundancy comes with a cost and an employee is normally entitled to a redundancy payment. Further details can be obtained here:

It is possible that a settlement agreement might be appropriate. In simple terms a settlement agreement is where an employer and an employee agree terms for ending employment. They are often used when redundancy is being considered or if an employer thinks an employee is not performing as they would expect. Once agreed employment comes to an end.

Downsizing is an uncomfortable process but can be essential to ensure the viability of a business. Some of the legislation is complicated and employers should seek specialist advice if they have any doubt about the processes.

If you require employment law support please contact us on:

T: 0800 302 9448