Avoiding compulsory redundancies: creative alternatives for HR to consider

Making compulsory redundancies is rarely a simple business decision. Letting go of valuable talent can leave skills gaps just when the business may need to pivot or recover. Redundancy payments add up quickly, and the wider impact on staff morale, engagement and employer brand can be hard to repair.

HR professionals are often tasked with finding solutions that preserve headcount while also delivering the savings needed. Below are some practical alternatives to explore before moving to compulsory redundancies:

1. Voluntary redundancy schemes
   Inviting employees to step forward voluntarily can soften the blow. This gives people more control over their exit and often helps retain those most committed to staying. Be clear about the terms and retain the right to decline volunteers in business-critical roles.
2. Changes to Terms and Conditions
   Consider amending hours, pay, or duties by agreement to reduce costs. Where agreement isn’t possible and the business case is compelling, the “fire and rehire” route may be a last resort- but tread carefully. There is a Statutory Code of Practice in this area now. Non-compliance could lead to tribunal claims and compensation uplifts. The Employment Rights Bill proposes to outlaw the practice, save where the business’s imminent survival is at stake. 
3. Unpaid Sabbaticals or Career Breaks
   In areas of low demand, offering short-term unpaid leave can provide breathing space without permanent job loss. Frame it as a development opportunity or reset.
4. Job sharing or reduced hours
   Offering part-time working or job shares can achieve cost savings while retaining talent and flexibility. These options often suit those seeking better work-life balance.
5. Freeze recruitment and reduce use of contractors
   Sometimes cost savings can be achieved without affecting current staff—pause new hiring and consider trimming contractor use first.

By thinking creatively and engaging early with employees, HR can often find workable alternatives that protect both people and the business.

Speak to Jon Dunkley

Jon is a Partner at Wollens and can advise you. Contact Jon via email jon.dunkley@wollens.co.uk or call 01271 341021.

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