Creative Ways to Cut Your Staff Costs During a Recession

In this current economic climate many organisations are needing to find ways to reduce their overheads as the recession takes hold. For some employers, this means redundancies and for others, adopting alternative ways to make the necessary cost savings whilst trying to maintain their existing staff in whom they have invested time and resources. Indeed, some larger organisations have actively sought to avoid redundancies where possible and maintain their staff training and development programmes so that they will have the staff in place when the economy becomes more buoyant again.

If you find that you need to look at more creative ways to cuts your costs, the following ideas may be worth exploring.

• Consider reaching an agreement with staff to reduce their salary or benefits. It is essential that staff agree to any such changes or you will be vulnerable to claims for breach of contract or unlawful deduction from wages. Those employees with a year's service would also be able to resign and claim constructive dismissal. Agreement should be reached through consultation and it is advisable to keep a written record of all discussions and meetings and record any agreed changes in writing.

• Promote flexible working opportunities to staff, which could include working from home, job sharing or varying or reducing hours of work. Remember that any variation must be agreed and recorded in writing. Requests for flexible working must also be considered carefully to ensure compliance with the Flexible Working Regulations and in order to avoid complaints of indirect discrimination.

• Review your employee benefits. It may be that by shopping around or engaging the services of a broker you can find alternative providers for your employee benefits, such as medical insurance and life assurance, which will save you costs.

• Consider introducing a sabbatical policy for staff, allowing a period of unpaid leave. This should be subject to management's final agreement based on operational requirements and employees taking sabbatical leave should be informed that no guarantees can be given regarding their role on their return. However, do also remember that during this period of leave employees will still have continuity of employment and advice should always be sought before a returning employee is dismissed. Again, the arrangement should be recorded in writing to avoid any uncertainty.

• Look at offering staff the opportunity to buy extra annual leave and therefore sacrifice their salary on a pro rata basis. Again, this may only be possible on a temporary basis and any arrangement needs to be clearly documented with all staff concerned.

If none of these options create the savings you need to achieve, you may need to resort to redundancies or considering outsourcing some functions or roles. In either case, taking appropriate professional advice at an early stage will always prove a good investment.

Jo Atkinson, Head of HR and Legal, Harrison Rose Ltd

Harrison Rose Ltd is a specialist in Human Resource Management and a former practising solicitor and member of CIPD. If you require advice, please contact her on Tel. 01483 813818 or at ja@hrluk.co.uk.

Professional advice should always be sought for assistance in specific areas of the law and HR management and we cannot accept any responsibility for any action based on this article.

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