'Challenging year' | Days into 2023, thousands of workers face layoffs - how can HR manage this turbulent time?

Days into 2023, thousands of workers face layoffs - how can HR manage this turbulent time?

It has been a difficult start to the year for many businesses. Having struggled with a range of problems throughout 2022, many are now finally at breaking point, and must make the unenviable decision to dispose of a chunk of their workforce.

Tech giants Amazon and Salesforce have recently announced substantial layoffs, with Amazon cutting 18,000 employees - a sizeable portion of which will be in the UK – the firm announced it will close three of its UK warehouses, putting up to 1,200 jobs on the line.

Elsewhere, Salesforce cutting 10% of its workforce, in addition to suggestions that more may be affected soon.

And after enjoying something of a boom period during the pandemic years, Goldman Sachs is offsetting falling profits by dispensing 3,200 staff members – roughly six percent of its workforce – which again will include many Brit employees. The company has rapidly expanded in recent years, adding 10,000 employees to its roster since December 2019.

And these huge firms are not alone. According to the latest poll by employment law and HR consultancy firm, WorkNest, over two-fifths (44%) of employers looking to make cost savings in their workforce are planning to restructure or make redundancies in 2023 amid rising costs.

WorkNest’s survey of 404 employers across all sectors found that just over a quarter (27%) of SMEs admitted they’re finding ways to make cost savings within their workforce this year. However, over a third (35%) of employers are still undecided if the cost of living crisis will mean making cuts in the coming months.

Additionally, three in 10 (30%) SMEs revealed there were looking at freezing employees’ pay. While this isn’t a surprise with the increase in costs SMEs face with rising energy bills and inflation, this is, unfortunately, a considerable worry for employees, who are also struggling with their rising living costs.

Reducing employees’ hours or pay by changing T&Cs is what 13% of employers plan to do this year, while 11% want to scale back employee benefits.

How should HR move ahead with tough decisions?

Tina Hyland, Employment Law Adviser and Solicitor at WorkNest, commented: “2023 is going to be a challenging year, especially for SMEs that are feeling the pinch, more so than larger businesses which can forefront some of the costs to an extent.

“Unfortunately, this does mean employers will be looking to make some difficult decisions, such as making redundancies or restructuring the workforce, as staffing costs are usually a significant expense for a business. Suppose that’s an avenue they decide to take; in that case, employers must be prepared to negotiate with employees to ensure they receive a fair deal.

Give the support your employees deserve if you are planning on making redundancies

Give the support your employees deserve if you are planning on making redundancies

As the UK economy moves into a recession with an uncertain economic future ahead, now is the time to invest in employee support should your business need to consider redeployment in 2023.

Download this guide to find out how best to support your people and your organisation when making redundancies.

You will learn:

  • What benefits outplacement offers to both employees and employers

  • The outplacement support available to senior executives

  • How outplacement can provide essential support for employees remaining in the business

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“We highly recommend businesses reduce the chances of making any employees redundant by making alternative choices where possible, including implementing pay freezes or reducing benefits. However, each option comes with its own risk, so obtaining proper legal advice is critical in making the right decision for your business while minimising the negative impact on employees.

“Unfortunately, in the context of the recession, any cuts inflicted on employees due to employers’ decisions, such as restructuring or pay freezes, may be detrimental to employee’s mental health, especially with further worries to their financial wellbeing throughout this time. Supporting employees with additional benefits that might be available to them already, including Employee Assistance Programmes to retailer discounts, could help improve an employee’s bottom line in other ways.”

What should the redundancy process look like?

If a business reaches the conclusion that nothing other than job cuts can keep them afloat, it's important to start considering how a redundancy process should be managed. The redundancy process is one that is wrought with stress and anxiety, not just for employees, but also the HR teams overseeing the process. It’s crucial, therefore, that process is handled sensitively and professionally.

On its website, the Chartered Management Institute (CMI) offers insight from Paul Holcroft, Associate Director at Croner, who advises firms on their HR policies – part of which covers redundancy packages. He said that honesty and clarity are the critical components of successful support.

“Being made redundant can be an incredibly distressing time, so it is essential that employers maintain regular dialogue with affected staff,” Holcroft said.

“Given the complexity of a redundancy procedure, employers should provide individuals with a clear explanation of their rights and a timeframe for when decisions will be made. This reduces any unnecessary stress and ill feeling among the workforce. Employees with a minimum of two years’ service are eligible for a reasonable amount of time off to look for new work or to arrange training for future employment.”

Similarly, official guidance from the CIPD explained that ‘redundancy should be a last resort’.

“It can be one of the most distressing events an employee can experience. It requires sensitive handling by the employer to ensure fair treatment of redundant employees as well as the productivity and morale of the remaining workforce. Redundancy legislation and case law is complex, and employers must understand their obligations, including employees' rights and the correct procedures to follow,” the body’s official advice explained.

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