Alternatives to Redundancy for Employers

Why explore alternatives first

UK employment law requires meaningful consultation before any redundancy dismissal. A tribunal will look at whether you genuinely explored alternatives before dismissing — if you did not, the dismissal is likely to be ruled unfair, even if the business need for redundancy was legitimate.

Beyond the legal requirement, alternatives can also:

• Preserve institutional knowledge and talent
• Reduce the cost and disruption of recruitment when the market improves
• Avoid industrial action or low morale across the wider workforce
• Reduce the risk of discrimination claims from selected employees

1. Redeployment to alternative roles

The most direct alternative to redundancy is finding another role within the organisation for employees at risk. You are legally required to consider and offer suitable alternative employment before confirming any dismissal. Suitable alternative employment means a role that:

• Is on no worse terms than the current role (or only marginally worse)
• Matches the employee's skills, experience, and circumstances
• Is appropriate for them in their current situation

Search across all departments and consider roles at any level — sometimes a more senior employee is willing to take a more junior role if it avoids redundancy. Also consider roles in associated group companies.

2. Reduced hours or job share

If the need is for fewer hours of work rather than fewer people, consider:

• Reduced hours: Moving full-time roles to part-time, with corresponding salary reduction. This can be agreed with employees rather than imposed
• Job share: Splitting one full-time role between two people, both working part-time. Particularly useful for skilled or specialist roles
• Compressed week: Same total hours in fewer days — reduces headcount needs without reducing capacity

These arrangements require employee agreement — you cannot impose them unilaterally. But many employees facing redundancy will prefer a reduction in hours over losing their job entirely.

3. Retraining and upskilling

If business needs are changing but the number of roles is not reducing, consider whether existing employees can be retrained to do the new type of work. This is particularly relevant when:

• Technology or processes are changing, requiring different skills
• Different products or services are being introduced
• Geographic operations are changing

Retraining costs money but is generally far cheaper than the cost of recruiting new employees once the business situation improves. The government's Apprenticeship Levy can be used to fund training in some circumstances.

4. Sabbaticals and extended leave

For a temporary business downturn, offering sabbaticals can reduce headcount without dismissing employees. An employee on sabbatical remains employed and retains their employment rights — they simply take an extended period of unpaid leave.

This works best when:

• The business need is temporary and you expect to need the roles back
• Employees are willing to take unpaid leave
• The roles require specialist knowledge that is hard to replace

5. Voluntary redundancy as an alternative to compulsion

Rather than selecting employees compulsorily, open a voluntary redundancy scheme. This allows employees who are willing to leave to do so on agreed terms — often with an enhanced package above the statutory minimum to encourage take-up.

Voluntary redundancy does not guarantee you will get the right number of volunteers — you may get too few or too many — but it avoids the legal risk and morale damage of compulsory selection.

You can also negotiate with volunteers: if you need exactly 10 people but 15 volunteer, you can negotiate with some to withdraw their application.

6. Early retirement

For employees approaching retirement age, an early retirement package — enhanced redundancy terms with access to pension — can be a mutually agreed way to reduce headcount. This can be more cost-effective than keeping someone on for a few more years.

Note: you cannot compel employees to retire early — this requires their agreement. It also cannot be targeted specifically at older workers as this would constitute age discrimination.