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Redundancies and pay freezes on cards for 2023

The cost of living crisis may force employers into redundancies in 2023, according to research from employment law and HR consultancy firm WorkNest.

The research showed more than two fifths (44%) of employers could be looking at restructuring or redundancies to cut costs in the next 12 months. 

More than a quarter (27%) of businesses are already looking for cost cutting measures, while 35% are unsure the impact of the cost of living crisis will have on how much money they need to save.

More on redundancies:

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CEO fires 900 staff over Zoom: why failure to get redundancy right will have far-reaching implications

Tina Hyland, employment law adviser and solicitor at WorkNest, said employers need to be measured in their approach to redundancies if they decide to go down that road.

Speaking to HR magazine, she said: “For those employers that make workers redundant next year, they must remember to handle them with care and obtain legal advice in advance to reduce risks of unfair dismissal claims. One of the crucial elements that employers must follow to ensure a fair process is a duty to inform and consult with affected employees, either individually or, in cases of 20 or more redundancies, with appropriate representatives. 

Sacking employees with protected characteristics becomes more complicated, Hyland added.

She said: "Employers must also consider whether specific rules affect certain groups of employees. For example, in the case of pregnant employees or those on maternity leave, there are extra protections. They must warn all their employees of a potential redundancy situation, including those on maternity leave or off work with a pregnancy-related sickness, and of how it will impact them.

"Consultation is more than just informing the employee of a decision already made. It should open a two-way dialogue where views and information can be exchanged, with the ultimate aim of exploring ways that redundancy might be avoided and discussing any selection process with the employee."

The survey also showed that 30% of SMEs said they were considering freezing employees’ pay in the next 12 months.

Other businesses have thought about reducing employees’ hours or pay by changing terms and conditions (13%), while 11% want to scale back employee benefits.

WorkNest surveyed 404 employers in December 2022.