According to research by employment law firm GQ Littler, the number of redundancies in the UK has fallen by 21 per cent in the last quarter.
From January to March 2022 - when the figure stood at 50,382 - it dropped in April to June 2022 to 39,669, which is rather a surprise with a poor economic outlook and the possibility of recession - and with firms facing rising business rates and inflation eating into margins.
Philip Cameron - Partner at GQ Littler - said:
“Traditionally a squeeze on margins, such as the one being created by the spike in inflation, we would see businesses reducing costs through redundancy.”
He added that the extreme shortage of available staff means many firms are retaining underemployed staff rather than making them redundant - saying:
“They are concerned that when the economic outlook starts to look better, they won’t be able to rehire those staff. Many employers will have learned this the hard way following the pandemic”
He went on to say, however, that despite many businesses currently retaining underemployed staff, it did not mean that the drop-off in planned redundancies will not take place - adding:
“Business is by no means out of the woods yet, and as rising interest rates slow the economy, we may see more redundancies in the future.”
Tania Bowers - Global Public Policy Director at the Association of Professional Staffing Companies - stated:
"In this environment, it’s perhaps no surprise that businesses are keeping staff rather than making decisions to reduce headcount. Employers have seen the impact on service delivery of perhaps reducing headcount too far during Covid in the travel and hospitality industry and may be taking a more measured approach.”
The fall in redundancy plans, however, has not stopped employees from discussing the topic.
Jill Cotton - career trends expert at Glassdoor - made it clear that although workers were now in a stronger position - compared to when redundancies reached their height in 2020 - not all worries had been dispelled.
She stated:
“The sharp decline from the record highs set during the pandemic hasn't eased employees' worries about being laid off - soaring inflation and cost of living may push companies to tighten their belts.”
Chris Parker - Managing Director of Renovo - stated that HR should get a clear process in place should redundancy plans change later in the year - saying:
“Employers also need to identify and determine how support will be provided to staff in the event of redundancies. Honesty and transparency are always key. Having the preparation done enables clear and consistent messaging through the process. It is vital to avoid ambiguity.”
Paul Britton - Director of Britton and Time Solicitors - added that HR must also remember the relevant reasons for redundancy - cessation of type of work; closing of the workplace and that the work has diminished - in addition to following the correct processes if there are plans to resume redundancies in the future.
He said:
“If HR teams don’t stay on top of the process and ensure it is fair then they stand to face serious Employment Tribunal claims that could cost tens of thousands of pounds to either settle or fight.”
