Coronavirus: How to reduce your workforce in a controlled way

It’s one of the most difficult, delicate and hard decisions for any business to take. However, the coronavirus (COVID-19) outbreak has made the prospect of job losses and the need to reduce your workforce immediate.

Sooner rather than later, many businesses will have to confront cutting parts of the workforce. It’s a tough exercise at the best of times, but the combination of stress and worry about the virus, coupled with fears about financial security make it doubly so right now.

The most important thing to note is that the government has taken steps to help businesses keep as many people as possible employed, and able to get back to work when the virus is under control. There’s more detail below, but schemes have been set up to help pay the wages of “furloughed” workers during the crisis.

Even with that in place though, you may be thinking about job losses in the very near future. This guide is designed to help you go through that process.

Got 2 minutes? Use our reducing your staff checklist to get you quickly heading in the right direction

Got 10 minutes? Take advantage of our checklist and structured how-to guide below

What government help is available to avoid cuts

The government is taking lots of steps to try to protect jobs and businesses from the coronavirus outbreak. New measures are being announced all the time, but right now, here are the most important areas of help that might avoid the need to cut jobs:

• The Coronavirus Job Retention Scheme helps pay the wages of “furloughed” workers. Furloughed means an employee stays on the payroll, but they have to cease working. The government will pay 80 per cent of wages up to a £2,500 cap. Details of this are still emerging, so it’s important to keep checking back for updates
• Statutory Sick Pay Rebate: Small and mid-sized businesses can reclaim statutory sick pay (SSP) paid for staff sickness absence due to coronavirus. The refund will cover up to two weeks’ SSP per eligible employee

There are a range of other business support measures as well, lots of which relate to business rates holidays and access to finance. While they’re not directly relevant to the cost of keeping staff on, they might help with broader financial concerns which in turn could provide the space to keep staff on.

It’s one of the hardest tasks but ask some key questions before you do.

Looking for helpful advice and guidance to deal with coronavirus business issues? Visit Rebuild, our dedicated hub that brings together the experiences of companies from around the UK.

The basics

• Ask whether you definitely need to reduce your workforce. With the government putting in place support for 80 per cent of employee wages (up to £2,500), you may be able to put off cuts for now
• Look at less drastic options. Reduced working hours, short time working schemes or voluntary unpaid leave might be options worth discussing with employees. Deferring the previously agreed start date of any new joiners is also something to consider and act on. Again, the Coronavirus Job Retention Scheme should help mitigate the need to use these routes
• Take the time to prepare for this. It’s one of the hardest conversations you’ll have, so don’t rush it or make it up on the hoof. Think carefully through what you’re going to say and seek a (confidential) second opinion with someone you trust to give you honest feedback
• Check the rights of your employees. If you’re letting people go, you need to make sure you adhere to the rules on redundancy. The last thing you want is a legal challenge over how you handled an employee exit

Going about this: what to consider and what to read

No one goes into business wanting to reduce your workforce. It’s one of the hardest acts you’ll have to manage and doesn’t get any easier even if you’ve done it several times.

To try and help you deal with this, work through the following reducing your workforce steps

Step 1: Research your options before taking the decision

We’ve already listed out the various government measures available to help try and avoid the need to make redundancies.

The Coronavirus Job Retention Scheme provides the most help, but requires employees to be “furloughed”. A good definition of what this means in practice comes from the law firm, Mayer Brown. As the firm describes it: “A furloughed employee is one who rather than being dismissed for redundancy, is kept on the payroll during a period where the employee does not have any work for the employee.”

Their guide continues: “It does not apply to employees who have already been dismissed or made redundant” and that “it does not appear to extend to subsidising wages where shorter hours or reduced pay have been negotiated in response to COVID-19, nor employees on sick leave or in isolation.”

If you’re still committed to letting employees go, then consider whether reducing their hours might be a temporary measure for some instead. The rules around taking this or other measures can be complex. In the first instance, follow the advice in this UK lay-off and short-time working provisions guide from Pinsent Masons.

If you’re going to follow any of these measures, or make people redundant, then it may well be worth talking to a specialist lawyer before you start the process. It will cost in the short term, but may save considerable amounts of time and effort dealing with legal challenges down the road.

Step 2: Get everything well prepared

One of the most important things you will need is to be up-to-date on the rules regarding redundancy measures. UK employment law has a whole host of restrictions and lines of guidance on this issue, to protect both workers and employers.

One of your best resources for this will be the Chartered Institute of Personnel and Development (CIPD). The industry body has a dedicated business knowledge hub area of its website full of advice and guidance on redundancy and similar measures.

Citizens Advice also has a large, detailed section of its website on workers’ rights which you should consult as part of your preparations.

And perhaps the best guide comes from the government-backed service, Acas. Its managing staff redundancies guide lists six steps to go through:

• Make a redundancy plan
• Avoid compulsory redundancies
• Consult your employees
• Select employees for redundancy
• Give employees notice
• Work out redundancy pay
• Support your staff and plan for the future

A lot of this can be complex and take time to process. Again, this is where investing in a specialist like an employment lawyer now could save you time, expense and problems in the future.

Step 3: Mentally prepare and deliver the message

This is going to be difficult, uncomfortable and (for the staff member and maybe you as well) emotional.

The most important thing is not to go in cold. You need to be well prepared and rehearsed. Having another person you trust on hand to rehearse with will be really valuable.

There’s a lot of advice available about how to approach this most difficult of conversations. An article from business website CNN provides some really good, human tips on how to deal with it. They include:

• Don’t surprise them – it shouldn’t be a surprise right now, but still be aware that shock will be a strong first reaction
• Do it face-to-face – this isn’t going to be possible a lot of the time due to coronavirus, so you’re going to need to think about how you can do it in a suitable way if not
• Be clear and concise – a lot of what you say won’t necessarily be remembered in the shock of the moment. Repetition is important
• Keep your emotions in check – this is going to be hard for you as the manager or owner, but you need to keep in control
• Be honest – perhaps the most important point of all. Again, the news may not come as a shock given the current environment, but honesty is key

There’s more good advice on letting employees go from Fundera.

The last thing to bear in mind before you start delivering the news is to prepare for the unexpected. Every employee will react differently and you may get asked questions you feel unable or unwilling to answer at this stage.

Again, within reason, honesty is a strong policy here.

Step 4: Deal with the aftermath, for them, you and other employees

The process doesn’t finish with delivering the news. If you haven’t already, then you will need to arrange the relevant paperwork for your departing staff member.

Beyond this, the other vital element to consider are those staff who remain. If you don’t tell them what is happening, those who are departing the business will.

There’s a high degree of risk with letting the news filter out this way and wherever possible it will be best to tell the rest of the employee base yourself. Again, the current social distancing guidelines and number of people working remotely makes this far harder.

So, consider the following:

• Consider an all staff call or video call
• Or gather everyone on the office, shop or factory floor if you are still working on-site
• Repetition of your message will be important, so follow up over email if you can
• Bear in mind any employees not working on the day you tell everyone else and follow up with them
• Make it clear you’re happy to answer questions (within reason) and try to offer a message of reassurance

The other thing to bear in mind, if it is appropriate, is to follow up with those employees you let go once they leave the business. If you realistically think you will struggle to do this, then assign someone you trust to do it instead.

A difficult choice to make and to execute

No one is sure how long the current situation will last. Hopefully, the measures the government has taken to support your wage bill and your business mean you can avoid having to reduce your workforce.

If not however, follow the steps in this guide and above all, make sure you do your research and read what you need to. This is a difficult, challenging period for almost every business, but with the right preparation, you can get through it.

Get free expert advice on coronavirus recovery tactics and stories from your peers at Rebuild, our dedicated support hub.