A third of UK organisations expecting jobs cuts in the next quarter of 2020

According to the latest Labour Market Outlook from the CIPD and Adecco Group, the number of employers expecting job cuts has gone up by half since spring, with 29% of businesses saying they intend to decrease staff levels.

Labour Market Outlook Summer 2020

What is the UK Labour Market Outlook for Summer 2020?

The quarterly Labour Market Outlook by CIPD and The Adecco Group aims to offer an early indication of future changes to the labour market around recruitment, redundancy and pay intentions. This quarter’s survey is based on the views of more than 2,000 employers and was undertaken between 10 June and 9 July.

With the coronavirus (COVID-19) pandemic causing significant issues for companies across the UK, many employers are facing with the prospect of making staff redundant. According to the Summer 2020 Labour Market Outlook:

  • the number of employers planning to make redundancies continues to top the number of employers planning to hire, with the net employment intentions figure for Summer 2020 at –8, a fall from –4 in Spring 2020 and a significant fall from the +21 recorded in Winter 2019/20
  • 33% of employers are planning to make redundancies in the three months to September 2020, up from 22% in the Spring report
  • 49% of employers expect to take on new recruits in the next three months, compared to 40% last quarter
  • 21% say recruitment and redundancies will increase staff levels
  • 29% say their intention is to decrease staff levels, a rise of 7% from the spring survey

Senior Labour Market Analyst at the CIPD, Gerwyn Davies, said the latest Labour Market Outlook was “the weakest set of data” the organisations had seen in years: “Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes.

“Hiring confidence is rising tentatively, but this probably won’t be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market over the next few months. As a result, this looks set to be a sombre autumn for jobs.”

How can businesses keep staff employed post-coronavirus?

The latest Labour Market Outlook suggests that employers are implementing new measures to try and preserve jobs, with 18 per cent of organisation implementing pay cuts and 26 per cent introducing bonus cuts. Pay cuts were most common in construction (44 per cent of employers), business services (30 per cent) and hospitality (29 per cent).

According Kate Palmer, Associate Director of Advisory at global employment law consultancy at Peninsula, there are some other things that employers should consider before making staff redundant:

1. Reducing working hours

Due to a decrease in business demand, businesses should consider if staff could be asked to work fewer hours to help the company save costs. However, bear in mind that if the employer is not permitted to make such a change by a term in a contract of employment (which is unlikely), staff will need to agree to the change. Although they may not be overly enthusiastic at the prospect of reducing their hours at first, they may be willing to accept to it if the alternative is redundancy. 

2. Freezing training budgets

If the company is spending large amounts of money on training, another way to save costs is to stop training provisions temporarily. Although modern-day workers value the opportunity for development in their roles, it should be made clear that this is only temporary until the business is in a healthier situation. Employers should take care if staff are engaged as part of a training contract, as removing the training part of their role could lead to a breach of contract claim. 

3. Freezing pay 

As mentioned, some employers are not providing annual bonuses in this financial year. However, if employees are entitled by contract to benefit from this, not providing these payments could again be a breach of the contract. That said, if there is a discretionary clause in there, which outlines that these payments will only be made if business need permits it, employers could seek to rely on this. It should also be remembered that if bonuses have been paid for the last few years, employees may be able to argue that they have received the bonuses enough times to establish a custom or practice, meaning they could be entitled to receive it this year even without a contractual clause. 

4. Introducing flexible working arrangements

Employers may be considering if redundancy procedures can help them to reduce the number of staff that will be in the workplace, and therefore assist in social distancing measures. However, flexible working offers an alternative to this. For example, staff could be permitted to work from home on a more permanent basis, or shifts could be staggered to reduce numbers in the building at any one time. 

5. Voluntary redundancy

If employers wish to proceed with a redundancy procedure, they will need to ensure that they follow the correct process. One key aspect of this is demonstrating that alternatives to compulsory redundancies have been considered. This can include offering voluntary redundancy to staff. Voluntary redundancy invites staff to put themselves forward for redundancy and therefore help employees who do not wish to be made redundant avoid this. Ultimately, it is down to employers who they permit to be made redundant. They should be prepared to consider these requests.

See also

Five things to consider before making staff redundant

Working from home: what are the pros and cons for your business?

Could a four-day work week ever be introduced in the UK?

Monthly UK insolvency statistics - June 2020

Coronavirus notices

Find out more

Labour Market Outlook Summer 2020 (CIPD)

Image: Getty Images

Publication date: 10 August 2020

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.