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Restructures and redundancies spike: preparing with care

With the struggle for cost efficiency at the top of the agenda for many businesses, restructures and redundancies are set to rise. Here we look at trends impacting employment and how a well-managed redundancy process can be the difference between business integrity and costly tribunals.

The impact of wage hikes and automation on UK employment

There are many external UK and global factors impacting the economy and shaping key business decisions. But for the purposes of this article, we’re focusing specifically on employment matters that are driving restructures and redundancies.

Firstly, technology’s impact on employment cannot be ignored. For some time now, technological advances and the rise of AI have accelerated the automation of some processes. Although not replacing people altogether, technology will affect productivity and team dynamics.

More recently and specifically, the changes announced in the Budget are having a significant impact on many employers, which was fully felt in the April payroll onwards. Increased national insurance contributions (NIC) along with a decreased NIC secondary threshold have placed a particular financial strain on some employers this month.

National Minimum/Living Wage increases have also put pressure on margins. The higher rate (National Living Wage) brings an increase of 6.7%, which is significantly higher than the median c.3% award that forecasters predict for employees across the board this year. Those employing younger workers and apprentices are hardest hit and can expect to see an 18% increase in their pay bill given the significant uplifts awarded to those workers.

CIPD forecasts a rise in redundancies

CIPD findings suggest that around a quarter of surveyed employers intended to reduce their workforce through redundancies in the three months to March 2025. With the factors outlined above, this trend is set to continue. Peter Cheese, CEO of the CIPD, has suggested, rather gloomily, that “these are the most significant downward changes in employer sentiment we’ve seen in the last ten years” and that “employment indicators are moving in the wrong direction”.

It’s not possible to provide all the advisory notes on this wide and deep topic. But we’ve put together this helpful reminder of three key areas to focus on before starting any type of downsize, restructure or redundancy.

1. Be clear when outlining the business rationale

2. Developing fair and meaningful selection criteria

3. Holding meaningful consultation

Redundancy programmes are never easy. Managed poorly, they can open the door to employment tribunals, reputational damage and unnecessary costs. On the other hand, a well-managed process can preserve business integrity and employee trust.

There are many other variables to consider that can emerge during a redundancy programme, such as ‘bumping’ and family leave. Please contact Kerri Constable for a conversation about HR and legal support in this important area.

authors:kerri-constable