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An Alternative to Redundancy?
30th October 2009
The CBI has warned that unemployment could rise to over 3 million by next summer unless urgent action is taken to save jobs and businesses...
CBI warns of further rises in unemployment
The Confederation of British Industry (CBI) has warned that unemployment could rise to over 3 million by summer 2010, unless urgent action is taken to save jobs and businesses.
A report undertaken by the CBI (the UK's leading business organisation speaking for some 240,000 businesses) and Siemens plc (a leading global engineering and technology services company) proposes a voluntary "Alternative to Redundancy" scheme under which employers and the Government would jointly pay laid off workers to stay at home for a maximum period of six months. Employers could therefore avoid losing skilled workers if the government were to back the scheme.
How would the Alternative to Redundancy Scheme (ATR) work?
The Alternative to Redundancy scheme would only be implemented after a consultation process where no alternative job was available. As such, the scheme would help prevent job losses and give employees greater security.
Employees would not work during the period of lay-off, but would be paid twice the rate of job seekers' allowance – half by the Government and half by the employer. Instead of losing their jobs, employees would be retained, with the prospect of being called back to work when economic conditions improve.
Where demand fails to pick up during the lay-off period, full redundancy rights would be preserved; including the six months of ATR service and the employee would be free to find another job at any time.
In the report, the CBI Deputy Director-General, John Cridland, warned that although the worst of the recession was over, businesses still faced a long convalescence, and dole queues would continue to grow. He explained that the ATR scheme would not involve any extra cost for the Government, unlike wage subsidies, and was only likely to be taken up by businesses which were serious about saving jobs. He added that the scheme would enable businesses to cope more easily with sharp drops in demand and help them prepare for recovery, while workers would benefit from improved financial support.
The CBI Deputy Director-General also called on the government to review the length of redundancy consultation because the current 90-day period applicable for 100 or more affected employees “prolonged uncertainty for staff and the organisation”. In addition, the 2011 increases in National Insurance contributions should be deferred as being a further tax on employment at a time when the economy could be making a weak recovery.
Andreas Goss, Siemens’ Chief Executive, said he supported ATR and highlighted the CBI’s call for a long-term focus on skills and training to support expected job growth in the new technology and green sectors. He added that the UK needed a highly motivated, adaptable and skilled workforce to compete globally.
Further Advice and Support
Further support and advice in respect of how to handle redundancy can be obtained from your HR Department. For NorthgateArinso clients, our NorthgateArinso Advice Line are on hand should you wish to discuss the matter of redundancy in more detail. Call the team, on 0845 299 0243, who will be happy to help.
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