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CBI urges alternative to redundancy scheme

The Confederation of British Industry (CBI) has proposed a radical ‘alternative to redundancy’ (ATR) scheme that could see workers paid to remain at home for up to six months.

The employer’s group is proposing that firms who are suffering a fall in demand have the option of offering a period of extended leave on reduced wages as an alternative to making workers redundant.

Under the ATR scheme, the employee would not work but would be paid £130 per week, double the rate of the current Job Seekers Allowance, to which both the government and the employer would contribute equally.

Firms could either take employees back once the period of ATR had completed or make that person redundant. The employer could even take the employee back earlier if it found that prevailing conditions had improved. If demand failed to pick up, workers would retain the normal full redundancy rights, including the six months of ATR service.

The CBI, which is calling on the government to put in place the plans, believes it would help firms to retain skills during a short and sharp fall in demand and provide workers greater confidence of returning to work.

CBI deputy director general John Cridland said: "We considered various forms of wage subsidy and support for short-time working, but this approach is better.

"Businesses will be more able to cope with sharp drops in demand and prepare for recovery, while workers benefit from improved financial support and a door that is kept open for six months."

"This is not about businesses ducking their redundancy responsibility. In fact if a scheme runs for six months and a redundancy is still made then the business will end up paying more," Mr Cridland added.

The CBI warned that unemployment would rise to more than 3m by next summer unless prompt action was taken.

Union concerns

Brendan Barber, the TUC general secretary, said: "It is better to keep people in work and training with their employer even if on short-term working, rather than sitting at home, which is why unions and other employer groups are campaigning for the kind of wage subsidies that are now common in the rest of Europe."

Pearson Hinchliffe Commercial Law are able to advise you on employment law matters, especially managing redundancies.

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