Renishaw job losses prove pay cuts and shorter weeks do not always help

The jobs cull at engineering firm Renishaw will serve as a stark reminder to HR to warn staff that pay freezes and shorter working weeks don’t always save jobs.

HR chief Peter Bowler told Personnel Today that a 20% pay cut last month was “ineffective” at saving 500 jobs globally, with most set to go from its 1,500-strong Gloucestershire workforce.

Following a £10m drop in orders in the first six months of 2009, Bowler admitted the job losses were “inevitable”.

“We instituted the voluntary 20% reduction pay cut [which all employees took] and included the option of diverting the employer contribution to their pension as a way to save jobs, but an incredible drop off in orders rendered the moves ineffective,” he said.

However, the pay cuts will prevent further redundancies, Bowler added.

Trevor Bettany, employment partner at law firm Speechly Bircham, warned employers that staff could get unrealistically high expectations that their jobs would be safe provided they accepted reduced pay or benefits.

“Employees now expect that employers will be more creative and broadminded about alternatives to redundancy,” he said. “But in situations where the employer has no choice but to make lay-offs, it may be under greater pressure from employees about not pursuing alternatives.”

Renishaw’s main customers include car makers and manufacturing firm JCB, which earlier this year was assigned the same fate. It cut 500 jobs despite staff accepting a £50-a-week pay cut in November.

Earlier this month, a CBI survey warned hundreds of employers were about to introduce pay freezes or shorter working weeks to cope with a slump in demand.

Bettany warned HR to ramp up the message to staff that cuts to pay or benefits would not be a ‘cure all’ to avoiding job losses.

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