Can retailers follow other businesses and offer extended career breaks to cut costs, asks Liz Morrell

Both BT and KPMG hit the headlines in recent weeks when it was revealed they were offering extended holidays or sabbaticals to employees to cut costs.

The CBI, meanwhile, is lobbying the Government for a formal Alternative to Redundancy (ATR) scheme to be added to the statute books, which CBI employment policy adviser Benjamin Digby says “would provide valuable breathing space for firms who have experienced a sharp, but purely temporary, downturn in business”.

The principle is clear, says Croner Consulting employment law consultant Jo Potts: it enables companies to retain vital skills while they wait for the economy to pick up.

“With redundancies you can be in the situation 18 months down the line where you need more staff than you have and there is no one in place in terms of succession planning. Suddenly the savings you would have achieved haven’t been realised,” she says. The ATR could also benefit employees by giving them some welcome time out while maintaining job security.

But such measures are only temporary, warns Potts. Employers need to be confident of a turnaround in the imminent future, otherwise they are just postponing the inevitable. There is also the issue of managing staff remotely. How do employers keep those on career breaks motivated and up to date with the business? Without that, how valuable will they be when they come back?

While many retailers have implemented recruitment or pay freezes, or undergone redundancy programmes, none seems to have embraced the sabbatical or extended holiday concept. Mike Emmot, an adviser at the Chartered Institute of Personnel and Development,  believes it is partly to do with the industry. “In financial services it’s reflective of the relative high value they place on the high performance of their people.”

Others suggest it is an issue of scale. High staff turnover at store level would make it impractical, while at head office there aren’t the economies of scale necessary to make significant savings. Some say, though, that it could be used for project teams where investment may have been put on hold.

Like John Lewis and Asda, Marks & Spencer offers an unpaid sabbatical as part of its HR policy for staff with more than five years’ service. But despite making around 400 head office redundancies earlier this year, a spokeswoman says the focus was on redeployment of staff and recruitment freezes, rather than paid leave.

While career breaks may have a place in industry, their use in retail looks limited.

The CBI’s proposals

The Alternative to Redundancy (ATR) scheme would give organisations the option to place an employee on ATR for up to six months, during which time they would not work but be paid an allowance equal to twice the rate of Job Seekers’ Allowance. Half of this would be paid by the Government and half by the employer.

If demand failed to pick up, full redundancy rights would be preserved. However, companies would need to go through a consultation before implementing the scheme.

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