Reducing the Workforce
Business: Cambridge International GCSE (2027 Exams), topic 2.1.4
Reducing the Workforce
In some circumstances, businesses need to reduce their workforce. This could be for several reasons:
Dismissal vs. redundancy
- Dismissal is firing someone.
- This typically occurs if they have had to be disciplined several times for poor behaviour or unsatisfactory work.
- Redundancy is when the company is forced to downsize.
- If a worker is made redundant they must receive compensation.
Reasons for making workers redundant
- Workers may be made redundant if the company is introducing automation. This means that manual labour is no longer necessary.
- Workers may be made redundant if the company has to downsize because demand is falling.
How to choose who to make redundant
- The human resources department is responsible for dealing with redundancy.
- When choosing who should be made redundant businesses consider how they fit within the company, how much value they add to the company, and the worker's adaptability.
Recommendation
- When businesses face redundancy decisions, they should recommend and justify which employee(s) to make redundant in a given situation.
- For example, if the company is introducing new technology, employees with outdated skills and low adaptability may be selected first.
- If demand is falling in a particular product line, employees who are directly linked to that line of work may be chosen.
Justification
- However, businesses must also consider fairness and avoid discrimination.
- e.g. based on age, gender, or health
- Clear justification ensures the process is transparent and legally defensible.
Resignation or retirement
- The workforce may also shrink if workers choose to resign or retire.
Test yourself on Reducing the Workforce
When is someone fired?
If a worker is made redundant, what must they receive?