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CBI proposes alternative to redundancy

A radical alternative to laying off staff could see workers, whose firms are suffering a fall in demand, paid to remain at home.

The plan has been put forward by employers’ group, the CBI.

Staff would be paid a nominal weekly wage of £130 to which both the government and the employer would contribute.

Employees would stay off work for up to six months until their employers were in a position to take them back once the economic downturn has eased.

Under the Alternative to Redundancy (ATR) scheme, the CBI said, employees would not work but would be paid an allowance equal to twice the rate of the Job Seekers' Allowance, with half coming from the employer and half from the government.

While on ATR an employee could seek new work, but the scheme would allow firms to take employees back when the period expires or if business improves earlier.

Should, however, demand fail to pick up then full redundancy rights are preserved and would include the 6 months extra of ATR service.

The CBI said that an ATR scheme would only be implemented following consultation.

The employers’ organisation also argued that the government needs to look at the length of consultation for redundancies.

At the moment, firms must give a consultation period of at least 90 days where 100 or more employees face redundancy in a three-month period. But, the CBI said, such a timeframe prolongs uncertainty for staff and hampers the ability of firms to adapt to changing circumstances.

A further recommendation would see the rise in employer National Insurance contributions, due to come into effect in 2011, deferred.

The increase would be an additional tax on employment at a time when the economy could be making a weak recovery, the CBI claimed.

John Cridland, the CBI’s deputy director-general, said: “The worst of the recession may be over, but businesses still face a long convalescence and the dole queues will continue to grow. The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers.

“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.”

Mr Cridland added: “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.”