Should You Be Cutting Costs?

 As we saw the introduction of the National Living Wage, many employers are looking to cut costs elsewhere to help stabilise their business under these difficult conditions. So what can you do to help manage this new circumstance? We take a look at some of the options available to you:

Wage Costs

Choosing to reduce your wage costs is a massive decision and one that should not be taken lightly. If this is something that you do decide to move forward with, it is important that you meet with all of your employees to discuss your reasoning and to discuss an agreed solution. Topics to get their opinion on include: reduction in hourly rates or commission, reduction in hours, additional unpaid holidays or extended lunches, or even potential redundancies. Once you and your staff come to an agreement, it is key to amend their contracts. Communication is important and you should make sure that you meet with each employee separately to discuss.

Propose Ideas

Whilst you can’t breach contracts and cut your staff’s hours without permission, you can give notice of change. For example, you can make your employees aware that in six months’ time you will be stopping time and a half for any overtime undertaken. Or stopping the option of overtime altogether. It is better to discuss all ideas with your staff because you will be needing them to agree with you before you can move forward with a plan.

Consider Redundancy

If you have tried and exhausted every other option available to you, then it might be worth considering redundancy. In this instance, redundancy is a dismissal therefore procedures should be followed correctly and your selection criteria should be as clear as possible and non-discriminatory. You need to be aware of your employees rights when moving forward with this decision. Employees must have a minimum of two years’ service to claim a redundancy package and the costs are outlined as suck:

Between the age of 16 – 22: Half a week’s pay for each full year of service

Between the age of 22 and 41: One week’s pay for each full year of service

Over the age of 41: One and a half week’s pay for each full year of service

Other Options

  1. Be strict with staff holidays and only approve their holiday during quieter periods in your business.
  2. Consider hiring staff for a 37.5 hour role, rather than a 40 hour a week role. This could help save you almost £900 a year.
  3.  Similarly to the first point, you know when the quiet times are in your salon so it may be worth shutting down during this time.


Has your business had to go through some recent cut backs since the introduction of the National Living Wage? Leave a comment below, we’d love to hear about your experience and how you managed to handle the situation.