Cutting costs? Do so lawfully

The coronavirus lockdown caused a recession with the UK economy shrinking 20.4% in the second quarter. There are signs that the UK is bouncing back. But, that is set against a renewed call to work from home, a large increase in redundancies and proposals by the UK government to ignore the rule of law and leave the EU with no trading deal. Even if your business is in good health, now is a good time to check whether you need to cut costs.


There have already been high profile job cuts running into the thousands. The furlough scheme is about to be replaced by a job support scheme and this will add cost back into your business. Perhaps not surprisingly, there are indications that planned redundancies will be twice the rate of the previous recession. If you’re looking to cut headcount, don’t forget to follow the correct procedure. Otherwise, you could have a raft of claims for unfair dismissal or discrimination. Don’t forget that zero-hours contractors might still have enforceable worker protections. And if you don’t engage freelancers properly, the changes under IR35 might mean they’re your employees.


Your premises have probably been sitting empty during lockdown while you continued to pay rent. Lockdown proved that not only can staff work from home but many would prefer to continue doing so even as restrictions are being lifted. You might be looking to reduce your office space as a result of your reduced headcount and increased flexible working. This saving could mean an immediate boost to your profits. Check your lease. Does it allow you to reduce your floorspace? Can you exit your lease early? Can you move to flexible office spaces?

IT systems

If you’re looking to downsize your premises, maybe now is the time to move your IT infrastructure into the cloud and get rid of your server room. Check the terms you signed up to in haste during lockdown for new remote services. They often contain weak promises. For example, the service is provided “as is” and they exclude all liability. This could be disastrous if your business-critical infrastructure fails or your data leaks. Make sure it’s all secure, with a robust business continuity strategy in place.

Equipment & resources

Are your staff willing to use their own devices going forward? Will you contribute to them buying a new PC or mobile phone? Who is responsible if they break it? If you reduce your headcount and premises space, you might see a similar reduction in your requirements for desks and chairs. Will you need as many conference rooms? Stationery? What do your ongoing supplier contracts say about downsizing or terminating? Do you have to pay termination payments?


The EU has said 31 October is the deadline for agreeing a trade agreement. The UK government has indicated it is willing to leave the EU without a trade deal, meaning WTO basic terms apply. It is difficult to plan around posture politics like this. Under the new WTO tariffs, prices could increase. Or, if the government waives tariffs, prices could drop. But so would tax revenues. Can you cope with prices fluctuating? What measures can you put in place? Can you adjust your existing customer and supplier contracts? What should you put in your new ones?


Has your turnover reduced during the lockdown? If so, you’re not alone. Maybe you need some short-term finance to get through the next few months. Coronavirus grant from the government? Loan or share issue? Bank or VC?

Next steps

You should re-evaluate your business and prepare for a worsening economy. And ensure you don’t make things worse by incurring avoidable liabilities.

If you need advice, contact me or +44 (0) 20 7611 2338.

One comment

  1. I’d add: if you’re intending to make home-working a permanent feature of your business future, you need to help staff to:
    a) check that their leases and home insurance permit them to work from home
    b) have an ergonomically-acceptable workspace, which may mean paying for furniture, IT kit and lighting
    c) get advice about expenses and tax implications to enable them to claim for broadband and other necessary costs.
    d) implement appropriate physical, behavioural and technological measures to protect both themselves and your business from possible cyber-crime and data breaches.

    Point d) is particularly important. Clearly it should already have been addressed, but the ICO in particular has been giving businesses wide latitude and practising very lax enforcement. This won’t last forever, and home environments are rarely secure.

    Who else is using the same WiFi, and how secure is that WiFi in the first place?
    How else has access to the PC or laptop they’re using, what’s stored on it, and how is it protected?
    Who can overhear their phone calls and Zoom/Teams chats?
    What are they printing out, and do they have access to secure shredding when they’re done with it?
    If they are using their own kit, what security and virus protection does it have in place?
    If they are using yours, how well-protected is it from theft?
    How are you going to monitor what they’re doing in a privacy-compliant way?

    Home working will increase, not reduce, your information security and privacy compliance costs – make sure you do it right and that the maths stacks up.


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