Why are leaders under pressure to cut in 2026?
The labour market is softening. Unemployment rose to 4.5% in July 2026 and private sector vacancies are falling. When margins tighten, headcount is the most visible cost on the P&L.
Yet retrenchments remain relatively low. The ABS annual retrenchment rate was 1.8% in February 2026, and most employers are holding on to people. They remember how hard it was to rehire after the last cycle.
Scenario "The CFO wants 10% off labour costs by Q3"
James (illustrative) is CFO of a national retail and services group. Revenue has softened and the board wants labour costs down 10% by the third quarter. The default plan is a redundancy round across support functions.
The People team runs the numbers differently. Agency fees, advertising and contingent spend add up to more than half the target. Six roles in the at-risk group match open vacancies in the stores and distribution centres. And two of the functions on the list will need to rehire within 12 months when a new contract starts.
Redundancy would hit the target on paper, then cost more to undo.
What are the alternatives to redundancy?
Redeploy before you cut. Use your recruiters, who are trained to spot transferable skills, to match at-risk employees with open roles. Under the Fair Work Act, a redundancy isn't genuine if it would have been reasonable to redeploy the person, so this is also a compliance step.
Freeze or slow external hiring. Fill roles internally first and pause non-critical external recruitment.
Cut the overheads around hiring. Agency fees, unused advertising, duplicated technology and unmanaged contingent spend are often easier savings than people.
Convert fixed cost to flexible capacity. Move peak or project work to contingent or on-demand models so your permanent base matches baseline demand.
Offer voluntary options carefully. Reduced hours, purchased leave or temporary pay arrangements can save jobs if they're transparent, fair and time-limited.
Protect the programs that build your future. Graduate intakes, apprenticeships and parental leave are cheap to cut and expensive to restart. Employers who cut graduate intakes during the GFC felt the talent gap for years.
If redundancy is unavoidable, manage it well. Voluntary programs often lose your top performers, long-tenured knowledge holders and diversity. Target carefully, communicate honestly and support people into new roles.
How does this connect to build, buy or borrow?
Redeployment is "build", you keep capability and develop it into a new role. Flexible capacity is "borrow", you scale up for peaks without carrying the fixed cost year-round. Both reduce the pressure to cut, and both leave you ready to grow when demand returns.
Where does Harrier fit?
Harrier's delivery model is built to flex. Our scalable solution lets clients ramp recruitment capacity up or down as volumes change, with commercial models that align cost to hiring activity rather than fixed headcount. Our Contingent Workforce and MSP solutions also bring visibility and control to contractor spend, one of the most common hidden costs we find.
When clients need to shift from external hiring to internal mobility quickly, our embedded talent teams can pivot within weeks, because they already know the roles, the people and the hiring leaders.
[TESTIMONIAL] Brief: a client on how Harrier helped them reduce recruitment or contingent costs, or redeploy talent, during a period of cost pressure.
FAQs
Do I have to consider redeployment before making someone redundant? Yes. Under the Fair Work Act, a dismissal isn't a genuine redundancy if it would have been reasonable to redeploy the employee within the business or an associated entity.
What costs can I cut instead of people? Agency fees, recruitment advertising, unused technology licences and unmanaged contingent spend are common places to start.
Are voluntary redundancies a safer option? Not always. They tend to attract top performers and long-tenured employees who are confident of finding new roles, which can drain knowledge and diversity.
Series links Build, buy or borrow · Article 3: Is RPO cheaper? · Contingent Workforce/MSP page · Download the white paper.