Thanks to Covid-19 we are all aware of just how many challenges businesses are facing. Very few will emerge from the pandemic functioning just as they did previously and with exactly the same workforce. Many unpalatable decisions have been forced on the owners of businesses, and the prospect of having to let go of valued and skilled members of staff has had to be confronted.
Redundancy, however, isn’t cheap. It can also be a complicated process fraught with challenges. What is more, in the current circumstances many potential redundancies are not wanted by either party, so considering some of the available alternatives, the ways in which businesses might retain skilled workers after furlough, is worthwhile. Here we look at some of the possibilities.
Pay cuts may be something that many employers would feel nervous of suggesting, but in the current crisis it is often the case that employees would be happy to consider that option as an alternative to redundancy, or as a means of helping to save a struggling business from going under. However, any changes to employees’ terms and conditions of employment, including to pay, working hours and benefits, can be legally challenging to effect. There may be a wording in certain contracts that permits minor changes, but this is rarely likely to cover the kinds of changes that may be needed in these situations.
All is not impossible, however, since if the employee consents to changes the process becomes significantly easier. Even if they do not, the alternative is not necessarily outright redundancy and there is always the option to terminate a contract and then offer the employee immediate reemployment on a new, revised contract. That is not likely to be an easy process either, but may offer some chance to retain workers.
If this latter route is a serious option for an employer – the so-called ‘fire and re-hire’ process – then unfair dismissal claims will always loom large as potential problems. Professional legal advice ought to be taken to prepare for but, hopefully, avoid that eventuality.
For employers whose workforces are represented in part by trade unions, collective bargaining may be yet another route to agreeing changes, but this will usually exclude management roles so individual agreements at higher employment levels may still need to be negotiated separately.
Some employers may have considered reducing pension contributions as one relatively easy way to save money. It still requires employee consultation, however, and not only do particular types of consultation apply to pension schemes, you also need to bear in mind current pension law on contributions.
The furlough scheme offered by the government during the Covid crisis avoided the need for many businesses to lay off workers or reduce working hours, but as the scheme comes to an end many will be faced with such possibilities. For this option to work an employer will need to check contracts carefully to see whether they have the legal power to go that route. Although back in the 1980s contractual provision for such reductions in working hours was common, that is rarely the case nowadays. In most cases today, doing this will also require the consent of employees if the employer is to avoid potential legal claims for unlawful deductions from wages, breach of contract and constructive dismissal. This may be an example of a formerly common contractual clause that would be a useful addition to new employees’ contracts going forward, just in case such a crisis ever faces us again.
If you use casual staff, agency workers or self-employed consultants, then dispensing with them for the time being may be a sensible money saving option. However, defining self-employed status can be tricky. There is a clear difference between the directly employed and others, but in the wake of the Supreme Court’s 2018 ruling on the Pimlico Plumbers case it can be tricky to prove that someone you consider to be self-emloyed is not, in fact, in the category of ‘worker’. Get this wrong and there is potential for having to pay redundancy or being hit with unfair dismissal claims. Again, professional advice would be time and money well spent here. Furthermore, if an employer is looking to terminate a fixed term contract early, checking that there is a valid break clause is essential.
If you offer your employees any non-contractual benefits that can usefully be removed to save money, simply having a frank conversation with your staff about why you need to do this is probably all that is necessary. Again, most employees at the moment are likely to accept such action without quibble if they understand that it actually makes their job more secure.
If none of the above applies, employers are still not entirely out of options. Sabbaticals may be a possibility, for those staff members who can afford them, although in most instances annual leave entitlements continue to accrue during sabbaticals so bear in mind that cost. In rare instances, secondments or redeployments may also be a possibility, although these will require employee consent. Finally, offering people the option to work remotely may save you costs on running a workplace, and offering part-time work or job shares may be of appeal to some.
We hope that this information will have given you food for thought. Above all else, adequate and open communication with employees is the employer’s best way to effect any of these steps without undue problem. Advice is here for you, whenever you need it, and at a time when the last thing that any business wants is to be faced with legal action that was avoidable, we recommend strongly that you avail yourself of it.
