An economic re-start over the coming months means businesses will face tough decisions, . As redundancies are neither cheap nor easy, the alternatives to achieve savings yet retain skilled staff are worth examining. Here are some of the options together with the legal issues to consider.
Changing employees’ terms and conditions
Adjusting employees’ contractual entitlements such as pay cuts or reducing other benefits can make good savings.
Pay, benefits and hours of work can be ‘express terms’ (written down), ‘implied’ (created by custom and practice) or ‘incorporated’ - derived from collective agreements with Unions. Major changes require the variation of employees’ contracts and this is legally challenging.
Our advice would depend on things like the specific terms of your contracts and whether your staff are unionised. Some minor changes may be permitted in the terms but these are unlikely to achieve much-need costs saving.
Most changes will either need your employees consent or, if not forthcoming, terminating existing contracts and offering new ones containing the changes needed.
Either route requires careful handling. If you decide to take the dismissal/re-engagement route, you’ll need to be mindful of the legal pitfalls such as triggering your legal duty to consult and potential unfair dismissal claims.
Pension scheme changes
Pension changes can look attractive but may still require you to consult with employee representatives. Special consultation requirements apply to pension schemes.
Lay-off and short-time working
The CJRS was designed to avoid lay-offs or reducing working weeks. However, when the scheme ends it may be that employers will reconsider these options.
Again, you will need to look at your employment contracts but few businesses currently have lay-off terms. Without contractual ‘permission’ you are back to the ‘changing terms and conditions’ section above. Without your employees’ express and informed consent, you risk claims for unlawful deduction from wages, breach of contract and constructive dismissal.
Reducing use of contract workers
Dispensing with the services of casual or agency workers and self-employed consultants will reduce costs but make sure none of them qualify as ‘employees’. If they do they will have statutory redundancy pay and unfair dismissal rights. Check any fixed term contracts to ensure there is a ‘break’ clause. If not, you could be liable to make payments to the worker until the end of the fixed term.
Non-contractual (‘discretionary’) benefits are easier to reduce/remove. Employees would probably rather lose these ‘extra’ benefits than face a reduction in salary or risk their jobs.
Redeployment, secondment and sabbaticals may also be on your list. Redeployments or secondments need your employee’s consent (in the absence of an express right to do so in the contract of employment.) A sabbatical, or career-break, is simply time away from work and some employees can afford some time off. Continuity of employment is generally preserved during a sabbatical.
Part-time working or job-sharing can reduce costs. Seek consent here and set out the new ‘regime’ in writing. Remote, home or flexible working all reduce overheads but be aware of our advice above on changing terms and conditions. Also consider issues such data and health and safety.
Communication is key
With any changes, engaging with your workforce will be key to getting buy-in. In our experience, open communication goes a long way to getting consent to changes and consent reduces your legal risk is almost nil