It wouldn't be too much of a presumption to state that many employers have had to consider the option of redundancy given the economic environment within which everyone has had to operate.
Many employers, however, are faced with the increasing need to reduce costs while at the same time maintaining staffing levels in order to retain core skills. Indeed, many employers will also be keen on keeping employees in a job and operating on the basis that their current economic difficulties will only be temporary.
As such, rather than going down the road of redundancy, a lot of employers are considering the alternative options of temporary lay-off, short time working or reduced working hours.
What do temporary lay-off, short time working and reduced working hours mean?
- Temporary lay-off arises where an employer is temporarily unable to provide work for staff and involves a complete cessation of work for a temporary period of time, with no payment being received. Importantly, employees may be able to claim financial supports in these circumstances where they have been on lay-off for four or more consecutive weeks or where they have been on short-time for a total aggregate duration of six weeks in a 13 week period.
- Short time working involves a reduction in working hours whereby the employee's hours are reduced to below 50% of their normal working hours. Importantly, employees may be able to claim financial supports in these circumstances where they have been on short-time for four or more consecutive weeks or where they have been on short-time for a total aggregate duration of six weeks in a 13 week period.
- Reduced working week involves a reduction in working whereby the employees’ hours are reduced but the employee is still working 50% or more of their normal working hours. Importantly, employees cannot claim redundancy in such scenarios and it would have to be a voluntary request.
However, before implementing any of the above measures, employers should be aware of their obligations to their employees in such scenarios. One key aspect of any of these processes is consulting with the employee before effecting any such decision.
Is consultation required?
As a general rule an employer ought to consult with employees prior to putting them on lesser hours or temporary lay-off. What is crucial in this respect is for employers to ensure that they have effective terms and conditions in place that cover the eventuality of a temporary shortage of work and that the employee has signed their agreement. In this respect, the important point to note is that a company may only lay-off workers without pay or put them onto short-time working or a reduced working week where they have an express clause in the employee’s terms and conditions allowing them to do so. If the employer does not have such a written policy, the employer is obliged to obtain the employee’s agreement to the lesser hours or temporary lay-off unless the employee gives consent to reduce hours. If the employer does have such a temporary shortage of work policy then they may consult with employees and ultimately introduce lay-off or lesser hours whether or not the employees agree to it.
However, these options should only be seen as a last resort, particularly lay-off, and before proceeding with such an approach the employer should satisfy themselves that they have fully consulted with affected employees on possible alternatives and that these alternatives are not viable.
Notwithstanding the fact that the employer may have reserved the right to put employees on lesser hours or lay-off, an employee may still take a claim on the basis that such measures were particularly onerous or unnecessary in the circumstances. Needless to say, if there's no policy then the employer must consult with the employees with a view to seeking their express agreement to the lesser hours or lay-off option. If they fail to reach an agreement then there will be a risk of a constructive dismissal claim, payment of wages claim and/or a civil breach of contract claim if the employer proceeds with the measures anyway.
An employer should review any relevant documentation relating to information and consultation in the workplace (company policies and procedures) and comply with any relevant procedures in place, for example, the inclusion or otherwise of trade unions or staff associations.
Consultation: The process of communication
Good communication is vital in the planning and implementation of lay-offs, short time and reduced working hours. Aside from an employer’s legal obligations, it also makes good HR sense to keep employees fully consulted.
Whilst informing staff of the situation is not pleasant, it's important that employees hear this directly and honestly from management. Honest communication is one of the key ingredients in managing change as well as managing people. Whilst holding the meeting, it's necessary to have two-way communication which allows for information flowing both to and from employers and employees. This can make the process run more smoothly for all parties involved.
By informing staff of the rationale for the decision it will allow management to explain that the decision is not personal but rather due to business justifications. Explain that it's due to a temporary downturn in the business (e.g. decrease in revenue/sales/funding), rather than breaking the employee’s continuity of service and opting for measures such as redundancy. Remind employees that the business is looking to implement alternatives such as temporary lay-offs, reduced working hours or short time. Through effective consultation employees can feel they have some part in the decision-making process that affects them and the business and it will provide them with a forum to voice alternative ideas on how to bring about the budget savings you must make.
When you consult with an employee, their initial reaction may be one of shock. Reactions from staff could include shock/silence, depression, negative attitude toward work or a sense of helplessness. Companies with access to an Employee Assistance Programme (EAP) may wish to refer staff to this service which will enable them to access confidential counselling from qualified counsellors. This can also be a useful service for managers to prepare for the emotional responses of staff.
Communicating changes to managers
It's advised to communicate changes to both managers and staff alike. Even if managers/supervisors are not directly impacted, the changes in staff levels will impact work practices in the business. Be prepared to tell supervisors and employees how you plan to make adjustments to service standards and production levels and/or expectations. This can assist a smoother transition. If employers fail to acknowledge that "things are different" and that expectations of employees are therefore different, employees may feel that the burden of the reductions is falling on their shoulders and that management has not developed a comprehensive plan. In particular where companies make the commercial decision to implement the changes without provision in their contract of employment or staff agreement, it may lead to staff unhappiness and potential risks for the company.
Bad will among staff is something that's extremely hard to remove so the better prepared a company is in advance of such a process then the smoother the business and process will be. In the consultation meeting you should give as much detail as possible for the decision.
Some extremely important tips for handling the consultation process would be as follows:
- Prepare your rationale for having to introduce these cost-saving measures. In doing so the employer should outline what considerations have gone into the process and what steps the company has taken to avoid such measures to date and what alternatives they have considered which haven’t proved viable. The rationale should identify the number of workers involved, the length of time they're expected to be laid off/on short-time/reduced working hours and the selection criteria to be adopted where the employer has to pick some employees from a group
- Prepare your message. It's always a worthwhile exercise to prepare a draft statement for employees outlining the information above. This should be kept short and to the point and its use can greatly relax the manager delivering the information
- Prepare the next steps and schedule meetings with the employees in respect of the consultation process that's to be followed over the coming days.
- Prepare yourself emotionally. Don't assume personal responsibility for these unfortunate measures as this is a business decision no doubt brought on by external economic difficulties. It may be worth speaking to your own HR manager or to the EAP in order to prepare yourself for what may be an emotional rollercoaster.
- Prepare yourself for employee reactions. analysis has shown that employees typically display several reactions to this type of news: anxiety, disbelief, escape and anger. Acknowledge and anticipate these reactions and this will allow you to respond accordingly and handle the situation effectively.
Whilst there's no minimum notice required for lay-off, short time, or reduced working week, an employer should provide as much notice as possible to employees before they introduce any changes. Employees have their own financial concerns and allowing as much notice as possible will help them get their finances in order before they take a financial hit.
It's also important to communicate regularly with employees and to provide information on business conditions so that a reduction in working hours does not come as a total surprise.
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