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Wednesday, June 24, 2020
Why do it?
The law requires you to look at means of avoiding redundancies before you proceed to them.
It takes some time for the redundancy and notice costs to unwind and for wage savings to manifest themselves.
Finally, when you lose staff you lose customer contacts and organisational knowledge. Is it worth it if you are potentially going to have to recruit in the foreseeable future thereby incurring recruitment and induction costs.
We are in a unique situation. A combination of coronavirus, lockdown, furlough and home working has created a once in a generation sense of “new normal”. It is a chance to examine terms and conditions in contracts, there is also a real need to think constructively about bridging the gap between the end of furlough on 31 October 2020 and say spring 2021.
Constructive suggestions for staff
I have four constructive suggestions that you might put to staff:
- On a short term basis you reduce both hours and salary. Typically five days to four days with salary reduction to 80%. You reserve the right to increase to full-time if things pick up.
- Deferral of pay. Typically an individual continues to work full-time but receives say 75% for his or her pay for the next six months. This is on the basis of a contractual commitment to repay this money over the following twelve months. If the individual leaves, the agreement is that there is no repayment of deferred monies and you must avoid pay going below national minimum wage levels.
- Sabbaticals which can be unpaid or on reduced pay. The contract of employment continues, a return to work is guaranteed in the same post at a fixed point in future. In the meantime, there can be keeping in touch days, training, and a specific mentoring contact.
- Finally, you can offer home working on a permanent basis in exchange for the individual setting their own hours to suit their own needs and a modest salary reduction of say 10% to represent the saving on time and expense of the daily commute.
You lose nothing by making these proposals. They may prove attractive to the majority of staff such that the minority who refuse can potentially be dismissed fairly on notice without redundancy pay on grounds of SOSR.
If unsuccessful, it shows you have at least tried and demonstrates a clear commitment to consultation.
Written by Robert Gibson, Senior Consultant - Employment Law
Robert is a Senior Consultant at Samuel Phillips and specialises in employment and business matters. He advises in relation to employment and shareholder disputes, including pensions and related issues.
