What will the world of work and business look like for you in 2021?
None of us really know the answer to this question, as the Covid-19 pandemic has resulted in significant long-term changes to our business landscape.
Many businesses are operating at best, on reduced business activity and reduced customer offerings, with a significant impact on turnover, while many are trying to pivot their businesses and/or create new offerings to bring to market.
As a result of these challenges, many businesses will need to make difficult decisions in terms of managing their staffing costs. This may mean changes to employee’s working hours, days, pay, layoffs, or redundancies.
The most important thing to remember is that, if you need to make changes to your employee’s Terms and Conditions of Employment, you are required to consult with your employees and all changes must be agreed, in writing, between you and your employee(s). Terms and Conditions of Employment cannot be changed without consultation, and written agreement.
If you agree permanent changes, then other relevant documents will also have to be updated, including the relevant company Policies and Procedures, the Employee Handbook and potentially the Contract of Employment itself, depending on the changes agreed.
HR Planning for 2021
If your business has been financially impacted this year, and you’re not sure if you can sustain your current levels of employment, then it’s a good idea to engage in HR Planning, to review your staffing costs, and to create a new model that will work for your business in this new and changing business environment.
If you’re anticipating your business will be operating on reduced business activity, as part of this HR Planning process, you will need to ask yourself the following questions.
- What business hours will you operate? What Days, Hours, Times of Day will you open for business?
- What skills are required to service revised operating times, revised offering, revised services?
- Will your employees be working from home, onsite, or a hybrid of both?
- How do any revisions such as reduction in working hours affect staff availability?
- How have your employee’s circumstances changed and how has that impacted on their availability to work?
- Will you have to reduce pay and if so, how are you intending to do that? e.g. by reducing staff hours, days or job sharing?
- How will you show your employees how you have looked at and/or tried as many alternatives as possible before reducing pay or hours?
- Will you be able to retain all your staff in employment and if not, what process will you employ to assess your needs?
- If you do have to reduce staff numbers, what criteria will you use for redundancy selection and how will you engage in the consultation process?
For any re-structuring or redesign process to run smoothly, and to be legally compliant, you will need to work in close collaboration with your management team, HR supports and you will need to talk to your employees and employee representatives or union representatives, as appropriate, about these changes.
In this HR Update, there are some guidelines for the following restructuring options:
- Temporary Reduction in Days/Hours or Pay
- Job Sharing
- Temporary Layoff
- Other Temporary Options
1. Temporary Reduction in Days/Hours or Pay
If you are considering this option, you will need to refer to your Contracts of Employment and Employee Handbook. They will give you guidance on your policies and processes.
As part of the consultation process give employees enough time to consider the changes and invite them to revert with reasonable alternatives in advance of confirming any changes in writing. You will want to show that you have already considered and looked at as many alternatives as possible.
For some employees reduced days/hours or pay may suit their own changed circumstances, but its only through the consultation process that you find this out.
If the role or roles are not skill specific then you could ask for volunteers (i.e. there are multiple employees in the same role) but if it is skill specific then it can’t be voluntary and you will need objective, justifiable reasons for making the changes.
In addition to the written agreement, it’s also important to keep a documentation trail of the consultation process itself
Job sharing is another option, where two employees share a role and split the hours between them. This can be split by hours or days per week or fortnight. This flexible working arrangement may suit some of your employees and if it is not skill specific, you can ask for volunteers.
This process does require you to consult and get agreement on the new terms and conditions. Moving employees into a shared arrangement may require reallocation or redefinition of their role and responsibilities and Job Descriptions may need to be updated. You will also need to show that you have looked at and considered as many alternatives as possible, before making this proposal.
If you are reducing days/hours or pay or job sharing, then you will need to consider the following.
- Getting Agreement in writing – Reducing days/hours or pay or job sharing must be agreed in writing between the employer and the employee. You don’t necessarily have to re-issue a new contract of employment but you do need to get written agreement that the employee has agreed to take a reduction in days/hours or pay or agreed to job share and any changes to their role and responsibilities that may result from that change. This doesn’t always happen, and if the changes are not agreed in writing, it can lead to employee relations problems and potential claims down the road.
- Agreement in terms – In this agreement you will need to state what the change is, how long you think it is for, when you think it will be reviewed or if it’s a permanent change then you need to note and communicate that.
- Selection criteria – You need objective and justifiable selection criteria. You will need to apply the criteria fairly and consistently across departments or the business. When you are looking at selection criteria make sure you are being fair and consistent and that you are treating everybody equally.
- Paper trail – You will need to keep proper paper trail of the consultation process.
- Equality – Be conscious of equality legislation when making your decisions, particularly as it applies to the 9 protected grounds.
Where possible, it’s best to look at reducing days/hours or pay and job sharing before considering temporary layoffs.
If you are closed or unable to provide work, then you have no option. During lay off employees are still employed by you, even if they are not receiving payment from you.
You will need to refer to your Contracts of Employment and Employee Handbook for guidance on your policies and processes.
For some employees’ temporary layoff may suit their changed circumstances, particularly if they have transport or childcare or other challenges, but its only through the consultation process that you can find this out.
If the role or roles are not skill specific (i.e. you have multiple employees in the same role), then you could ask for volunteers, but if it is skill specific then it can’t be voluntary.
If you don’t have a clause in your contract of employment that gives you the right to lay people off, then legally those people are entitled to be paid for all the hours you laid them off. This is one of the reasons it’s so important to have a solid contract of employment in place.
Temporary Lay Off Selection Criteria
The criteria should be reasonable and applied fairly. For example, you could do last in, first out, or a skills matrix and retain the people who have the required skills. That’s a justifiable reason but if that is the reason you use then you must apply it across all the business or department.
4.Other Temporary Options
Depending on your business and your own circumstances, the other temporary options that you can consider, to manage staffing costs, include:
- Reducing reliance on contractors by bringing outsourced work back in-house
- Hiring pause, pay pause, redeploying or reskilling employees
- Annual leave – this is an option if its requested by the employee, and you have the request in writing
- Unpaid statutory leaves- some employees may request unpaid leave such as paternity or parental
- Redeployment to another position – an employee agreed to take up a different role
- Re-Skilling – this can be used to upskill or cross skill employees to meet the needs of 2021 and beyond in your business
As with all other arrangements, you will need to get written agreement and a documentation trail for the consultation process.
The other key message in all this is to engage with employees every step of the way.
Thank you for reading and engaging with me here. If this is a current issue for you or you would like some more information or support, please contact me at firstname.lastname@example.org. If you need help with employee contracts and handbooks check out Simple HR Online.