An unprecedented time – preserving your business
The current crisis in relation to the coronavirus has very quickly taken on a different complexion for many businesses. It is no longer planning for self-isolation and how we control the spread of the virus within the workplace. Many businesses are planning for survival as they are facing the stark reality that trading levels may drop significantly to a level where operating costs will outweigh current and projected revenue streams.
Organisations that have a clear view of their people resources and adopt a flexible strategy to the changing commercial and economic environment are more likely to minimise the disruption to their businesses. This may mean that in some cases difficult decisions must be made which will have a detrimental effect upon the workforce. However sound decisions made now could safeguard businesses for the future, with redundancies be treated as a last resort outcome given the potential costs involved:
- Reducing hours: If only temporary changes are needed to provide some financial breathing space short-time working, part-time or flexible working or overtime bans could provide the help that is needed.
- Temporary stoppages: Faced with the reality of no job in the short-term, employees may be open to consider a sabbatical, taking unpaid leave, taking a period of paid annual leave or being laid-off.
- Reducing payroll costs: A reduction in costs can be achieved in different ways and does not have to always be reliant on a reduction in headcount. Would pay freezes, pay cuts or the withdrawal of bonus entitlements be more appropriate?
- Reducing headcount: Compulsory redundancies are not the only way to reduce headcount. Consideration should be given to voluntary redundancy, recruitment freezes, reducing non-permanent staff, the withdrawal of new job offers or deferring the start date for new joiners, reducing the number of agency staff, considering redeployment or secondment of staff or even early retirement.
Whilst the impulse may be to look for a quick fix which may be seen to be job losses, employers should not be surprised that in difficult times employees will be less resistance to change and may be amenable to different options when the only other alternative is redundancy.
Any strategic fix for your business should involve a robust operational readiness assessment before communications are made to employees, who at this time are looking for clear management direction. Key considerations in ensuring the strategy is fit for purpose would be:
- Establishing whether redundancies are the only option. Any redundancies come with costs and may leave the business faced with a skills shortage later in the year.
- Having certainty that there is sufficient flexibility in the plan to be able to respond quickly to any changing trading conditions (good and bad), if implementing alternatives to redundancies.
- Recognising that any decisions affecting the workforce must consider collective and individual employment rights (statutory and contractual). Advice at the planning stage is important so that legal risks can be managed and accounted for. The legal framework around lay-off, short-time working and statutory guarantee payments can be tricky to navigate, as is the collective consultation obligation, which may be triggered where proposed workplace changes may affect 20 or more employees.
None of us are currently operating in a perfect world and there are some difficult times ahead. FG Solicitors are experts in all areas of Employment Law and HR and we can guide your business through any difficulties you may face like this one. Feel free to call us on 0808 172 9322 for a no obligation discussion.