This is the second in our series of articles where we suggest ways to avoid making people redundant. Redundancy should always be a last resort for employers and employees will always have an opportunity to discuss and explore with their employer ways of saving their job.
In this second of three articles we look at ways to reduce the number of hours that current employees work so reducing the need to lose staff permanently.
As economic conditions deteriorate, organisations may have to cut down on the work they do (for example, many car manufacturers have had to cut down production). In these circumstances, employers might try to adopt temporary stoppage arrangements, instead of implementing redundancies.
Many public sector organisations have sabbatical policies in place and some provide employees with a contractual right to take a sabbatical every few years. Such policies and contractual provisions are less common in the private sectors but can easily be adopted at times of financial decline.
Arranging for employees to take periods of unpaid leave is another way of stopping or reducing work temporarily. An unpaid leave period is likely to be shorter than a sabbatical, but many of the same factors are relevant.
Employees’ consent is required unless the employment contract (or collective agreement) contains a clause allowing the employer to place employees on unpaid leave.
As an alternative to unpaid leave, an employer could require employees to take their contractual or statutory annual holiday allowance at quiet times.
It has become fairly common, during periods of economic uncertainty, to lay off all or some employees during a short-term and temporary slow down in work. Employees remain employed throughout the lay-off period. This makes the lay-off solution popular: it provides immediate saving of labour costs, coupled with the flexibility to restore the workforce when trade starts to pick up.
However, employers do not have the automatic right to lay their staff off just because trade is poor. An employer must have a contractual right to lay off, and the contract should make clear that employees will not receive their normal salary during the lay-off period.
If the contract does not give the employer the right to lay off, then any proposal to lay off will need to be the subject of consultation with employees, and will require employees’ agreement.
Complications can arise where an employer only needs to lay off some staff, as it needs to keep the business going but cannot afford to do so in the short term with its full complement of staff. It may be necessary to go through a selection process to determine which employees are to be laid off.