On 30 September 2021, the furlough scheme came to an end after 17 months. It is unclear how the end of the scheme will affect UK businesses and the economy as a whole at this point in time, however, in the event businesses face a short-term post-furlough economic decline, employers will of course need to adapt to the changing circumstances.
As discussed in Parts I and II of this newsletter series, ((available here (Parts I) and here (Parts
II)), redundancies may not be the ideal solution. Employers may want to consider ways of temporarily reducing outgoings, ensuring they are in a position to meet customer demand once economic circumstances improve. This newsletter will explore ways of reducing the amount of work done by employees, in turn reducing an employer’s costs.
In what other ways can we reduce payroll costs?
1. Overtime bans
If an employee’s right to work overtime is contractual, the employer will need employee consent before introducing a ban on overtime. Best practice is to obtain the employee’s consent to the ban in writing, specifying that the employer reserves the right to end the overtime ban as and when business picks up. If employees do not have an express contractual right to work overtime, the employer will not usually need to obtain employee consent in order to ban overtime unless, for instance, the employer has always paid overtime at a specific rate over a long period of time such that a right to paid overtime may have become an implied term.
2. Short-time working
In our previous newsletter on this topic we discussed the option of laying off staff during times of economic difficulty. Whereas lay-off involves sending home employees with no work, short-time working involves providing employees with less work, for less pay (less than half a week’s normal pay to be precise). There is a statutory short-time working procedure that must be followed if employers wish to place their employees on short-time working.
Just as with lay-off, the imposition of short-time working for too long may result in the employee gaining the right to serve notice and terminate the contract themselves (and receive a statutory redundancy payment if they have over two years’ continuous employment). This means the outcome of the break may be out of an employer’s control.
3. Flexible/part-time working
Employees with at least 26 weeks’ continuous employment have the right to ask for flexible working. Employers may be surprised at how many employees would rather work fewer hours for less pay, than face redundancy. Employers may invite applications for flexible working across teams, departments, or certain levels to gauge the level of enthusiasm for temporary flexible working.
As ever, effective communication will be key when implementing any of these changes and we would advise employers to adopt an open and honest approach with staff.
We are ready to advise and support your business through these challenging times. Please get in touch with your usual 3CS contact to find out more about how we can help.
