Cost-saving workplace changes must be communicated

Explaining cost-savings to employees

By: Kate Southam, Editor of

Employers must consult staff before introducing major cost saving options such as a four-day week or directing staff to take holiday leave.

The managing partner of Harmers Lawyers Joydeep Hor said while most employers are well-intentioned and just trying to save jobs, they must obtain the “proper consent” from employees to avoid breach of contract claims.

The most common plans include nine-day fortnights, directing staff to use up holiday leave, salary and recruiting freezes and redeploying staff to other areas of the business.
“A lot of employers are doing it quite  tough and are genuinely trying to avoid terminating people’s employment by coming up with alternatives.

“Because they are not sacking people they don’t think it is that bigger deal – varying everyone’s employer arrangements 

“However, an individual’s employment arrangements can only be varied or changed with their consent whether that relates to a written or a verbal [employment] contract. Suffice to say everyone has a contract.

For small business owners this means talking to staff members on an individual basis. If there is union membership, this must also be considered when obtaining consent.

Mr Hor said other considerations include:

<ul><li>Providing an appropriate amount of time for staff to adjust to the changes, particularly full time staff who have never known any different. </li>

<li>Where possible, allowing staff to retain full time benefits so in the event of redundancies employees are not further disadvantaged. </li>

<li>Understanding the law on directing staff to take holiday leave. Under most employment contracts, an employee can be directed to take a quarter of his or her leave only once they have accrued eight weeks holiday leave. </li></ul>
“As fair as the employer might think they are being by keeping people on board, they still have to go through a process both legally and ethically in terms of talking to people about these changes.

“Without this consent the employer exposes themselves to litigation, as well as potentially harming employee trust and morale,” Mr Hor said.

“Where employers are transparent with their people instead of presenting decisions as fait accompli and where they try to understand the impact of the decision on people they will get the buy in of staff and build up trust with employees.

He said most employees were willing to work with an employer to save jobs and some will even welcome the opportunity to have more personal time.

“The employer is essentially saying to its staff, ‘We don’t want to make any redundancies. We are so committed to retaining you that we are willing to take a flexible approach to do so’,” Mr Hor said

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