Given the current difficult trading climate many business are forced to think outside the box and look at ways to ensure their business survives the current tough economic climate.
Redundancy is often the worst case scenario as, understandably, companies are hesitant to lose valuable employees but are often left with no choice but to reduce the overall headcount in order to cut costs and stay afloat. However, reducing employee hours can often be an effective cost saving measure and should always be considered before jumping straight into a redundancy situation.
Many businesses will have a “Temporary Shortage of Work” policy built into their handbook which can be a very useful tool in allowing employers to make quick savings by introducing temporary ‘reduced hours’ or ‘short time hours’. Such a policy is crucial as it may be deemed a breach of contract for an employer to unilaterally reduce an employee’s hours without agreement if no such policy exists. This can lead to the employee claiming they have been constructively dismissed or claiming arrears of monies owed.
Although they may seem the same, ‘reduced hours’ and ‘short time hours’ are very different. If an employer puts an employee on short-time then that means the employee has had their hours cut by more than 50%. This is crucial in that in such scenarios the employer is required to issue the employee with an RP9 form and after 4 consecutive weeks of short-time, or an aggregate total of 6 weeks short-time in a 13 week period, the employee can claim redundancy from their employer. The employer may then be required to make the employee redundant, and issue a redundancy payment, if they are not in a position to offer that employee 13 consecutive weeks working at their full-time hours and pay. On the other hand, putting an employee on reduced hours means that the employee has had their hours cut but they will still be working 50% or more of their contractual hours. There is no requirement to issue an RP9 form in these scenarios and the employee does not have the same ability to claim redundancy from their employer.
It is important to note that the “Temporary Shortage of Work” can only be applied where there is a ‘temporary’ shortage of work. A permanent reduction in an employee’s contractual hours may in many respects be exactly what the business requires in order to remain viable. However, if the reduction is to be a permanent reduction then the employer will need to secure the employee’s agreement beforehand and this agreement should be confirmed in writing by both parties.
Employers may also benefit from a carefully worded ‘Hours of Work’ policy in the employee’s contract which states that they are required to work variable hours and that their hours of work may be subject to change. This policy can also be of great benefit to employers when seeking a change to working hours but advices should be sought before relying on such a policy, particularly where the employee(s) involved have been working the same set hours for a significant period of time.
Notwithstanding this, proper and through consultation with employees can often get you the results you need as being open and honest with your employees and explaining the difficult financial position of the company can often lead to their agreement, especially if they understand that this change is an attempt to avoid potential redundancies down the line. Consultation can often also lead to other suggestions that the employer may not have considered and it may materialise that there are other cost saving measures the employer can implement upon the suggestion of the employees in order to avoid reduced working hours entirely. Even if these suggestions are not viable it is often easier gaining employee agreement to a reduction following this as they can visibly see the efforts the business has gone to in order to prevent this. It is often helpful to offer some form of incentive to employees who you are asking to make the change.
The key piece to take from this is that employers should seek advice before making any changes to working hours as each scenario can differ and if you do require assistance please do not hesitate to contact the 24 Hour Advice Service on 01 855 50 50 and one of our experienced consultants will be happy to help.
