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Looking ahead to a time when the restrictions on Irish businesses are eased, many business owners will be wondering how feasible it is to maintain their staff headcount at the levels that were in place prior to the COVID-19 crisis.
The plain truth is that many businesses will find it difficult to take up where they left off before the emergency measures kicked in.
In addition, as economic activity is likely to recover in stages rather than overnight, each business will have to carefully assess their cost of doing business. Headcount is likely to form a large part of that decision-making process.
While redundancies are unfortunately likely to be on the agenda, there are alternatives to consider before confirming the decision to make an employee’s job redundant.
Salary reductions
The first way to save salary costs without making redundancies is to seek your employees’ agreement to a wage cut. Pay is a fundamental term in the employment contract, and you won’t be in a position to make a unilateral decision to cut employee pay. However, the alternative for employees who refuse an offer to keep their position on a reduced salary is redundancy. In the current climate, employees are more likely to at least consider the chance to stay on as an employee on a lower salary.
Layoff and short time
Generally, employers need a contractual right to put employees on layoff or short time. Layoffs occur when an employer suspends employment because of a lack of work. Short-time working is a scenario where, due to unavailability of work, employers reduce work hours by more than half.
A contractual right will make it more straightforward to take these steps. However, it may still be possible to put layoff or short-time working arrangements in place by agreement with the affected staff. If employees don’t agree to proposed layoffs or short-time working, they face compulsory redundancy.
Can job offers be withdrawn?
If job offers have been made and not accepted, businesses should investigate if they can be withdrawn. Candidates who have signed employment contracts but who have not yet started do pose a problem. It may be possible to get them to agree to a period of layoff which would entitle them to receive a social welfare benefit. Delaying their start date is also a possibility though the candidate may be less enthusiastic about this option as it will disqualify him/her from making a social welfare claim.
Reorganisation
The crisis will likely lead to changes in how certain businesses run their operations. Before considering redundancy, it would be worthwhile assessing how working from home or more flexible work patterns might allow more employees to stay on with the business.
Statutory leave
Employees have various statutory leave entitlements that could allow them to take a period of protected leave without breaking their continuity of service. Parents with children under the age of 12 are entitled to take up to 22 weeks of parental leave. Some employees may be entitled to carer’s leave of up to 104 weeks which is also accompanied by a social welfare benefit. This option will not suit all employees but is worth considering in efforts to avoid making redundancies.
Annual Leave
While asking employees to take annual leave does not reduce your outgoings on salary, it may allow you to see out a short period where there is little work for employees. Asking employees to take a day a week for a number of weeks for instance might allow both employer and employee to make it through a difficult trading period.
