Can employment law help deal with difficult trading conditions?

Published November 04 2019

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The latest Industrial Trends Survey by the Confederation of British Industry (CBI) makes for some gloomy reading for those in the manufacturing sector, with those manufacturers surveyed anticipating decreasing output and the fastest fall in employee numbers since 2010. But it’s not just manufacturers who are facing challenges at the moment.

If your organisation is affected by difficult trading conditions, it’s likely that you will be considering taking steps which may affect your employees. If so, you may be wondering how employment law can help you. With this in mind, we look at some common scenarios below and how you cab use employment law to support your organisation.

  • Temporary downturn in work?

If this is affecting your business and you don’t have enough work for all your employees you may be able to use short time working or lay-off to help you manage the situation, if you have the necessary clause in your employment contracts.

Short time working/layoff enables employers to reduce an employee’s working hours or give them no work for a period of time without the need to continue to pay them full pay. Instead, employees will only be paid for the hours they actually work and if there is a completely workless day, a ‘guarantee payment’ if they qualify for it. Guarantee pay is currently £29 per day (subject to a maximum of five days in any three months).

It’s important to bear in mind that short time working/lay-off is intended as a fix for a short term situation. Whilst it can be very useful for employers who have the contractual right to use it, it’s important to understand the rules regarding its use and operation. This is particularly important as employees can, in some cases, make a claim for a statutory redundancy payment if they are laid off or placed on short-time working for a certain period of time.

If you are considering using short time working or lay-off in your organisation you should seek advice on your situation from your Employment Law Specialist.

  • Reduced need for employees?

If there has been a reduction in work and you need fewer employees as a result, this is likely to be a redundancy situation. The law recognises that employers may need to make redundancies and strikes a balance between the needs of the business and the rights of employees by requiring that redundancy dismissals must usually be reasonable in the circumstances and carried out fairly.

If you are considering making redundancies, it’s important to be aware that you will usually need to:

  • Identify the appropriate redundancy selection pool, this is the group of employees who are at risk of being made redundant.
  • Warn and meaningfully consult employees who may be affected by the proposed redundancies before any decision to dismiss is made.
  • Fairly select who will be made redundant (unless you are proposing to make all employees in the selection pool redundant). This is usually done using a ‘skills matrix’ which involves you identifying selection criteria and scoring employees on their performance in these areas.
  • Keep under review whether there is any alternative work available in your organisation or that of any associated employer.
  • Pay redundancy pay to those employees who are entitled to it.

If your organisation has a potential redundancy situation it can be a difficult and stressful time. You should seek advice from your Employment Law Specialist as soon as possible as they can provide you with support and guidance from the planning stage through to the conclusion of the process. It’s important to ensure redundancies are handled appropriately as employees who have two years’ service or more can complain to an employment tribunal if they are unfairly dismissed. It should also be born in mind that if you are proposing to make 20 or more employees redundant at one establishment within a period of 90 days or less, there will be additional steps to follow.

Can’t afford to take on additional employees?

If your organisation has plenty of work but you can’t afford to take on the extra employees you need to do it, you are likely to wish to utilise your existing staff. If this will involve them working overtime getting opt-out agreements in place can help you to comply with the rules on working time.

For adult workers there is a weekly working limit of an average of 48 hours a week, this is usually calculated over a 17-week reference period and includes overtime. This limit doesn’t apply if an adult employee enters into an opt-out agreement so they will be able to work  more hours than is usually permissible if they wish to do so. This can be helpful for employers, but there are a few things to remember when it comes to opt-out agreements. Employees cannot be forced to enter into them – they are voluntary and even if an opt-out agreement is in place, this does not change an employee’s rights to minimum rest and rest breaks.

If you would like an opt-out agreement you can use in your organisation, please do not hesitate to contact us as we are happy to help.

Need to get the most out of your best assets?

It’s always important to get the best out of your employees but this is particularly the case if times are tough as everyone needs to play their part to support the organisation. If you have employees who are underperforming, you are of course entitled to address this:

  • If the underperforming employee has less than two years’ service

You may be able to take advantage of a legal loophole to dismiss them without the need to first follow a process or issue any formal warnings. This is because employees need to have at least two years’ service to bring a claim of ordinary unfair dismissal. To make sure this would be a safe course of action in your situation you should always seek advice before dismissing even a short serving employee, this is because there are some claims they can bring from day one of their employment such as discrimination.

  • If an underperforming employee has over two years’ service

You will need to ensure you address the performance issues fairly and reasonably. This will usually involve meeting informally with the employee to discuss your concerns over their performance, find out if there are any good reasons for it and if there are not, set appropriate targets and give them a reasonable time to improve. A performance review meeting will need to be held and if there is still no improvement, or an insufficient improvement, the matter will need to be addressed formally through a capability procedure. Your Employment Law Specialist can provide you with detailed guidance and support throughout this process if you need to address poor performance in your organisation.

If you have an employment law matter you would like assistance with, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.