“Can I reduce staff hours?” is certainly one question that crops up with employers, especially in light of the pandemic and the business uncertainty it has caused.
Nevertheless, this subject must be carefully considered and treated with the utmost sensitivity so as not to alarm employees and create toxic working atmospheres.
Currently, we are in midst of the “Great Resignation” movement, with employees re-evaluating what is most important when it comes to the likes of pay, mental health support and work-life balance.
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Any attempt to reduce staff hours and pay will inevitably create fear and feelings of instability amongst employees, in turn increasing the risk of harming employee retention rates, and negatively impacting company culture.
‘Conversation around hour reduction is extremely sensitive and ever-evolving’
In short, only if there is an existing term within the contract of employment is it legal to reduce staff hours unilaterally in specified short-term working circumstances. According to employment law, a reduction in staff working hours requires employee notification in advance of the changes and a formal agreement. The notice given by employers must be at least one month in advance of the proposed changes. Following this, a new contract can be created and signed. The terms need to be clearly defined outlining why the reduction is being imposed, the calculations or logic behind the reduction, as well as the pay implication of it.
Alternatively, existing contracts can be used if there were flexibility clauses included before intended changes. This means that reasonable changes to hours may be permitted under specific contracts.
However, if the flexibility clause was vague, it cannot be used to implement significant changes, such as asking for a relocation with little notice. Unilaterally reducing staff hours may lead to employees claiming constructive dismissal on the basis that the hour reductions suggested are unfair.
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Similarly, short-time working inadvertently gives employees the right to claim redundancy pay by your organisation. Ultimately, the “implied term of mutual trust and confidence” included in all employment contracts protects employees against unreasonable changes.
In summary, reducing working hours across the board is subject to contractual agreements. Presenting individual, tailored changes to affected employees is a preferable route to make the transition as smooth as possible. As the pandemic brings about more challenges and trends such as increased employee demands for flexible working – with one in six stating they would quit if denied flexibility – the conversation around hour reduction is extremely sensitive and ever-evolving.
Jonathan Richards is CEO of HR software app Breathe