While most people are happy to see the back of 2020, this year 2021 will also contain many challenges. The rollout of vaccines is encouraging from a public health viewpoint, however, economically it is uncertain what will happen once the Government cut the financial supports to business and individuals. We have asked Tara Cooney, HR Consultant with TSA Consultants to set the scene.
It is important that employers plan for varying economic scenarios as the year progresses. The management of labour costs, a substantial cost to any business, should be a key part of any set of business scenario planning. It is, however, an area of cost with substantial legal protections in the form of employment legislation and managing the expectations and morale of a team who have already been through a very challenging 12 months.
TSA Consultants are advising clients at the beginning of 2021 to focus on, and strive for, a positive business performance for the year ahead. We hope the contents of this article will lay some foundations for creating an appropriate business employment plan. Please note that each employer should seek individually tailored advice from their HR or legal support as their contracts of employment and/or work practices will impact uniquely on the creation of their plan.
General ways to reduce labour costs
As a rule, you must get written acceptance for any wage cut or an employee may successfully claim a breach of contract. Explain the
position to employees and if they indicate agreement to a wage revision ask them to sign a letter accepting it on a temporary or permanent basis as agreed. To maximise the chance of success try to ensure fairness across the board with all colleagues. If everyone is contributing pro-rata, they will feel a solidarity and hopefully agree to play their role.
Analyse the Contract of Employment for clauses regarding ‘hours of work’, ‘flexibility’, reference to ‘lay-off/short-time’ and reference to any ‘unforeseen emergency situation’. Ideally the Contract provides some ability to revise or reduce the hours. Some options for reducing rostered hours include:
If an employee who works more than three days a week is reduced to three days or less, they can claim ‘Short Time Work Support’. This welfare payment is €40.60 per day. It is advised that the employer would look to implement this in a fair and transparent manner across the board on a LIFO basis.
Redundancies: Redundancy is a form of dismissal, there is no sugar coating it. For this reason, it is critical that employers follow a correct and legally sound procedure if considering departures from the roster. Employers should conduct a genuine business review and develop a credible plan for their business. This plan may indicate that some positions are subject to a viability review.
In many ways, as stated, we hope the contents of this article will not be required by HAI members this year, however it is important to
have a grounding of how to consider managing labour costs now to support contingency planning in case more difficult economic times are coming.
Should you have any queries our office is contactable on 021-4634154 or e: email@example.com
This Business Support article featured in the January/February edition of The Hardware Journal