Reducing your employees’ hours

Concerns for staff

Whether you are looking to change an employee’s hours permanently or temporarily you run the risk that the employee will not be able to meet their personal financial commitments on a reduced hours pay packet.

It could also cause issues with staff who are not being moved to short hours and that word that all employers hear with dread: “Morale”. Changing the hours of some staff is bound to ruffle the feathers of other members of the team. From resentment that they might have to now work harder in their hours of work or in fear that they too may be asked to reduce their hours later.

As with most aspects of HR you have to treat staff fairly and work in consultation, not as a dictator, in these matters. If there are very few options, then at least you have given the full picture to the employee by going through a period of consultation.

It can also give an outward sign, not just to the staff of the business but to other businesses, that your business is in decline. How you communicate the changes to your staff base will impact the confidence in your business both internally and externally.

Temporary changes to hours and reducing hours by 50% or more

Short-time working is a temporary change to an employee’s contract. This is when an employee’s hours of work are reduced, by reducing the number of days worked per week or the hours per day worked, by more than 50%, and their pay is reduced accordingly.

If there is no contractual right to impose short-time working, the employer should present its proposal to the relevant employees (or their representatives if they appoint one or are a member of a union) explaining why it considers that short-time working is necessary. This will be with a view to seeking their consent.

As employee pay will be reduced, employers should communicate sensitively with the workforce and explain the company’s thinking behind the reduction in hours. This will encourage employees to be “on side”. If it can clearly be shown that the reduction is to reduce or avoid redundancies, employees are likely to be more amenable to short-time working.

Also, if a whole section of the workforce is going to be affected, selection will be straightforward. If the short-time working pattern requires that particular employees are selected, care should be taken to avoid any discriminatory or unfair selection process.

Short-time working arrangements should be treated with caution. Imposing short-time working can give employees the right to claim a redundancy payment although the legal provisions governing this are complex.

For these specific purposes, a week of short time will only count where the amount of work provided for the employee is less than 50% of normal hours. So, if an employee receives less than half a week’s pay due to short-time working for four weeks in a row or six out of thirteen weeks (with no more than three weeks being consecutive), then they will be entitled to claim a redundancy payment without actually being made redundant. Such a claim must be made in writing to the employer who may refuse to pay only if it believes normal working is likely to resume within four weeks.

Similarly, if an employee’s hours are reduced to the level where they receive less than half a week’s pay for four consecutive weeks (or for six weeks out of 13 weeks), then they can give the employer written notice that they intend to claim a redundancy payment.

What happens if employees don’t accept the new working hours?

They can either resign and make a claim to the Employment Tribunal for breach of contract, or they can work the new hours but regularly complain to the employer that they are working the new hours against their will.

However, if they adopt the latter tactic, there will come a time when they will have to either just accept the new hours (because they have been working them for a period of time) or they will have to resign and follow the Tribunal option.

In employment law, if they have worked the new hours for more than 3 months then it is considered that they have accepted the new working practices – even if they are still complaining!

Reducing hours by less than 50%?

If you decide as an employer to reduce the working hours by less than 50%, so they may be working say 80% of their previous hours, you would still need to get the employee’s agreement to work the reduced hours.

Again, there needs to be a period of consultation and discussion so that the employee can understand why this needs to happen and what alternatives are available (which most likely are worse) and how long such a change to hours is expected to last for. Ultimately, they will have personal cash flow to consider as well.

With this smaller reduction in hours, the employee doesn’t have the same rights to demand to be made redundant, so it doesn’t create the same risk as a 50% reduction in hours. If the employee refuses the offer, then they would need to resign and bring a claim to an Employment Tribunal for breach of contract, as redundancy would not be an available option.

If an employee disagreed with the new reduced hours, but continued to work, it could be considered that they have accepted the change.

Permanent contractual contracts

If you are looking to make a permanent change to an employee’s contract, then you need to check to make sure that your contracts include a variation clause which allows you to make these changes such as:

• Hours or days worked
• Rate of pay
• Place of work

Employers should only use these clauses to vary a contract if they have a good reason, such as the business is struggling financially and need to cut staff hours.

As an employer you would need to follow a fair procedure if you want to use the variation clause to make a change to an employee’s contract, and it is best to gain the employees agreement through consultation.

Talking to employees from the start can help implement a change that:

• Meets the needs of the business
• Works for both the employer and employees

Consultation is a two-way process where ideas are shared and worked on together.

If there is no variation clause covering the proposed change, the employer and employee would need to agree to the change before it can go ahead.

An employer can force a contractual change, but this should be the last resort with appropriate notice given as it could lead to legal action with a breach of contract.