Difficult decisions in employment law

NPA Essential

Difficult decisions in employment law

Each one of these options will need you to have a clear business rationale
for making such changes, identifying how cuts in funding and other changes necessitate cost cutting

Stuart Watkin, senior employment law adviser at Ellis Whittam, summarises the legal considerations when looking to reduce staff costs

Pharmacy businesses examining workforce efficiency need to be fully conscious of employment law.

Bonus schemes, commission and other incentives

It may be that you offer incentives to staff in order to boost productivity. The main issue here, from an employment law perspective, is whether such incentives are contractual or discretionary.

If they are truly discretionary, then there may be some flexibility in being able to vary these. If, however, they are contractual in nature, then a consultation process needs to be followed if agreement to change them cannot be obtained.

Reducing overtime pay

This is very similar to dealing with incentives. However, it is highly likely that enhanced overtime pay will be contractual. In addition to this, employees may be reluctant to work overtime if they are paid at the basic rate.

Reducing and changing hours

An employee’s normal hours will be contractual. There may be some flexibility in those hours depending on the wording of the contract although again, unless the changes are minor (for example, altering start/finish times by 30 minutes) consultation will be required if agreement to change hours is not obtained.

Restructuring roles and redundancy

Major changes, subject to any right to vary contained within the contract, will need agreement.

It may be that if such changes are more substantial this results in a redundancy situation, given that the original role may not be required any more. This will require a consultation process to be undertaken with those employees at risk of redundancy.

Each one of these options will need you to have a clear business rationale for making such changes, identifying how cuts in funding or other changes necessitate cost cutting.

It is advisable that before you decide which option is appropriate that you give some thought as to what you want to achieve – is the issue what your employees are doing, or is it a sustainability issue?

Reducing pay is unlikely to be justified if the employee is doing exactly the same job. If, however, employees agree to this as an alternative to redundancies being made, then it may be something to consider – whether agreement can be obtained is a different matter entirely.

Care should be taken with any of the above – getting it wrong can result in unfair dismissal and breach of contract claims, which, given the reasons for considering going down this route, is the last thing you need.

A team of professionally qualified employment law advisers are available to assist NPA members. Call 0330 123 0558 or email employmentadvice@npa.co.uk.

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