Q&A - Can I reduce workers’ hours until the business gets back on its feet?

Q: My wife and I run a small business with five employees. Unfortunately I’ve just had a customer put back quite a big job. I am sure they will go ahead early next year as they say, but meanwhile I am going to struggle to keep all the staff on the payroll unless I can reduce some of their hours from full-time to part-time. How should I go about doing this and how much notice do I need to give them? 

A: You would need to change their contracts of employment, but first you would need to get the agreement of the employees concerned. If you don’t it would be a unilateral change and would constitute a breach of contract. 

In the first instance you should arrange a meeting with the employees and explain the problem you’re facing. Tell them that unless you shorten their hours to part-time until the anticipated contract comes on line you will be left with no alternative but to consider redundancies. If they won’t agree to going part-time you should enter into a period of consultation with them, during which time you must consider any suggestions they might make as to how you could overcome the current problem. 

To assist in protecting your position if the situation should go any further, you must give valid business reasons as to why you need to make the changes. Regarding how much notice you should give for any proposed changes to their contracts, there is no minimum, though it will help relationships if you do give them some notice. 

If your business is likely to continue to be uncertain you might consider including the contractual right to temporary lay-off and short-time working in your terms and conditions of employment. However, these are not unrestricted rights and you should take advice from an employment lawyer.

Article 21/10/2019

Robert Williams

Robert Williams

Partner

Partner and Head of the Civil Litigation, Personal Injury and Dispute Resolution team in Wrexham