Our business is going through a very quiet period. In an effort to avoid redundancies, management wishes to reduce working hours across the board. Is this something we can do due to a downturn in company workloads? If so, how do we implement it? Are there notice periods we need to provide to staff? And where do we stand if an employee refuses to reduce their hours?
An employer cannot generally reduce hours or pay without the consent of the employee. To do so can constitute a constructive dismissal. To implement the kind of reductions in hours or pay you are contemplating, it is generally best to let the staff know that the business is going through a difficult period and trying to avoid any redundancies, and ask for employees’ consent (in writing) to temporarily reduce their hours or pay. You should not threaten the employee with dismissal if they do not agree, however if they do not agree then you may have to find other ways to cut costs such as allowing fewer overtime hours or making positions redundant. There is no need for a notice period if you obtain agreement to vary the contract. Otherwise, you will need to adhere to the relevant notice period if you are dismissing employees because of redundancies.