Following the recent High Court Case new proposals in relation to JLC/REA's have been made by the government:
24-Nov-10 at 18.17 | Resolve HR Admin
Following today's decision to reduce the Minimum Wage rate to €7.65. The Government has signalled that the ERO and REA rates should be reviewed. In particular the Catering,...

Business Solutions

To be successful, any organisation, regardless of industry or maturity, needs to constantly analyse its size, performance and structure to ensure that it reacts to changes in its operating environment and is fit for purpose. One of the services we provide here at Resolve HR Consultants is assisting businesses to successfully complete this process, the following gives an example of some options we would suggest to businesses looking to manage their payroll costs more efficiently.

 

Alternative Systems of Work

In the current climate many employers are faced with making very difficult decisions, as cash flows are squeezed and businesses seek to manage costs. From a Business management perspective, making decisions about staffing and what to pay people can have a crucial impact on the long-term viability and success of the enterprise. Here at Resolve HR we have decided to look at some of the atypical employment arrangements and cost saving measures currently open to employers:

 

Job-sharing and part-time working:

This approach allows businesses to keep payroll costs to a minimum while retaining key staff and existing knowledge. Employees are asked to share a position or to work part time rather then full time. It enables the business to come through the downturn while also giving it the flexibility to quickly ramp up activities to react to any turnaround as it occurs.

 

Re-Structuring:

A lot of businesses are still structured on a model developed during the heady days of the Celtic Tiger, despite the dramatic changes to their operating environment which have occurred over the last twelve months. Some sections/departments of businesses such as Credit Control may be extremely busy while other areas such as Marketing/PR may not be so busy due to enforced budget cuts. By critically examining your current business structure and assessing its fitness for purpose in the new economic climate, you may discover more productive ways of utilising your employees.

Annual Leave:

The Organisation of Working Time Act gives employers discretion over when employees take their annual leave. By directing staff to take annual leave during slow periods, businesses can reduce their holiday accruals and save on running costs e.g. electricity bills. When employers decide to direct staff to take annual leave they must give them one months notice (Some industry JLC's have longer notice periods).

Hourbanking:

This can be used in isolation or in combination with directed annual leave to extend the period that the business or department is closed. One variation of this is where a business lets employees take time off now, and when business picks up the "banked" hours taken as time off can be claimed back as normal hours, thus helping to avoid overtimes claims. However there are a lot of different ways this can be implemented, facilitating businesses in shutting down departments or the whole operation. The principal focus is on maximising productivity during busy periods and minimising costs during lulls.

Parental Leave:

Under the Parental Leave Act any employee with one years service is entitled to take 14 weeks unpaid parental leave for each child (subject to certain conditions). By being creative and looking at potential ways of making this leave more attractive to staff employers can temporarily reduce their weekly payroll while still holding on to staff.

Condensed Hours:

This is another alternative approach to working hours, which consists of employees working their normal working hours over a shorter working week i.e. 4 days as opposed to 5. It doesn't reduce payroll costs but depending on how it's implementation is managed it can deliver greater productivity and will reduce running costs.

Term Time Leave:

Term Time leave is used quite a bit in the Public Sector and basically allows people to avail of unpaid time off when their kids are off school. So over a 12-month period the person may only work for 9-months, spending 3 months at home with their kids. Depending on the nature of the business this has the potential to provide payroll savings during lulls in business while retaining talent for busier periods. This Leave can be made more attractive by allowing employee's to spread their wages for the 9- months they work over a 12-month period, they then have an income when they are on leave, at no extra cost to the business.  

Flexitime/E-Working:

Flexitime allows workers to set their own hours of work within agreed limits and usually includes certain core hours every day when staff have to be in the workplace, say 11am-3pm. Outside these hours the employee controls their own attendance. Often flexitime is used in conjunction with E-Working where an employee may work from home or some other location for a number of days each week. Research has shown that both these option can lead to greater productivity. However the main issue for owners/managers when considering these options is the suitability of these methods to the industry and their ability to put suitable performance measurement systems in place to ensure employees are being productive.

Adjusting Pay:

There are a variety of ways to reduce payroll costs from introducing pay freezes, to actual pay cuts, eliminating, reducing or restructuring discretionary bonuses to reflect the current economic situation. Remember that employers do not automatically have the right to implement pay cuts, as this constitutes an alteration of the employees "terms and conditions of employment". However if the alternative is redundancies then most employees will be willing to accept pay cuts. The crucial element when implementing any pay cuts is how the information is communicated to employees.

Reduced Working Hours:

Often called Short Time, although short time actually refers to a reduction in work so that the employee's hours/pay are half the normal amounts. Hours can be reduced by any amount necessary as dictated by the levels of business. Again when reducing working hours the key to successful change is in the communication process. Employees on reduced working hours may qualify for Social Welfare payments.

Temporary Lay Offs:

Lay offs are a temporary halting of employment. Employers do not have a legal right to lay off employees, unless included in the contract of employment. However similar to pay cuts most employees will be receptive to lay off's if it is an alternative to redundancies and it is communicated in an open manner and selection processes are transparent.  

Re-Deployment:

An aspect of the restructuring can involve re-deploying staff to other sites. However there is no legal entitlement to re-deploy employees. So unless it's included as a clause in the employee's contract employers will have to carefully manage the whole process. However as mentioned previously if the alternative is redundancy most employees will be receptive to any reasonable re-deployment proposal.

Contract Work:

Rather then making employees redundant and incurring the cost of redundancy payments and losing skill-sets. Businesses should as part of an overall costs/benefits review examine agency contracts and independent contractors and explore the benefits to terminating these arrangements.

Secondments:

This involves moving some employees to a client, it can help to reduce pay roll costs but in the current climate it may be difficult to get clients to buy into this option.

Career breaks:

This has been a popular option recently, with some of the banks who wanted to reduce payroll costs in the Short Term. It generally consisted of them offering staff the option of taking a career break for a number of years with annual lump sum payments. Generally these arrangements will include a clause, which does not allow the individual to work in the same industry or in some cases work in Ireland. Other variations on this include offering study sabbaticals where the individual goes back to University/College to up-skill, and the employer makes a contribution to the course fees.

 

Resolve HR is currently providing HR Advice and HR Consultancy services to businesses around the country. To get more information on any of the issues discussed in this article please contact us here at Resolve HR Contact Us