Latest Information
Credit crunch
21/08/2008
Employment Law Pitfalls
Lancashire Magazine September Edition
The current economic instability continues to hit the jobs market causing uncertainty for all. People looking for employment are finding the demand for both temporary and permanent staff is weak. Those working in certain sectors of employment (in particular finance, retail and manufacturing) are seeing a severe fall in demand for employees, meaning that redundancy may be looming.
John Hassells, Head of Employment at KBL Solicitors, Bolton says “The current economic climate means that employers may need to save costs resulting in the possibility of wide spread redundancies. Employees may find their jobs under threat and having to take a second job due to a reduction in earnings”.
John goes on to warn employers of the importance of seeking legal advice before they take any steps to dismiss employees for reason of redundancy. Redundancy may only be a potentially fair reason for dismissal if it falls within one of three distinct spheres. An employee's dismissal must be "wholly or mainly attributable to" the employer (1) business closure; (2) workplace closure; or (3) reduced requirement for employees. Further, there are procedurally intricate steps that must be followed. Failure to follow any one of these steps could see any dismissal being found to be unfair by an employment tribunal, even though the redundancy was entirely genuine. Employers are urged to take legal advice to prevent costly procedural errors.
Employees must also be aware of their rights at this time. Many employees are being offered a binding agreement, known as a compromise agreement, between the employer and employee (or other parties to a statutory claim) to settle a case or refrain from instituting or continuing with certain proceedings without the involvement of a conciliation officer) detailing redundancy packages. Independent legal advice must be sought before a compromise agreement can become a valid legally-binding document.
Another cost cutting exercise sees employers requesting authorisation from employees to accept a pay cut or a reduction in their working hours. Employers are growing increasingly cautious of the credit crunch and a close check is being kept on salaries. Recently, Carol Vorderman was reportedly requested to take a 90% pay cut for her role in Channel 4 program, Countdown. This in itself shows that employees of all levels, manual labourer to office staff, senior executive to television personality, must be vigilant to the needs of the business they work within. In this time, compromises may need to be reached and employers need to demonstrate a degree of restraint.
With no immediate end to the credit crunch and reports that it may continue for 2 years, employers and employees both need to recognise that businesses may need to restructure in order to reflect the reality of the current economic situation.
