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Surviving the Recession

ARTICLE ORIGINALLY PUBLISHED APRIL 2009

QUESTION

Trade is really slow after Christmas however I have spent several years building an excellent team and I want to avoid redundancies if at all possible-are there any alternatives?

Response -- Since Xmas, by far the most common query from readers has related to the recession and staff costs.

Redundancy costs can be expensive and once the skills have gone they are lost forever. Remember, you have invested heavily in the training and development of your staff and redundancy effectively writes off this investment. It might leave you poorly prepared when the economy comes out of recession.

Helpful hints -- Faced with the position where some or all of your staff might be redundant, staff are often much more receptive to ideas which, whilst uncomfortable, might be the lesser evil. Perhaps the changes might be for a three month period to give breathing space. If you can make the savings and save all your staff you might well be better placed when the recession begins to end.

  • Pay Reduction -- Subject to the minimum wage levels staff can agree to a permanent or temporary pay reduction. However, pay cuts must not be imposed.

  • Commission Reduction -- Similarly staff can agree to reduce commission or agree to more demanding targets.

  • Reduction in Hours -- This is an area for serious consideration. Each member of staff reducing one day a week creates the same effect as one redundancy. The reduction might be on a “quiet day” and result in further saving. Of course it is subject to staff agreement.

  • Change of Working Pattern -- Staff reverting to 4x10 hours day from 5x8 hours day might enable you to close on your quietest day ensuring the utilisation of your staff is maximised and possibly saving energy costs.

  • Additional Holiday -- Ask all or some of your staff to take one or two extra weeks unpaid leave in the next few months.

  • Flexibility -- Appoint new staff on a more flexible basis. Whilst this might make your posts less attractive, appoint to, for example, 25 hours instead of 40 hours, with a facility to offer extra hours subject to demand. Alternatively, appoint staff to 100 hours per four week period rather than a fixed 25 hours per week, this may increase their productivity.

  • Part-time -- Appoint part timers to replace full timers. Turnover in the industry has historically been high and you might be surprised that there are many experienced staff who would find a fixed day or two evenings very attractive. Similarly clients are already telling me that staff who left for smaller salons or to work mobile are contacting them regarding possible vacancies.

At the end of the day none of the above might be sufficient to solve your problem. But, if nothing else, your staff will be clear that you have explored every avenue before making redundancies. Similarly, you will have valuable evidence if by any chance you are taken to tribunal.

If you make staff redundant they are entitled to contractual notice and, if they have 2 years service, the following payments:

  • Between 16 and 21 years old - half a weeks pay for each years service

  • 22 – 41 years old - 1 weeks pay for each years service

  • aged over 41 years - one and a half weeks pay for each years service

Finally remember staff can still claim unfair dismissal and the max payment was increased by the govt on 1feb from 63 to 66 and a bit k see—printed email

THIS MONTHS QUESTION

I give my staff an annual Christmas bonus, the amount varies depending on profitability of the salon. An employee was on maternity leave from June 2009 but has returned and asked why she was excluded? What are her rights?

Staff are entitled to receive the benefits they would normally have received , when on maternity leave except their salary . I am assuming this “bonus” was not a contractual and it is debatable if it will be considered pay. Potentially the employee can look to claim sex discrimination as her maternity leave seems to be the reason for the non payment. I appreciate that she was not at work and you will feel that she hasn’t “contributed” to the profits but, on the information you provided I believe she has a strong case for the payment.



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