Pay Freezes and Shorter Weeks
By Helena Wheeler in Redundancy, Retrenchment and Restructuring on Friday, March 27, 2009
It is said that about one in ten companies in the UK is freezing pay or implementing shorter working weeks in attempts to control costs.
One such company is Jaguar Land Rover who has implemented a pay freeze until 2010 and a four day week in return for the promise of no compulsory job losses for 2 years. Similarly Toyota are said to have cut pay and working hours by 10%. Other measures include management waiving bonuses and pay hikes whilst other companies have frozen senior employees’ salaries whilst offering small increases for employees on lower salaries.
In times when companies have seen their income reduced it could be seen as understandable that they should implement measures to reduce their outgoings. Furthermore, it has been recognised that companies must also be at the ready for when the downturn finally ends therefore retaining skilled and experience workers is necessary.
There are those who feel that the measures taken simply mean they are doing more work for less money, keeping more people in work, albeit for smaller salaries can be said to be the better of two evils. Moreover, Trade Unions are on the look-out for employers who may use the recession as a shield behind which to save money. The Unions will be attempting to prevent those companies which are profitable from implementing unnecessary measures.
A Evans wrote:
There has been in house talk of a Cull within the relief teams of [a] large... catering company for sometime. Operations Managers have suggested to people that they know well and have been in touch with etc that they take on more “Full Time Roles” before they may face the company expulsion process themselves. This has been known of for some time. Even a company of this size cannot cover up all. Obviously this has all been planned for some time and the Credit Crunch is being used as a front for redundancies. This seems more likely to be the normal restructuring as the company constantly do. With the new faces onboard sweeping clean under the guise of a world crisis. The problems appear to be more office based with a centralised control adopted recently, clearly not working as well as the earlier regional system. The company appear to be struggling with diseconomies of scale and centralisation. Unrealistic redundancy plans have been on the cards for a long time and are covering up, the actual planned restructure that seems to be caused by those in control not being fully offay with the actual business. In reality [such a big company], needs to lose staff, they have major problems and this appears to be an appease the shareholders rather than a credit crunch ordeal,. A company operating in most of the world with over 500, 000 employees can obviously integrate those it wishes to and you would think need to keep it’s relief team intact. However, it seems that in modern times, many are not interested in working weekends and the company plan is to recruit under a 5/7 scheme. Throwing back industrial relations etc, fifty or more years. With many believing that you will always need to eat and they must be safe, it seems the company view is different. Obviously [the company has a large legal team], but to seem to follow the letter of the law regarding redundancies and actually doing are totally different. The law requires in such cases a protection to employees, a legal team against Joe Blogs will make it seem legal. This requires a good investigative journalist and parliamentary debate etc. SHAREHOLDERS: Worry about how this co, is getting to big and suffering diseconomies - Wouldv you not be better derved investing elsewhere, I am.
John Morley wrote:
How to be SAFE in troubled times. Fear of 'job-loss" is a universal element in the minds of millions of people worldwide, because of the basic system that creates the "employee" mindset. Systematic programming over a long period of time, coupled with a manipulative education system ensures that fear is permanently embedded. From being small children to adults, the GRADING/CHANELLING and SCREENING process systematically and progressively reduces the options of an individual to the point of needle point specialization. The result is .. large numbers of highly trained, but very limited individuals at the mercy of market forces which are beyond their own control. The obligatory letter of EMPLOYEE UNDERTAKING, not to engage in other income generating activities whilst employed, sets the stage for a life of exclusive servitude. Routinely creating a mindset that has the 'expected outcome' of a single dependency income is the root cause of unlimited personal distress. Even though the risk of financial disaster is exceptionally high, it is sought after and welcomed year after year by the millions of new and willing job seekers. In economically difficult times the truth becomes self-evident. THE SYSTEM IS SERIOUSLY FLAWED to an extent that verges on immoral. The FACT is.. Everybody should have at least THREE INCOME SOURCES. It is folly to rely on a single dependency income from a source outside your control. It is silly to expect an employer to put your interest before that of the Company. It is idealistic to believe that the Government will maintain your standard of living. It is foolish to think it only happens to OTHER people. Under the generally accepted system MOST employed people are only three paychecks away from losing their homes. Is it any wonder that in these troubled times, the fear of retrenchment tops the list of stressors. The solution is not difficult. It does however require a change of mindset. It is NECESSARY to replace the EMPLOYEE mindset with an entrepreneurial mindset ... For the sake of your family, your sanity and your future prosperity you must re-focus attention onto the real issues. To get what YOU want you have to work with YOUR rules. AT LEAST three sources of income are necessary for security. If your JOB FAILS its ok ..If you career fails its ok ...if your business fails its ok.. because the other TWO will sustain you. Make your additional income sources in diverse industries. Leave the fear behind ..YOU don't need it. There are dozens of opportunities available to you every day ..if you look beyond the blinkered tunelled view of an employee. Don't place your future in the hands of other people .. They will eventually abuse you. Don't place your families future in the realms of hope and prayer.. They depend on YOU. Making small changes can give big results .. Learning the RIGHT skills is the key to financial security. No point learning how to mend shoes when everybody throws old shoes away. Good industries to build income streams are .. "Health" .. "Leisure" .. "Telecommunications" .. Become a "middle-man" .. get paid for talking and organizing .. Teach other people how to work and get paid for what they do. Look at leverage industries and marketing. There are many avenues available to you.. if you take off the blinkers. Eventually you could find that retrenchment was the best thing that ever happened to you. Perhaps it just opened the door to a better life that you otherwise never would have found. Reach out with hope ..a world of opportunity is waiting..
Emma Cross wrote:
The provisions regarding statutory guaranteed payments only apply to days when an employee is given no work at all whereas those simply working reduced hours will not be entitled to receive a GP. As you correctly point out, if short-time working continues so that an employee receives less than 50% of a week’s pay for four consecutive weeks, or six weeks in a period of 13 weeks, the employee may be able to claim a redundancy payment. Short-time working can of course only be introduced by an employer if permitted by the contract or a collective agreement or with the express agreement of the employee. I agree that contractual sick-pay should be based on the reduced rate if that would have applied had the employee been at work. Holiday pay must be calculated in accordance with reg 16 Working Time Regulations so averaging may be needed. Likewise, redundancy payments may need to be averaged taking account of any recent reduction.
Roger Baldwin wrote:
Whilst most contracts of employment probably include provision for shorter time working the only legal definition of "Short Time Working" appears to be where less than one half week's pay is involved, and, then if it lasts for more than 4 weeks possible Redundancy claims from Employees, but nothing is said about what happens to the terms where it is not less than one half; such as losing a few hours each week. This has a knock on effect as being unclear for employers what to do about Accrued Holiday Pay and Sickness make up pay - is that paid at normal contract rate or the current reduced weekly rate? Probably current reduced rate in my view.If eventually Redundancy arrives are the wages calculated relevant to the reduced wages (i.e the average over the last 13 weeks which includes reduced wages whilst on shorter time)? Again this is probably correct. The answer for the future must be to revisit Employment contract terms now and cover these issues.