Cutting costs

A Scottish HR firm has reported that the number of calls from north-east businesses asking for support on redundancy issues has doubled over the past year.

Empire has experienced an increase of 128% in support requests in its Aberdeen office during March 2016, compared to March 2015, specifically related to queries about redundancy, reorganisation and salary reductions.

The recent economic downturn and low oil price has led to firms across the north-east cutting jobs and re-organising their workforce.

As a result, managers have been seeking advice on how to fairly and legally reduce costs. Queries to Empire’s employment law advisory team have varied with questions focusing on redundancy selection procedures, redundancy pay calculations and termination of contracts for people whose service is less than two years.

Catherine Wilson, advisory service team lead at Empire, said: “The increase in calls is not just from oil and gas firms, but across many industries including manufacturers, hotels, shops, builders, charities, and leisure firms.

Catherine Wilson

“This clearly demonstrates the wide reaching effect of the recent oil and gas industry downturn here in the north-east and further afield.

“The main piece of advice we offer to employers is to be sure to follow correct processes within the legislative framework. If a business is seeking to reduce costs by cutting staff numbers, there are prescribed stages which need to be followed, in order to avoid the risk of an unfair dismissal claim. Selection for redundancy, consultation periods and communicating with maternity and long-term sick cases during a downsize need to be managed carefully.

“Employees have a number of different employment rights, including protection from discrimination, the right to be consulted and reasonable time off to seek other employment, as well as protection from unfair dismissal.

“We have also seen an increase in employers trying to keep their businesses going by changing terms and conditions, either through reduction in salary or reduced working hours. Employees can be quite responsive to this proposal – willing to make sacrifices to help the business in the long term.”

Catherine advises that the increase in job losses across Aberdeen has resulted in an increase in the number of unfair dismissal claims the firm’s litigation team are dealing with.

She added: “Employers who don’t seek advice can see themselves facing an unfair dismissal claim, which can cost up to £78,962. Furthermore, if a claim is related to discrimination, the amount is uncapped, and if an employer is not insured, there are litigation fees to fund as well as awards. In reality, most claims settle before ending up in court, but the amounts can still be significant to a small or medium-sized business.”

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