Keeping up staff morale when making cuts

Sometimes, Practice Managers have to undertake the difficult job of making cuts in staff hours and numbers for reasons such as shrinking profit. However, is there a way to go about this without falling foul of employment law or damaging staff morale?

Changes following a financial review could require the decision of reducing staff hours or in some cases, reducing the number of staff altogether.

When dealing with a decrease in hours, this has to be done as a contractual change. And when it comes to redundancies, a point worth highlighting is that finance alone is not a justifiable reason for making employees redundant.

In order to come to a redundancy decision you will need to decide which parts of the job are no longer required and how the remaining work can be covered by fewer employees. For a redundancy to be fair, the job the employee currently undertakes must “disappear”. You cannot rush a redundancy situation so other short-term options should be considered as well. In many cases, redundancy should be the last resort.

Any proposed change to hours must be done following a fair and proper consultation process, as this forms an important part of the change process. Before instigating any changes, you must consult with the employee(s) giving details of what changes are proposed and the rationale for proposals. This should be done verbally and followed up in writing. The consultation can either be done in conjunction with all team members, employee representatives or trade union representation (if a trade union is recognised).

As part of the consultation process, you should also allow the staff member(s) to raise any concerns and discuss the matter freely, and allow time for a decision to be made. It is important to keep written records of all discussions and representations should they be challenged in the future. If the employee(s) agrees to the changes, revised contracts should be drawn up and the employee(s) should sign in acceptance.

If the employee(s) does not accept the proposed change there should be a period of negotiation to try to reach agreement and consider alternative options if necessary. The practice may offer incentives and/or amend the proposal to make it acceptable to the employee(s). You may wish to consider offering a phase-in whereby the decrease in hours is introduced over a period of time. A reasonable business case presented as part of a consultation process may help the changes to be accepted by staff. You will then have to decide whether to enforce the change. Alternatively, you may wish to consider a trial period to evaluate the effectiveness of any changes.

There are two further courses of action the practice can take if no agreement can be reached. However, both these options carry a risk as the employee could claim constructive dismissal or unfair dismissal.

1. Impose the change without the employees’ consent:

If the employee(s) continue to work under the new terms without protest, then after a reasonable period has elapsed (a ‘reasonable period’ is likely to be measured in months), they can be deemed to have accepted the change.

The employee(s) may treat the breach as bringing the contract to an end, in which case they may leave the practice. In such circumstances, the individual(s) may potentially claim constructive dismissal.

If the employee works under the new terms but under protest, there would be no deemed acceptance and the employer would remain in breach of contract, running a risk that the employee could resign and claim constructive dismissal.

2. Terminate the employee’s contract and offer to re-employ on new terms:

The correct notice must be given, and as such a termination of employment would count as dismissal, and the proper dismissal procedure must be followed. In order for it to be fair dismissal there must be a valid reason for the dismissal, where such a case would be classed as ‘some other substantial reason’. There is a risk that the employee could claim unfair dismissal, and if so, an employment tribunal would examine the business reasons for the change, the consultation process and the efforts made to find a compromise and the employee’s reason for rejecting the change, in deciding whether the dismissal was fair or not. If the dismissal is judged unfair, the employee would be eligible for compensation.

How to manage staff morale:

Staff morale tends to become lower during any kind of change as individuals feel uncertain about their future. There are a number of ways to help keep morale up during these times, none of which are ground breaking. In fact they are quite obviously simple, however often forgotten.

The first, and probably the most important thing is communication and listening to what individuals have to say. Communication needs to be built into the planning stage of the process. Deliver the message in a plain way where the individuals can understand. It is also vital to remember that individuals will come to terms with changes at different times, some will immediately understand the need/benefit and for others it will take more time.

Please note the above guidance is of a general nature. It is important that practices ensure policy guidelines and contractual obligations are followed.

In addition to the above First Practice Management members can obtain further information via the First Practice Management website. Alternatively members can also email specific questions about employment issues to where your question will be treated in confidence and will normally be answered (by email) within 2 working days of submission.

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