Embracing HR

How HR can help you navigate through a recession - Paula Fisher

One purpose of HR is to give your business protection and flexibility. Never is this more important than during difficult economic times. Paula Fisher, Managing Director of Practical HR, discusses some HR areas to consider that will help you navigate the choppy waters.

Paula said “I have been working in HR for long enough to remember many situations that have had an adverse impact on business. These include the banking/credit crisis, the fuel crisis and even foot and mouth. Recently we’ve had COVID and now we are facing a recession.

COVID saw support from the government as never before with the Furlough scheme, but it is unlikely that such support will be available again as the government simply cannot afford it.

But that does not mean you cannot protect your business and have flexibility. In fact, it is the responsibility of business leaders to ensure, as far as possible, that the business is protected, as the alternatives are pretty grim!”

Contracts of employment

It’s essential that you have good contracts of employment. Good being the operative word, as not all contracts are equal. You need contracts that provide protection and include specific clauses. Here are just 2 clauses that are recommended in your contracts:

• Short time working and layoff

This clause allows you to put people on short time working or lay them off if there is a downturn in work. Furlough was a version of this – but with government funding.

Why is it important? Because it can allow you to reduce your salary bill quickly to help you survive the most difficult times.

Paula said “By way of an example, during the credit crisis we had clients who were losing business overnight as contracts were pulled or put on hold. Implementing short time working or laying people off, allowed the business time to recover or find new business without having to make redundancies and lose their workforce.

We had lots of examples of businesses who survived because of this level of flexibility. And while this was really tough on the individual effected, it actually saved jobs in the long run.”

• Deductions clauses

You need to watch costs at any time, but especially during a recession, and it can be frustrating when company property is damaged or lost and you have no way of recouping the cost. A clear deductions clause can help and encourage the behaviour you want i.e., for employees to take care of company property.

“We’ve seen lots of examples of this, but one that springs to mind was when an employee was having a very bad day and threw their laptop on the floor! There were lots of issues around this, but one question was ‘who’s paying for the broken laptop?’. A clear deduction clause answers that question”.

This can also cover things like damage to company vehicles (why is it always the same people who seem to do this?), or it may be the cost of a training course and then the employee resigns so you don’t get the benefit. All these situations can be protected with a good deductions clause.

You can find more information, template contracts of employment and additional clauses on the BITA HR Portal.

Redundancies and restructures

It’s not always possible to save jobs in a recession and if it becomes necessary to reduce head count, it’s important to follow the right procedures to avoid claims – as the last thing you need is the headache and cost of an employment tribunal when times are already tough.

A fair redundancy and/or restructure is about following a fair process and consulting with people. It’s always advisable to take advice on this so you don’t leave yourself vulnerable.

You can read more on the BITA HR Portal and access guidance and templates to help you manage any redundancy process.

You can access HR guidance and templates on the subjects outlined above by visiting the BITA HR Portal at https://bita.yourhr.guide/, which is provided by Practical HR. Practical HR also offer HR Portals, outsourced HR services and general HR support and consultancy on all areas of HR and employment law.

Contact details: 01702 216573 • paula@practicalhr.co.uk • www.practicalhr.co.uk