Short-time working is becoming a critical issue for many employers and employees as the impact of the 2009 recession continues to worsen. But what is short-time working, why is short-time working now seen as a necessity at so many organisations in 2009, just how widespread is it, and how best to go about implementing short-time working? As ever, XpertHR has all the answers.
What is short-time working?
Short-time working can be defined as a means of coping with a seasonal or temporary reduction in work by reducing the amount of time an employee works in a given week in return for a proportionate reduction in pay.
As XpertHR's guidance on implementing a lay-off or short-time working (subscription required) notes:
Lay-offs and short-time working are frequently used by employers as a useful way of handling temporary work shortages and adverse trading conditions without having to resort to redundancy.
Of course, short-time working can only be implemented under strict conditions, as XpertHR's FAQ on short-time working explains.
Why short-time working is on the rise in 2009
Short-time working is rising rapidly up the agenda for many employers as the amount of work on their order books falls victim to a Summer 2009 drought.
But it can be argued that it is not only employers that can benefit from such an arrangement, and that the current vogue for short-time working demonstrates this.
Over recent weeks, both the CBI and Bank of England Monetary Policy Committee member Andrew Sentance have hailed a new 'collaborative' spirit between employees and employers, manifested in a willingness to explore all alternatives to redundancy for the greater good of each. As Sentance put it:
We are seeing some of the benefits of increased [labour market] flexibility in the current recession, as companies have sought to minimise lay-offs by negotiating temporary changes to pay and hours of work. This co-operative approach is not only helping individuals and companies manage through the recession. But it should also help to reduce the loss of skills and experience that comes about through job losses and prolonged unemployment - providing a stronger skill and employment base for the economy when the recovery comes.
How widespread is short-time working in 2009?
The 2009 IRS redundancy survey (subscription required) found that employers are on average using three or more measures to minimise compulsory redundancies, and these can include pay cuts, pay freezes, reduced overtime and short-time working.
The latest XpertHR analysis of whole economy pay trends notes that the use of pay cuts is at present very limited (subscription required) among organisations monitored by IRS. But nonetheless there is evidence that growing numbers of employers are cutting hours and pay as a last resort to avoid redundancies (subscription required to view search results).
It would seem likely that this trend is set to continue as the recession worsens, although it is also likely that such action will only be taken by a minority of employers.
Next Friday (10 July 2009) a more detailed look at the cut in hours and pay at one employer - manufacturing firm Seagate - will be published to XpertHR's Pay and Benefits homepage.
How to implement short-time working
XpertHR offers a wealth of resources providing essential guidance to employers on how to implement short-time working. These include the following (subscription required for each):
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Comments (4)
I enjoyed the post, Michael. Understandably, job loss stories tend to grab the headlines but looking beyond those headlines it is very interesting to note that some employers are not defaulting to redundancies as the main form of cost-cutting. Collaboration with employees and employee groups are producing alternative arrangements which will hopefully enable businesses to retain skills, knowledge and experience.
That said, the unemployment rate continues to rise which is little comfort to those who currently are losing their jobs and their businesses.
Posted by Martin Couzins | July 3, 2009 11:34 AM
Posted on July 3, 2009 11:34
Aye, this spirit of collaboration between employers and employees could be one of the few good things to result from this recession, especially if - as my colleaque Susie Munro noted last week (http://www.xperthr.co.uk/blogs/employment-intelligence/2009/06/employers-respond-to-recession.html) - it is sustained post-recession.
It is born of necessity - the extremely rapid rises in unemployment over recent months and the seemingly unrelenting waves of dire economic news are affecting almost all UK employers and employees - but necessity is of course also the mother of invention.
Posted by Michael Carty
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July 3, 2009 11:49 AM
Posted on July 3, 2009 11:49
As a victim of short-time working, or perhaps temporary stoppage, the employers' side of this is pretty clear. They need to survive and as a large overhead the staff wages are a place to make cuts.
It's interesting from my side of the fence to be told we are to transition to short-time working (or else?) and yet hte delivery timescales for new IT systemas are unchanged.
That flies in the face of work being "unavaiable" for us as a reason for the STW and consequent 20% reduction in pay.
Necessity being the mother of invention, have any compaines considered:
Treating the loss of pay as a LOAN to the company and paying it back in the future?
Treating the loss of pay as contribution to a share scheme, and compensating by issue of shares in the future?
Of course the question is how long "the future" is going to be, 2, 3 years perhaps; also how long-sighted the employees are, and on the future prospects.
In a way it's a bet on your staff being willing to take a bet on your company.
Rather than a one-sided reduction in pay for little benefit, other than perhaps not losing jobs (and the business), this makes it a two-way transacion.
Posted by paul | July 27, 2009 7:22 PM
Posted on July 27, 2009 19:22
Thanks for your comment, Paul. It is extremely interesting to receive feedback from an employee directly affected by short-time working.
As I mentioned in the original post, short-time working is sometimes used by employers as a measure of last resort to stave off otherwise-inevitable redundancies. In such cases, the desire to preserve jobs becomes the principal consideration.
But how should employers approach the need to maintain productivity and employee engagement whilst cutting hours and pay for employees?
Your suggestions that employers could treat the reduction in employees' pay as a loan to the company or as a contribution to a share scheme are interesting ones, and I would be intrigued to hear from other people out there - whether on the employers' or the employees' side - as to their views on this subject, and particularly if their own organisation has implemented arrangements to compensate those directly affected by short-time working.
Please submit any relevant comments via the box below.
Posted by Michael Carty
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July 28, 2009 7:38 AM
Posted on July 28, 2009 07:38