The gradual increase in the National Minimum Wage, coupled with Brexit and the COVID-19 pandemic has had, and is continuing to have, significant implications for the food manufacturing industry, resulting in significant changes to the dynamics of the workforce. In an attempt to minimise business disruptions, many employers have had to look at ways to reconfigure the workforce to deal with significant shortages in labour – all in the midst of the global COVID-19 pandemic.
So, what can employers do to manage the labour crisis and ensure sustainable high performance while minimising disruption to the business? Sam Greenhalgh (Legal Director) and Melissa Willrich (Solicitor) in our Employment Team offer the following suggestions.
The cost of labour has gradually risen over the years with the increase in the National Minimum Wage, proving problematic for many employers in the food manufacturing industry. At the same time, margins have been squeezed. Due to the uncertainty caused by Brexit, many of the non-UK nationals that make up the labour force have decided to return to their country of origin. On top of this, the COVID-19 global pandemic has caused significant disruption to businesses with workers off work due to self-isolation rules.
It is therefore no surprise that businesses have been experiencing a hard time retaining and recruiting staff. So what can employers do?
- Continually monitor the pay market, ensuring you are consistently paying the highest to attract and retain the best talent. Of course, this will depend on your margins and it may not be viable to pay more than your competitors.
- Could you offer greater flexibility? Due to the nature of the role it may be difficult to offer the same flexibility as other industries however, there could be some easy wins and it speaking to staff about what their flexibility needs or desires are can help. Many employers offer shift swaps or alternating shift patterns.
- Be creative over your benefit offering. Could you offer additional holiday? Charity volunteering days? Could funds be set aside for social events – something more than just the Christmas party each year!
- General staff welfare – social initiatives with staff help to engender a higher level of connection with the workplace, colleagues and the employer and therefore staff are less likely to move because they feel they have put down roots and established relationships. Improving staff facilities such as a canteen or the general working environment can help. Some organisations that have many different cultures represented across the workforce hold themed days where different groups talk about their culture, values and traditions and share food/drink unique to that culture.
- Look to other markets for recruitment – particularly if the category of worker(s) required has more relaxed immigration abilities than standard workers. It is important to take advice on this from a specialist immigration lawyer and ensure the commercial terms agreed with any agency supplying the labour best protect you.
If the recruitment issue is still not resolved, 2022 could be the year where employers have an increased focus on tech enhancements, in particular automation.
If you plan to deal with the labour crisis through automation, consider the impact on existing employees
Since retention and recruitment of staff is becoming even more of a problem, the use of automated solutions has become increasingly attractive to employers. From an employer’s perspective this solution offers many benefits, not only boosting workforce efficiency but doing so without employment costs or risks such as sickness, holidays or social distancing requirements etc.
Increased automation could result in the need to change employees’ terms and conditions or could even lead to redundancies.
Changes to employment contract terms and conditions
If an employer is going to increase automation, this could result in employers needing to reduce or amend employees’ working hours/patterns and/or make redundancies.
How can an employer go about changing terms and conditions?
- Does the contract contain a flexibility clause enabling you to change certain terms and conditions without consent? If so, you may be able to rely on this to change the working hours.
- Obtain consent from the employee. If there is no flexibility clause then employers can look to obtain the consent of the workers to amend the contract of employment. This is a common approach but employers need to think carefully about how to get the employees to consent. What could be offered as an inducement? When would you offer this? What is the alternative for employees if they don’t consent? Time needs to be spent planning strategically around how to manage this process.
- Dismissal and re-engagement. If an employee does not consent to the variation to their working hours then it may be possible to, subject to consultation, dismiss them and offer immediate re-engagement on the new terms. Such an approach is high risk and we recommend you take advice before embarking on this approach.
- If you are making changes to contracts of more than 20 people then there are additional consultation requirements (as outlined below under redundancies). We suggest that you take advice on this before embarking on the process because if an employer gets it wrong, this could result in high levels of compensation including a protective award for each employee of up to 13 weeks uncapped pay.
If redundancies are on the table, do your research
If an employer wants to make changes to the contracts of more than 20 people and/or make more than 20 people redundant, they will need to ensure they have discharged the collective consultation obligations as set out in the Trade Union and Labour Relations (Consolidation) Act 1992. Note that the definition of redundancy in this situation includes proposals to change the terms and conditions of employees. The collective consultation process is quite involved and complicated but in brief this will involve:
- identifying the affected employees and check whether there is a recognised trade union in respect of the affected employees. If there is no recognised trade union, are there employee representatives in place that you can consult with? If not, the employer will need to arrange for employee representatives to be appointed and possibly run an election process. This can take time to set up before you can begin the consultation process
- there are strict time limits for consultation to take place before the changes can take effect. Where 20 to 99 employee dismissals are proposed at one establishment within a 90-day period, consultation must begin at least 30 days before the first dismissal is due to take effect. For 100 or more employees this consultation period rises to 45 days
- an employer must notify the Department for Business, Energy and Industrial Strategy of the proposed redundancies before it makes any dismissals.
These are just some of the headline points and we strongly advise you take advice on your own individual situation.
If you are in the food manufacturing industry and can relate to the issues outlined above, it would be beneficial to seek advice. Birketts has a team of expert and experienced lawyers to advice on these issues. Please do not hesitate to get in touch.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2022.