For many organizations, labour is their most significant cost. The loss of a major client, or an economic downturn, can mean that there is a need to reduce those costs.
Unfortunately, many employers do this without proper advice or planning, and expose themselves to additional liability and costs at a time when they need to reduce their expenses.
For example, they might let people go without providing the appropriate notice or severance. Or they may try to “be fair” by having everyone share the pain equally and reducing hours or compensation across the board. This can lead to constructive dismissal claims across the board!
In other cases, they will impose temporary layoffs when they do not have the legal right to do so, and will end up facing wrongful dismissal claims.
We work strategically with our clients to deal with situations where costs must be cut in a way that will minimize the cost and risk of doing so. This starts with our HR Checkup, when we help you draft your contracts. We can include provisions which limit the amount of severance that will be required, and give you the right to impose temporary layoffs.