UK Edition
The spread of coronavirus in Britain has already led to wide-scale job losses in sectors including hospitality and travel. Economists warn that hundreds of thousands of people could lose their jobs and push the unemployment rate from 3.9pc closer to the 8pc seen in the aftermath of the financial crisis.
John Philpott, an economist at the Jobs Economist consultancy, says: “A million job losses looks virtually certain but I worry it won’t be much lower even with some kind of generous wage subsidy.”
The Government plans to pay 80pc of wages for staff who are put on unpaid leave, worth up to a maximum of £2,500 a month - just above the median income.
Fears that the UK, like the entire global economy, is heading for a deep recession has sparked concern among employees they could be laid off imminently – and some are starting to ask managers about job security.
While dismissing employees or making people redundant is never easy, there are good ways and bad ways of going about it. The legality for dismissing a member of staff depends on the employer's reason for it and how it carries out the dismissal process.
Emma Swan, head of commercial employment law at Forbes Solicitors, says that if it becomes unfeasible to keep staff and job losses are inevitable, employers have a duty to explain changing circumstances.
“Workers need to be clear about why they’ve been made redundant and be provided with the appropriate remuneration as per their contracts. At this time, businesses are advised to communicate changes verbally in the first instance (via phone or video conferencing to respect social distancing) and then be followed-up with written confirmation.
“Both forms of communication can reference any steps the company has taken to try and avoid job losses, which will often resonate better with employees and the public.”
Kerry Jarred, owner of Jarred Consulting, which advises and supports businesses through periods of change, says companies should not rush into laying off staff, but should be more creative about how they deal with restricted cash flow.
“What you do now will define your business in the future, and if you act rashly this will stay in people’s minds. Businesses should not make a knee-jerk reaction but instead focus on putting resources into other areas of the business where they can make revenue; can you upskill certain people and place them elsewhere in the business? Can you spread the workload, or reduce hours? It’s always better for people to have something rather than nothing," she says.
“Of course some companies will need to make cuts, and quickly, but for the most part businesses are in it for the long haul and when they survive this they will value the talent they have kept. Those that let theirs go will have to recruit new staff which will be very expensive.”
Sankalp Chaturvedi, associate professor of organisational behaviour and leadership at Imperial College Business School, says companies that decide to let staff go during these unprecedented times should be careful about the way they approach talks with staff.
He says senior managers should take three steps. “First, make it clear why you are letting employees go, prepare the case. The business is struggling financially, the environment is changing and the company is struggling to cope. Make a broad statement about the situation the company is facing.
“The second stage is to be specific to the individual about why they are being let go – this must be a one-to-one interaction. Don’t do it by email. Be sensitive. Suggest other companies you know of that might be hiring.
“The third stage is to be clear that when the business is hiring again, they will definitely consider hiring them back. It is important managers be human but also keep their emotions in check.”