Key considerations when looking to reduce employees’ hours legally

The recent economic downturn has seen a rise in the number of employers looking to reduce employees’ hours. Reducing hours may help you to cut costs and therefore avoid redundancies, but it shouldn’t be done without first considering UK Employment Law and your legal obligations as an employer. This way, you avoid breaching employment contracts and protect your relationship with your employees!

To help you get it right, our experts have outlined some things you need to consider before reducing employees’ hours.


What are the regulations around changing employee contracts?

A clause can be included in employees’ contracts stating that their hours can be reduced according to the business’ needs. If this isn’t explicitly stated in the contract, you may need to renegotiate the terms of the contract with the employee.

Sometimes a clause isn’t enough to rely on if you’re considering reducing employees’ work hours. If your employee has a set working pattern and the clause hasn’t been used regularly, it’s likely that you’ll still need to negotiate a new work contract.

Forcing through a change to employees’ contracts is a high-risk strategy that could leave you exposed to costly claims brought against your company.


Can I reduce my employees hours?

Any proposed change to a contract term must be based on legitimate business reasons. For example, a business may need to reduce the hours of work for employees to keep the business going. This may be because:

  • The business’ financial position or structure has changed
  • Reduced demand for products or services

Any changes to a contract term must be dealt with by following a fair procedure and keeping within the confines of Employment Law provisions.

If you don’t have a legal reason for the changes, or you’re found to be discriminating in any way, you’ll leave yourself open to costly claims against your company. So, it’s crucial to get the right advice from an Employment Law expert before taking any action.


Reductions in contracted hours and Employment Law

To comply with UK Employment Law, you should follow the right processes when suggesting a reduction in contracted hours to an employee.

Firstly, you’ll need to propose this to your employee. In this proposal, you’ll need to explain the reason for the contract change and ask whether they agree to the change. It’s important to remember that specialist advice must be taken if 20 or more employees are affected, as this could require collective consultation.

If the employee agrees

If your employee has accepted the change, you’ll need to:

  • Negotiate a new work contract
  • Confirm this is in writing as soon as possible and within a month at the latest

If the employee disagrees or refuses

If an employee disagrees or refuses and you force through the change in terms and conditions, this could lead to claims being brought against the company, including constructive dismissal, breach of contract claims, and more.

Employees are well within their rights to refuse contract changes, but this can be a tricky area to navigate as an employer. We’ve provided guidance on what to do in this situation here.


Your obligations as an employer

There are a few actions you must take when reducing employees hours to avoid any serious legal consequences. We’ve outlined these below.

Informing those affected

When you notify those affected, you’ll need to clearly explain:

  • Why you decided to reduce their hours
  • How you came to this decision (reasons must be fair and non-discriminatory)
  • What the new working hours and/or pay will be

Letters of notification

Once agreed, you’ll need to send the affected employees a written statement of the change within a month to state what the new contract changes are.

Changing contracts of employment

You’ll need to draw up a new contract of employment with the updated working hour and terms and conditions once everyone is in agreement. This will need to be signed by both parties before it comes into effect.


Reducing working hours for part-time vs. full-time workers

Part-time employees must be treated the same as full-time employees when it comes to changing working hours. As a result, you need to follow the same steps as above and make sure your reasons are fair and non-discriminatory.


Reducing working hours after furlough

The furlough scheme ended on the 30th September 2021, after which point many businesses had to decide whether to bring back employees on their same work contract, a new one, or make redundancies.

If you decide to make changes to your employees’ work contracts, you’ll need to consult with employees on these proposed changes and understand if they would agree to a reduction in hours to reflect the needs of the business.

However, if you’re going down the redundancy route, you may need to start the redundancy consultation process with a view to terminating the employment of those employees whose role is redundant. Normal redundancy rules and considerations still apply to employees returning from furlough.


The importance of following the correct procedures

Getting your head around Employment Law and reductions in employee hours can be a challenge, but it’s vital to follow the right regulations to protect yourself from claims.

Not only this, but it can also help you to maintain a positive relationship with your employee and protect your brand reputation.


How can Citation help?

Our contracts of employment services will give you peace of mind that you’re always sticking to the necessary legislation. Whether you need advice on reducing employee hours or you need to draw up new contracts, our Employment Law experts are here to help.

Call us or email us via the contact form to get advice on reducing the hours of work of your employees.

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