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HCR Law Events

10 October 2022

Cost-of-living crisis: Potential employment law issues arising

High inflation rates in the UK, fuelled in no small part by the world energy crisis, has led to different measures being introduced by the government to try to help with the high cost of living. The increased cost of food, fuel, and energy bills has been noticed by most, if not all people.

According to information gathered by the Office for National Statistics between 31 August 2022 and 11 September 2022:

  • 87% of adults in Great Britain reported an increase in their cost of living in August to September 2022
  • 4 in 5 adults reported being worried about rising costs of living in the past two weeks
  • Almost half of adults who pay energy bills found it difficult to afford them
  • Around 30% of adults found it difficult to pay their usual house bills in the month prior
  • Around 25% of adults reported that they were unable to save as much money as usual.

As an employer,  several issues may arise during this period. For example, employees may want to take on second jobs to help them make ends meet, you may be thinking about ways you can provide financial support to assist them during this period (perhaps through bonus payments), or you may even need to reduce the hours of some employees if business needs call for it. We outline here, a brief employment law perspective on the cost-of-living crisis.

Employees taking on a second job

There may be an increased possibility during this period that employees will want to take on a second job to provide them with an additional income. The first thing to consider here is whether your employment contracts contain provisions allowing employees to take on additional employment. Many contracts say that employees can take on a second job but only if it is with a non-competing business and if they obtain consent from their employer to do so. Failure to obtain consent in this situation, would likely constitute a breach of contract and could justify disciplinary action.

Can you refuse to give an employee consent to work another job?

Potentially, you can, if contracts require your consent. However, consider the reasons why you are refusing and whether it is reasonable to do so. For example, refusing to allow a more junior employee to take on a second job in the current economic climate may well be an unreasonable exercise of a contractual discretion. If the employee in question resigned, they could attempt to argue that they had been constructively dismissed. Additionally, it is important to ensure that the grants of consent are consistent and fair to lessen the risk of potential discrimination claims.

Competition

If you find out that an employee is working with a competing business, this could mean that they are acting in conflict of interest and have further breached the implied duty of mutual trust and confidence that exists between an employer and an employee. There could be a fear, depending on the employee’s position, that they are sharing trade secrets, stealing clients and generally breaching confidentiality obligations. In this case, an investigation would be warranted, and an appropriate sanction could be issued in accordance with the company’s disciplinary policy, after a full hearing has been held. Always consider less severe sanctions before dismissal and ensure all communications are accurately recorded to aid in the event of any future dispute.

Working Time Regulations

Under the Working Time Regulations 1998, an employer has a duty to ensure that a worker’s weekly working hours does not exceed 48 hours (averaged over 17 weeks). This working hour limit applies even if the employee has more than one job. An employee can, however, agree to exclude the minimum by doing so in writing. If an employee wants to take on another job therefore, as their primary employer, you should ensure that the employee in question has signed an opt out agreement to avoid liability.

Additionally, there is a risk that an employee’s extra work responsibilities could affect their performance negatively if they are stressed or not allowing themselves sufficient rest time. In this case, while a disciplinary procedure could be initiated, try to approach the situation with understanding and resolve it informally where possible. Ensuring your employees have access to wellbeing support during this period is also a step that could assist employees.

Bonuses

As an employer, you may be fortunate enough to be able to assist employees with the cost-of-living crisis by offering them additional benefits. For example, energy bonus payments are a great way to support employees with their increased energy bills. It is important to ensure however, that all employees are treated fairly to minimise the risk of any potential indirect discrimination. For example, if only full-time employees are paid energy bonuses, this could inadvertently mean that some women, who are more likely to be part time workers, could be put at a substantial disadvantage compared to men. It would also be a breach of the Part-time Workers Regulations and lead to liability for less favourable treatment. A sensible pro-rata calculation should therefore be applied.

Can there be holiday pay liability on bonuses?

Where bonus payments are paid on a one-off basis, this will not lead to liability. However, if you were to introduce a performance bonus or commission incentive scheme with any kind of regular payments, this could form part of employees’ normal remuneration such that holiday pay calculations ought to include these payments. Failure to calculate these properly could give rise to claims from each employee affected. If you have concerns or want to know more about potential risks, please do contact us.

Finally, should you have to reduce the hours of work of staff or make redundancies as a cost-cutting measure during this crisis, always consider the terms of the employment contract, ensure that you follow a fair procedure and carry out all necessary legal consultation. We strongly recommend seeking legal advice if any redundancies are necessary.

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