British Airways has recently been in the news for asking staff to work for nothing. No doubt many employers here will be reflecting on their outgoings and contemplating asking the same of their staff. But is this a good idea, something worth exploring for employers here?
In the current economic climate (did the parlance ever change to “recession” until a recovery was declared to be on the horizon?), there are good reasons to be tempted to invite staff to reduce the cost of their continued employment. But this temptation should be resisted, at least until the employer is absolutely confident they can accommodate any concessions their employees agree to, while also maintaining the trust & confidence of all employees, particularly those who don’t agree to sacrificing their wages or other benefits, as they will continue to be entitled to equal terms & treatment as their peers.
There are a few issues that need to be considered:
• Can the staff make sacrifices without the employer breaking the law on paid leave or minimum wage? If the wages & holidays are the minimum, probably not, but there could possibly still be ways, such as return contributions to the company.
• Can the employer ensure the employee won’t try to claim the wages/leave back at some stage in the future? This is complicated, as there are numerous recourses the employee could turn to. An Employment Tribunal would seem natural & quick, with the employee normally obliged to file a complaint within three months, but this is not the only avenue the employee could take, and there could be arguments to justify an extension of the tribunal time-limits if new information about the business later emerged.
• Will the employees who don’t feel able, or simply don’t care to, make such sacrifices be as secure in their future employment, and equally feel that they are? If redundancies did prove to be necessary in the future, selection would still need to be made in a fair manner, and any impression of staff buying security would not be likely to pass any reasonable test of an employment tribunal.
• Can the employer introduce secure legal contracts at a cost that would likely be mitigated by the benefits? For an employer the size of BA, this shouldn’t be a problem, but for smaller employers, this would be more of a challenge. Ideally, employers still seriously contemplating this option could try to pool the costs by getting other employers involved & negotiating a joint contract for the work (EmploymentLawClinic.com would be open to support this, but unfortunately won’t be able to promote this service to assist you in pairing the contract in the very near future).
• If the business survives, what longer-term gestures will be made to staff? Beyond keeping their job, some employees might expect a reward for their risk.
• Is the business willing to be open about the financial status, and be open to input on management? If employees sacrifice a wage or leave, they could reasonably want to ensure there is a good chance the business will survive, so they could require access to the books or other management records. Would you feel comfortable with this? Even with clauses a bank manager would accept, staff sometimes do talk, so you'd need to be open to this possibility.
There are probably many more issues that will arise, so clearly this is not an option to wander into casually, or simply to follow the headlines.
Nonetheless, early reports indicate that some staff in BA are contemplating or agreeing to the request, and most exceptionally, the pilots’ trade union (BALPA) is actually recommending its members accept a deal that involves a pay cut for more work.
There is no reason why (genuinely) struggling employers shouldn’t consider this option, but caution also needs to be exercised to ensure you don’t alienate employees, or otherwise leave the company open to claims from aggrieved employees – regardless of their future employment.
In conclusion, if the business owner is working for close to nothing, there is no reason not to ask the staff to too. Or at least to contemplate the idea...
Last edited by Employment Law Clinic; 19-06-2009 at 01:51 AM..
You must've missed it. As I wrote on my blog a few days ago:
Quote:
Their boss, Willie Walsh, has apparently already announced he’s going to work for no salary in July. That’s big of him. Considering that his annual salary is over £700,000, do you think he’s really going to miss £61,000 that much?
An interesting contribution added to this debate, courtesy of Director Magazine: the debate explores whether it's fair to ask staff to work for nothing, or if it's rude of the managers that have enjoyed the good-times & kept nothing behind to ask?
It's an interesting debate - as ELC mentions above, some responsibility must rest upon the managers and directors of the company - for having no reserves to alleviate the bad times.
On the other hand, is it fair to ask people to take a paycut or work a month for free?
Is it fairer than making them redundant outright? It may well be CHEAPER for the company - to put an alternative spin on that question; even though it could sound more attractive to some employees.
I tend to agree there is certainly no harm in asking - and a lot of employees (at least, most of the ones worth having!) will probably appreciate the honesty, as long as it is handled in a transparent way.
By the same token do employers offer thier staff double pay for a month when times are good? i dont think so.
Employers are in business to make money granted but their employee's, indeed in larger companies are the ones that are doing the work. I personally think its quite cheeky to ask them to work for free, offer them a unpaid sabaticle or extra unpaid holidays but to ask them to work for free is just short of slavery.
As mentioned above it was really big of Willy Walsh to give up a months pay, i'm sure he has plenty of money as the wages he currently recieves are footballer wages. I'm sure all his staff on £1500.00 per month have a spare few grand lying around to prop up their bosses incompetent handling of the company.
Thats what bosses are their for, they get paid more and they are the ones who should take the good times with the bad, not the workers.
Sorry to rant but i actually feel very stongly about looking after our staff, they are the cogs in the business which keep it turning day in day out.
1print, you have said everything I was about too, I remember my father having many a sleepless night because of the staff, not his profits.
I have been racking my brains on how to make money for other people, not just myself.
People should never have to work for free unless they have the money in the bank to help others, I have lived in asia for a relatively short time (18 months) and people can live on small money there in the remote parts, its a normal and happy way of life, but we have fought in the UK for years to make sure they have more and more money, which means that the farms over there are losing the workers from generations because they have tasted more and want more and are leaving their jobs, so the cost of things in the UK has risen because we are paying more abroad, and then they have the cheek to ask people to work for free, i think its disgusting.
People are not broke at the moment they are just being wiser with their money, i go to restarants that are still thriving, because they offer good service, good staff etc, this is why many companies are not surviving in this climate, because they survived on arrogance for far to long, I am not taking as much money as i would like to in a country that thrived 2 years ago, so i change what i do, not my staff or my family, its down to me to find what works.
And thankfully desperation is when the greatest ideas come, KFC, MacDonalds, Virgin all born from desperate desperate times, so I shall raise like a phoenix as they did!
And I wish the same for anyone else out there that thinks of others before themselves
An interesting debate developing here, so as I’ve helped promote, but not really entered into, I’ll make my views known.
As a trade union rep in my previous career (working for businesses now, some say a poacher turned gamekeeper), I would have pretty much rejected any suggestion of staff (nearly wrote “members” – the parlance of my previous era) working for nothing – for a day, let alone a month. One could never prevent managers from asking, but I would at least have discouraged the management, and campaigned for a vociferous rejection of the request if they did go ahead – although for management to invite volunteers, as Matt suggests, is perhaps fair, as it is voluntary and if you don’t ask....
Of course, management could be blamed for getting them into the mess (except if the managers were Gordon & Alistair, when it was the tripartite-regulated bankers, and the Americans until W left office, since when the blame falls only with the bankers), but the issues we or any employee have to accept are what is being faced at the given moment, not what actions should have been taken previously; we can all use past experiences to influence the future, but there is no point navel-gazing into the past.
But on the other hand, if it brings longer-term benefits, particularly avoiding more permanent staff cuts, it can’t be an altogether bad approach.
In the case of BA, given the potential concerns about the management’s leadership of the company (an argument the CWU are using to justify their current industrial action in the Royal Mail), and the very small take-up of the main offer – BBC News suggested 800 staff, out of a potential 40,000 staff – I think the unions might have missed a trick: to agree one-month sacrifice of 2% of gross pay among all staff (on an average wage of £25,000 (not sure of the average in the airline industry), about £40 before tax), the unions could have negotiated a greater influence in the management of the company. This would have:
• given what BA has now achieved;
• shown the unions not to be luddites, resistant to economic factors, or simply ignorant to the issues the company is facing at the moment;
• achieved a fairer distribution of the burden among all staff, not just 2%;
• supported better relations between staff – those that have made a sacrifice of a month’s pay are likely to expect their peers to work very hard now, and will likely be making noises to see their sacrifice was not in vain.
1clickprint makes the valid point that employees don’t get paid extra in the good times, so why should they make sacrifices in the bad times.
The real beneficiaries in the good times are the shareholders, but as a lot of these are seeing their finances suffer recently – often pension schemes that are already in financial trouble – a shareholder’s rights issue, or other effort to raise money from the previous beneficiaries of the good times, may simply fail. If things were different with employee share ownership - currently at its lowest level for 16 years - the employees could be asked to make a sacrifice of the nature now being asked of them, although in a status of shareholders. This would again spread the burden more evenly, but given the employee shareholder scheme is not working, not an option in this case.
I think the best points that are made in this thread though are equally among 1clickprint & EMBN & Kip FX Design – it’s the staff that actually make & keep any business a success: good managers will make good decisions that will make a profit for the company, but also balance these with decisions that have the involvement & appreciation of staff that deliver actually that success on the ground, not at the cost of the staff. Success in business shouldn’t be about treading on the lower ranks, but involving the staff to support a goal the benefits of which all can share in. Good HR policies will often help... and it’s never too late to consider how flexible working & other win-win policies could help a business.
Staff may agree to work for nothing for a monthm but will the mortgage people/gas/electricity/Tesco's etc offer to let them off paying for a month? No.
I don't know of many families with children who could afford for their chief money earner (or even the secondary in a lot of cases) to have no salary for a month and still pay their bills.
People still get paid monthly. A month's pay is deducted over a period of time - 3 to 4 months so that people still have a monthly income. At least that's how the big companies have done it.
we were asked to offer a "voluntary" reduction in Salary last November for three months (this had all been discussed through the external HR supplier who only came on board the previous month!). So we did.
Then in Jan we were asked to offer a further "voluntary" reduction in either pay or hours. Off the record I was advised that it was four days for me or redundancy. Oddly enough my mortgage company required me to work five days to pay them.
I set up on my own one day a week.
June I was asked to "voluntary" offer another reduction in either hours or wage. Down to three days and build up the second day with my own Clients.
Out of the blue in the last week of July I was told they wanted me back up to four days from 1st August even though I wanted to carry on with three days, indeed they expected my hours to return to full time soon.
Apparently, according to ACAS there is nothing I can do, it was a temporary arrangement.
I suppose I am lucky I was not one of the ones made redundant in Feb, or the ones made redundant in June, but who is to say that in two months I wont be asked to drop hours again.
The management have all taken pay cuts and are working unpaid overtime.
I have a temporary reprieve to the end of this month but have to go back to four days unless in the meantime I miraculously find alternative employment or get enough Clients to justify going full time self employed.
It is all well and good offering to help out, knowing you will not be repaid any of the sacrifices, but when it is only for the company benefit it is definitely one sided.
We are now actually in a situation where we have more managers than we have workers!!
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Working for nothing?
