Is It Legal to Reduce an Employee’s Hours?
Businesses may sometimes need to reduce an employee's hours to help their finances or where there is not enough work available. Find out more here.
Sometimes, if a business is in financial trouble or wants to cut costs, they may reduce an employee’s hours. Reducing your employee’s hours may reduce the need for you to lay off employees. However, this also means that an employee isn’t receiving the remuneration they normally would be. In this article, we’ll explain when it’s legal to reduce your employee’s hours and what you have to consider.
Being able to reduce your employee’s hours depends largely on what basis they are employed. For full time and part time workers, there is the reasonable expectation of ongoing and regular employment. This means that in order to reduce your employee’s hours, you must first consult with them. This will also likely require you to amend any employment contracts in place, which your employee will need to consent to. For casual employees, there is no reasonable expectation for ongoing and regular work. This means that you can reduce your employee’s hours without receiving the permission of your employee, however you need to give them adequate notice. The exception to this is where your employee has been working on an ongoing casual basis for more than 12 months.
When an employer wants to change an employee’s regular roster or ordinary hours of work, they have to talk about it with employees first. It is understandable that many businesses are finding themselves having to reduce their employee’s hours due to reduced business and Government shutdowns. For full time or part time employees, the reduction in hours can not be less than 75% off the employee’s normal working hours. Employees are able to still accumulate their ordinary leave entitlements despite their reduced hours.
Standing down employees
If your business cannot operate normally during this time, you may be able to stand down employees. This is only applicable for businesses that have been forced to close due to an unforeseeable event. Standing down your employees also indicates that you intend to get your employees back to work as soon as your business is able to. If your business has been forced to close due to COVID-19, you may also be able to pay your employee’s usual wages with the assistance of the Government’s JobKeeper Payment Scheme.
Consequences for reducing hours
Reducing your employee’s working hours is legal, as long as you consult with your employees. As an employer, you must understand your responsibilities relating to employee rights. This includes employment terms, contracts, leave entitlements and wages. When reducing your employee’s hours, you should also consider other effects it may have. This includes loss of sales and your employee potentially moving on to a new job with increased hours of work.
Generally, reducing an employee’s hours of work should be done with caution. You should make sure you comply with your legal obligations and only change any contractual terms with your employee’s consent. If you have further questions about altering employment arrangements, it may be worth getting in touch with an employment lawyer.
Sheza is a legal intern at Lawpath. She is completing a Bachelor of Laws at Macquarie University. She is interested in corporate/commercial issues within the legal industry.