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What’s a Hiring Freeze?

What’s a Hiring Freeze?

Unsure what a hiring freeze is and how it can impact the future of employees? Read this article to find out more information.

13th May 2019

What’s a Hiring Freeze?

A hiring freeze occurs when an employer stops hiring non-essentials for a period of time. Hiring freezes mainly happen to lower costs and save money during times of financial pressure. Mainly during a period of recession or business restructuring. During this hiring freeze, employers may evaluate current employees and restructure internal departments for utmost efficiency. Hiring freezes may be short-term or long-term. The length is up to the discretion of management in deciding when they wish to start hiring employees again. They are sometimes an alternative to terminating employees. Hence, a freeze period may even indicate to management that no new positions need to be filled.

Effects on employees

A hiring freeze may have a greatly negative impact on currently hired employees. The initiation of one may make employees wary of the business’ future. Hence, there is a necessity to emphasise that a hiring freeze is a ‘stop-gap measure’ ensuring the continuation of the business rather than indicating its demise. Hiring freezes are often an alternative to laying-off employees. Therefore, it may be best to reassure current employees that their job is safe.

As a hiring freeze may slim out staff members, there may be more work for current employees to take on and complete. Hence, some staff members may be attempting to complete work outside of their normal job requirement which can cause stress and discomfort. Employees may feel overworked or spread too thin due to the freeze. Therefore, it is important to identify to them that the freeze is not permanent so employees are more willing to assist until the hiring freeze is lifted. Furthermore, current employees may be displeased that they have to adopt more work obligations without the accompanying pay rise.

Caution to employers

It is important to be cautious of interns, part-time workers or ‘essential hires’ during the hiring freeze as it may off-set the purpose of the hiring freeze. Although it may be a cost-efficient way to continue the business while attempting to reduce the workload on current employees, it may have some detrimental effects. Employees may question why the freeze is necessary when new recruits are still going to work at the business. Furthermore, it may be considered a waste of time and resources if current employees need to properly train recruits only for them to be temporary and not properly integrated when the hiring freeze is lifted. Hence, jarring work-flow and consistency within the workplace.

If you require legal advice in regards to hiring freezes in the workplace speak to an Employment Lawyer. You can also speak to a Business Finance Lawyer if you wish to discuss legalities regarding the business’ financial position.
Don’t know where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Author
Chloe Kim

Chloe is an intern at Lawpath in the Content team. She currently is in her last year of studying a Bachelor of Laws with a Bachelor of International Studies at Macquarie University.