Dear PMSL
Our firm used to do a lot of business for the government, but over the last ten months since Government Ministries’ budgets have been cut, we have lost many of our long-term contracts and some of our staff have literally nothing to do. We know we must adjust to the downturn in the economy, but our staff have been with us for a long time and they have families to support. Is there any alternative to retrenchment that is sustainable until the economy improves?
PMSL Response:
Yes, there are, in fact, a number of viable alternatives and you are being sensible to consider them. Good and experienced employees are hard to find at the best of times and keeping your employees on through tough times will build staff loyalty and commitment that are irreplaceable if you can do so without actually becoming insolvent, which will not help anyone.
No one alternative fits all cases, but some of the options are job sharing, where two employees share one job, each working half day and sharing the wage that before the sharing, only one employee used to get. It is not ideal, but at least that way, each one will be earning something and will still be covered by NIS for sickness and pension benefits. An alternative is to put each employee on shorter hours paying them a relevant proportion of what full hours used to attract. Another option where there is hope for upcoming new business that has not come to pass just yet would be temporary layoffs, using vacation entitlements. Some companies have agreed with staff to across the board salary cuts while they keep looking for new and different sources of income. You can even consult with staff to come up with creative suggestions as to what can be done.
Which one will work best for you will depend on company size, staff allocation, unionization status, geographic location, method and periodicity of payment and other industry specific factors. All options should be carefully weighed before any one is embarked upon as any action taken will establish a precedent and affect not only employees’ lives but the future of the organization.
