Is it time for you to consider cutting staff perks?
Variation of Terms
Manchester United FC recently announced the end of free hot meals for its staff as part of a cost-cutting exercise. This leave the question, can you also cut-back on staff perks?
Contractual vs. Discretionary Perks
The first step is to determine whether the perks are contractual entitlements or discretionary benefits.
If any of the perks are contractual entitlements, you will only be able to withdraw them with explicit employee consent. Without consent, you risk being in breach of contract. It is therefore crucial for you to check the terms of employment contracts and staff handbooks carefully.
If the perks are not a contractual right but are provided entirely on a discretionary basis, such as free tea and coffee, you should be able to withdraw them without consent. However, as staff may have come to rely on these perks, it’s advisable to consult with staff about your proposals.
Our Advice to You
If any perks are contractual, seek employee consent through a process of consultation and negotiation. Employees are likely to be more understanding and give their consent if they see your proposal as necessary for business survival or job security.
Consider implementing compromises. For example, reducing perk frequency or replacing them with lower-cost alternatives rather than removing them altogether.
Being honest about the business reasons for needing to cut costs, how you plan to achieve this, and when the changes will be implemented can help maintain trust and good employee relations.
Warning
Be aware that, depending on the circumstances, a discretionary benefit can harden into a contractual entitlement through custom and practice if it has been provided consistently over time. Even if a perk is discretionary, it may now be part of the employee’s terms and conditions of employment.
If this is an area you need help and support with, please do not hesitate to contact us on 01206 239761 and we will be able to advise you accordingly.
