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Keeping staff on by reducing wages, changing hours of work and other techniques

You as an employer have an obligation to run your business in a way that meets your goals whether these are money-oriented goals, social service goals or whatever.

In deciding how to organise your business, you need to balance the staffing situation with those goals. For example, if you are a profit organisation and you employ ten staff, one of your goals is to continue to make a profit or if not a profit, to be able to survive off any reserves.

Therefore, you must assess your current labor needs – numbers, types of staff, hours required, individual staff costs.

Reminder – Be very aware any changes you make to staff’s employment arrangements have to be made in accordance with New Zealand employment law.

If you wish to retain your staff, but to change what you pay, you can:

  • Offer a reduced pay rate.  Get their agreement.  From a staff relations point of view, treat yourself as an employee and if you are asking for a reduction in the amount staff take, think about taking the same % reduction also. Make an offer above the Minimum Wages Act rates.
  • Look at staff’s hours of work.  Staff working 40 hours a week cost you more than a staff member working part time. Think seriously about whether full timers can work part time or part timers can reduce their hours of work.  What hours do you really need staff?  If this will save you money and keep your business operating, then consider making an offer to the employee.  It might be a short-term reduction in hours of work or ongoing.
  • Look at the other benefits you pay your employees and why you do it.   Do you provide them with a car?  A phone?  Laptop? Petrol money? Is it essential for the employee to have this benefit to do their job or just something that happened years ago?  Is it in their IEA?  Ask yourself if I stop doing this, would it help my financial goals?
  • Think about either merging or changing job’s functions to help your business.  For example, can your receptionist take on other duties such as stores functions or other functions which add value to your business, but keep your business operating financially?

If you would like to talk about how some of these options might work in your business, please contact Steve Newby on 0212621035; steve@newbyhr.com

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