Challenges within the manufacturing sector 

Off the back of the Covid-19 Pandemic and Brexit, the manufacturing sector is currently facing immense challenges, including recruitment and resource shortages.

Manufacturing businesses rely on seamless supply and customer chains. From an employment law point of view, employers in the sector must understand their obligations and support their people to be able to maintain production and sales.  

We have set out our top 10 employment tips for the manufacturing sector, which may provide some helpful guidance.

1. Plan for the “skills gap”

A shortfall of skilled employees in the manufacturing sector is likely to limit growth in the manufacturing sector in 2022. Technological advances can offset labour needs and increase efficiency, particularly in production. However, this will require the recruitment of employees with different skills, such as programmers and service engineers or retraining of existing employees.

2. Comply with ‘right to work’ checks

It is a criminal offence to employ someone without the appropriate immigration status, and there are now stringent rules around the checks that must be carried out. Employers must see employees’ original documents that prove their right to work, check they are valid (in the presence of the employee before they start their employment) and retain copies. The rules have been relaxed temporarily due to Covid-related restrictions and will be in place until 5th April 2022. Virtual checks are still required, and employers should check the latest requirements when recruiting.

3. Issue contracts of employment

This is a legal obligation, but it is also an opportunity to set out terms around pay, duties and hours etc., to avoid later disputes. If written terms are not put in place at or before the start of employment, Employment Tribunals can order employers to pay an award of up to four weeks’ pay per employee. In addition, Employment Tribunals tend to frown upon employers who fail to comply with this basic obligation, putting respondent employers on the back foot if they are challenged about any other issue.

4. Be aware of changes in National Minimum Wage rates

In the Autumn Budget, the Chancellor announced that the National Living Wage (applicable for employees aged 23 and over) will be raised from £8.91 to £9.50 in April 2022. There will also be raises in the National Minimum Wages for all lower age groups.

5. Beware the rights of short serving employees

While employees cannot usually claim unfair dismissal until they have two years’ service, various other claims can be brought from the start of employment. Any discrimination claim can be brought from the start of employment. This includes discrimination based on part-time status and fixed-term status. Employees can also claim unfair dismissal from the start of employment if the dismissal is for an ‘automatically unfair’ reason. This includes dismissals that are connected to pregnancy or maternity, taking family leave, raising health and safety concerns (including Covid-safety worries) and raising concerns about employment rights generally, such as working time rights.

6. Calculating holiday pay correctly

If employees regularly work overtime, their overtime pay is likely to form part of their ‘normal remuneration’. This means that it needs to be included in calculating their holiday pay by referring to an average of the previous 52 weeks worked.

7. Flexible working request

If your employees have been regularly working from home during the pandemic, they may wish to continue to do so. Any employee with 26 weeks’ service can request a change to their hours, work location or duties. There is a statutory process for responding to a request, and failing to deal with a request properly can result in an award of eight weeks’ pay. 

Discrimination issues also often arise, so recognising these requests, and responding appropriately, is important. There are also proposals that this should become a right that applies from day one of employment. If you want more information, you can watch our video guide for employers on Flexible working requests.

8. Stop former employees from damaging your business

This requires written restrictions, usually in the contract of employment, stopping a departing employee from joining a competitor or poaching customers or former colleagues for a period of time. These restrictions do need careful drafting to ensure they are enforceable. However, it is worth the investment, particularly if your business has key people who could cause serious damage to the business if they left. Without specific restrictions, a business’ options and remedies are very limited.

9. Handle reorganisations or contract changes carefully

Employers cannot unilaterally impose changes to employees’ terms and conditions of employment without the consent of the employees. Therefore, a careful approach should be taken to avoid breach of contract claims. Alternatively, notice can be served to terminate employment, with the offer of re-engagement on new terms, although this should only follow a full consultation process to avoid unfair dismissal claims. If 20 or more employees are affected, additional ‘collective consultation’ rules apply and should be factored in to avoid expensive additional penalties.

10. Get redundancy processes right

Data from Make UK, the Manufacturers’ Organisation, shows that 52.5% of manufacturers made redundancies during the first and second lockdowns. With 45% of manufacturers having furloughed 1-25% of their staff, employers will be concerned about another lockdown without the support of the furlough scheme, which came to an end in September 2021. If an employer is considering making genuine redundancies, a proper process must be followed.

Here to help

If you have any more questions or would like more information regarding employment matters within the manufacturing sector, please get in touch with our Employment Law Team below.

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