Many businesses are looking beyond the immediate impact of Covid-19 and the furlough scheme, considering what they need to do to survive.

Looking at staffing costs is one obvious move – how do you retain skills and experience for the future, whilst managing overheads?

To avoid redundancies, you may be considering pay cuts. You can impose a cut for some or all of your staff, but because pay is part of your contract with them, you need to agree the change with them or their representative. Any change must be confirmed in writing too.

Your approach will depend on how many staff are affected – if more than 20 are affected, you must have a collective consultation (involving trade unions or staff reps), and the consultation period is longer for a higher number of staff. You can vary the level of pay cut for different job groups.

Explain your proposed changes clearly and the business reasons for them, including the impact of not making cuts ie possible job losses. Each employee affected must have their own individual impact statement, so that they can make a proper decision themselves.

If some refuse to accept the pay cut, and you cannot find an alternative which achieves your business goal, you can impose the change on the basis of commercial viability.

To impose a cut, you need to dismiss the staff in line with their notice period or contract, and immediately offer them employment on the new contractual terms. If some refuse the new terms, do try to keep discussions open during their notice.

Handled properly and for sound business reasons, such changes can ensure your staff have jobs for the future.