The importance of the logistics sector to the UK economy cannot be underplayed.
The Logistic Report Summary 2024 published by Logistics UK highlighted the logistics sector’s significance when it comes to the UK bottom line with a £185bn contribution to the economy with more to come.
Undoubtedly, this figure can only be achieved by a sector founded on resilience and the capability to adapt in the face of a constantly changing political, economic and environmental landscape. Over the last few years it has faced COVID, a recession and a new government, while continuing to strive to maintain its commitment to decarbonisation.
This evident resilience is about to be tested again on various levels:
- The recent announcement by the USA to introduce trade tariffs globally, including a 10% base line tariff on the UK has created greater economic uncertainty and increased costs.
- Increased wages bills due to the rise in the National Living Wage and statutory payments such as maternity and sick pay, coupled with changes to National Insurance contributions have impacted budgets.
- Greater employee rights from day one, including unfair dismissal rights and the removal of the three waiting days for Statutory Sick Pay; all of which will need to be planned for and costed as the first changes are set to be with us by October this year.
Efficiencies and optimisation
Every business will have a different view on how to meet these challenges head on but there is likely to be common ground in that greater operational efficiencies and workforce optimisation will be required. Now is the time for businesses to think strategically and creatively about how to respond.
A business review identifying where the weaknesses are, followed by a strategic plan explaining how the weaknesses will be remedied, will be critical to maintaining business success and resilience.
The remedial work may involve some difficult decisions but may also include embracing new opportunities.
Improving efficiencies may involve investment in automation and new technologies. However, solutions may also be found in outsourcing certain services or even merging with other businesses. Workforce optimisation will require a realignment of resources to match current needs, which could involve identifying opportunities to reduce hours at less busy times, upskilling colleagues to be able to work flexibly across the operation, or a reduction in head count leading to redundancies.
Any plan must also have in mind what the future might look like once the challenges have been overcome. Relying on redundancies as a quick solution to budget constraints, while appearing to give immediate and beneficial relief, may not be the right solution for retention and utilisation of your best talent. Compulsory redundancies will also impact negatively on staff morale.
Redundancies are not the only option and should be viewed as a last resort. Alternatives to address immediate concerns could include restricting recruitment, pay freezes, a ban on overtime or short-time working, or layoff. A plan with long-term reach may consider the overhaul of the shift system, redeployment to other areas of the business or retraining.
Only if the efficiencies and optimisation cannot be achieved in other ways should redundancies by considered.
Mind the workforce
Whatever route is taken, the workforce will come under scrutiny. Where there are challenges to be addressed, changes will follow. Where there are changes that impact upon the workforce, there will be legal compliance – obligations under contracts of employment, collective bargaining agreements, where applicable, and employment laws – will have to be complied with.
A strategic plan must recognise the business’s legal duties and workers’ rights as the first step to ensuring legal compliance. Of equal importance is ensuring that the plan sets out the consultative framework to be adopted, including identifying the key stakeholders who will need to be involved – affected employees, relevant employee representatives and any recognised trade unions. While the framework will be there to enable the successful delivery of the changes, it should also ensure that it recognises there is a legal duty to consult with affected employees on an individual basis and any collective consultation obligations. If 20 or more employees are affected, the collective consultation obligations may be triggered, depending on the proposal. A merger or a change in service provider may add a further layer with the information and consultation obligations under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).
Timing is critical when it comes to consultation. It needs to be planned for and given a proper timetable so that the process is meaningful and legally compliant. Where there are collective consultation duties there are statutory minimum consultation periods, which must be adhered to.
Consultation should never be left to the last minute – sanctions for failing to comply with legal duties can lead to costly litigation.
Maintaining resilience
A failure to plan and have a strategy that makes these challenges a priority will inevitably weaken business resilience leading to operational disruption, financial loss and legal risk. To remain resilient, businesses need to plan and prepare; any response to these challenges will then be from a position of strength.
As the title says, Fail to plan…plan to fail.
For more information contact Helen Taylor at FG Solicitors on 0808 172 9322, email info@fgsolicitors.com, or visit their website.
Written by Helen Taylor, Principle – Employment FG Solutions
