Negotiating renumeration changes in contracts

by Michelle McLoughlin of Michelle McLoughlin Solicitors



Varying or re-negotiating an employee’s contract of employment is a matter of contract law. Contract law prohibits any unilateral (one-sided) alteration of a fundamental term of a contract so in order to change the terms of a contract, there must be agreement by both sides to the contract.

Salary would be a fundamental term of employment and so, it cannot be cut unilaterally without an employee's agreement.

To minimise any risk of a claim it would be best to consult with employees, explain the circumstances leading to the employer’s proposal, ask the employees for alternatives to a reduction – are any employees prepared to work less hours, have they suggestions that will result in the same cost cuttings as an alternative to salary reductions etc., set out the consequences should the cost cutting measures not occur and obtain the employees' agreement to such variation and reduction in salary in writing.

Where a salary reduction is unilaterally imposed without any consultation or without the employees’ agreement, employees have a number of potential legal avenues available to them to seek redress:

• Claim breach of contract
• Claim unlawful deduction of wages
• Claim constructive dismissal
• Claim the existence of a trade dispute

Morale, trust and industrial relations within an organisation would also be impacted by any such unilateral action which can cause long term negative consequences to an organisation.

Michelle McLoughlin is a solicitor who specialises in providing corporate and employment law assistance. For further information Michelle can be contacted on 087 6674534, e-mail: info@mmcloughlinsolicitors.com .Website: http://www.mmcloughlinsolicitors.com/

Lean Sigma as Applied To SME’s

by Brian Murray of B.Murray Consultancy Services

Lean Sigma is an improvement methodology used by many top medium to large companies to great effect to maximise profit and performance.
The core concepts of Lean Sigma can be equally beneficial to SMEs.

My experiences of applying Lean Sigma to SMEs are detailed below.

• Resources are scarce in most SMEs and they are at different points on their improvement cycle so any Lean Sigma program has to be bespoke to that particular SME.

• The projects that give the greatest return in the shortest period should be targeted first.

• A Coach or Mentor is often involved to support the Owner Manager and staff with practical help and training. These Mentors need to roll up their sleeves and work with Team rather than just citing Theory.

• Owner/Management buy in is essential. A good understanding of the basics of Lean Sigma is required.The jargon and theory that accompanies much of Lean Sigma is a major turnoff to many SMEs. Concepts have to be explained in a meaningful way.

• Culture change is difficult and takes time particularly in longer established SMEs. Step by Step changes often works better than the 'Big Bang' approach of a full Lean Sigma roll out. The initial Projects and the training of staff on particular tools is often the most difficult period where fear of change and lack of confidence often arise and where good guidance is essential.

• Most Lean Sigma Tools will be inappropriate to most SMEs. The 80/20 rule often operates where 20% of the available tools will be adequate to manage 80% of the issues requiring improvement.

• Finance to support a Lean program is often a major issue to many SMEs. Enterprise Agencies such as the Sligo County Enterprise Board with the current 'Tradelinks 2' program can be of support.

• Some of the most common Tools used for SME improvement are,

i) Detailed Process Mapping and Tools (A visual overview of the operation including key steps/problem return loops etc. and associated improvement tools which leads to process improvements).
ii) Cause and Effect Diagrams (also known as Fishbone or Ishikawa charts. This gives all the possible factors in a formal manner that influence a parameter to understand issues at a deeper level e.g. efficiency).
iii) Key Performance Indicators (KPIs) and using trend charts/key data to monitor key information for maximum return.
iv) The 5S's (Formal way of having a place for everything and everything in its place to improve efficiency).
v) The 7 Waste's, (reduce/eliminate waste in all its forms to improve return).
vi) Value Stream Mapping (highlights activity which does not give a return and may not be necessary).
vii) Mistake Proofing (changing equipment/procedures etc to reduce/eliminate errors).
viii) Benchmarking (Taking relevant beneficial lessons from other operations and applying to own operation to improve KPI's).
ix) Brainstorming (Getting the best ideas in a formal manner from the workforce to solve a problem or improve operations).
x) Improvement Teams (Finding and implementing operational improvements through experienced members of the workforce).
xi) DMAIC (Structured problem solving methodology for improving/solving deep process issues = Define/Measure/Analyse/Improve/Control).
xii) SPC (Statistical methods/data collection/ Charts appropriate to the SME for monitoring and improving operation processes/KPIs)
xiii) TPM, Total Productive Maintenance (For optimum operational efficiency)
xiv) The 5 Whys (To drill down to understand the real problem).

Many other tools are available on a case by case basis.

B. Murray Consultancy Services has 34 years of experience in Best Operational Practice Methods and has provided Mentoring support to many Irish SMEs and Consultancy to numerous Multinationals world wide.
For further information and a free consultancy contact Brian Murray on (087)284600. e-mail brianmurraydonegal@hotmail.com. www.bestqualitypractice.com