How employers can respond to global supply chain disruptions and fuel supply uncertainty

Global supply chain disruptions and fuel supply uncertainty can affect business operations, staffing, costs, and customer demand. Employers should respond proactively by reviewing employment agreements, updating flexible working policies, assessing restructuring risks, and planning for contractual issues such as force majeure. A clear response plan can reduce uncertainty, support employees, and help businesses remain resilient during periods of geopolitical instability.

In light of recent interruptions to global supply chains due to events in the Middle East, it is vital that employers consider how their business may be impacted by similar events and put a plan in place to mitigate any potential negative consequences.

Why employers need to plan for supply chain disruption

Just as with the COVID-19 pandemic, the current geopolitical instability has brought about many new challenges for employers to handle, having to adapt their business operations, staffing, and ways of engaging with consumers. Many of the learnings from the pandemic   will be relevant notably that employers should be proactive, rather than reactive, to ensure an effective response.

How fuel supply uncertainty can affect business operations

To be proactive, businesses should take time to plan how they will respond to an event. These plans are for the benefit of both businesses and employees, supporting the sustainability of the business and the well-being of its employees. Keep in mind that while everyone is dealing with uncertainty, this does not mean that everything is uncertain. Businesses being informed and prepared reduces uncertainty for both businesses and employees.

Operations considerations for businesses

Businesses should develop a plan to guide how operations will adapt. This involves assessing how fuel supply uncertainty affects the business, its consumers, suppliers, contracts, and costs, and how these impacts may worsen. In an uncertain environment, businesses should quickly identify and prioritise key risks and actions so they can respond proactively and minimise disruption.

Employment law and staffing considerations for employers

Employers should review employment contracts to ensure that they can take appropriate action should the circumstances require it and make sure they are familiar on what their obligations are. Employers should be conscious of flexible working clauses, restructuring clauses, and force majeure clauses.

Flexible working as a resilience strategy

In addition to being informed on flexible working clauses in employment agreements, employers should have clear flexible working policies ready to go, should the business need to make a sudden change to adapt to a changing environment. Even if a flexible working policy is already in place, employers may need to make further adjustments in this uncertain environment.  Front footing conversations with employees about possible ways of improving resilience, or suggestions to alleviate barriers to being productive workers can lead to positive and efficient workplaces where staff feel valued and appreciated.  

When restructuring may need to be considered

If the business determines that a restructure is necessary because of the impacts of interruptions to global supply chains, it is essential to be familiar with the relevant clauses in all employment agreements. In case of any uncertainty, seek legal advice.

Reviewing force majeure and contractual obligations

Consider if force majeure clauses may need to be invoked at certain phases. Review the wording of the clause and come up with guidelines on internal thresholds that need to be met before the clause can be invoked due to the impacts of interruptions to global supply chains.

Supporting consumers and business continuity

While the ability of business owners to adapt to the needs of consumers is dependent on the type of business and type of consumer, the business community can help one another by planning and reducing uncertainty. For example, if a business is set up to allow its employees to work from home one or more days per week, reducing an employee’s petrol costs, an employee would be in a better financial position to purchase goods and services. If an employee has a clear idea of what to expect from their employer at different phases of the FRP, they can make their own informed plans, rather than planning for the worst in a financially conservative mindset. Encourage others in your network to keep themselves informed and prepare their businesses as much as is practicable. 

There will undoubtedly be lessons learned during this period, so it is important to regularly evaluate what parts of your response are working well, and what could be improved. An evaluation should not be restricted to how a business deals with heightened global uncertainty; there may be lessons learned that the business could implement permanently when things return to ‘normal.’ By the same token, do not just file the lessons learned, use them to prepare for another significant event, whether that is a pandemic, fuel uncertainty, or a new unforeseen challenge.

How Ford Sumner can help

Global uncertainty can present complex employment challenges, and getting the right advice early can make all the difference. If you would like guidance on preparing for or responding to supply chain disruptions, whether that involves flexible working arrangements, restructuring, or managing contractual obligations, contact Paul Gillespie from Ford Sumner’s employment team.

FAQ about supply chain disruption and fuel supply uncertainty for employers