The current situation with the COVID-19 (known as coronavirus) outbreak is of great concern to all of us and there is no doubt that it will have an effect on businesses. The advice from the government changes day by day and as such it is vitally important that you keep yourself up to date with that advice in order to ensure you protect, as far as possible, yourselves, your staff and your clients, customers or members.
We have previously provided information regarding the recent amendments made to the Statutory Sick Pay (SSP) regime in the recent budget and general advice regarding the some of the measures that should be taken to look after employees. It remains to be seen how this situation develops however there is a possibility that business may face reduced work streams and difficult financial times ahead. This may translate to lay-offs, reduced working hours or possibly redundancies.
If you do face these issues we would advise as follows:-
- Make sure you communicate with your employees. They will be aware of the current situation and will be worried about their future. The more transparent you are with staff the more likely it is that they will accept measures that you may have to bring in to protect the long term future of your business and their employment. Consider regular updates to employees.
- Check your employee’s contracts of employment for lay-off/short time working clauses. If they are present you can act on them if you need to.
Short Time Working and Lay-Off
- Short time working is where an employer reduces the hours an employee is required to work. The employee’s wages are reduced accordingly. Lay-off is where you ask an employee to stay at home or take unpaid leave when you temporarily cannot give them paid work.
- Employers can only impose short-time working or lay-off where there is a contractual right to do so (usually in the contract of employment). You will need to present your proposal to the relevant employees explaining why you consider short-time working/lay-off is necessary.
- You will need to handle the situation sensitively. As employee pay will be reduced, it is sensible to communicate with the workforce and explain the company’s thinking behind the reduction in hours, to encourage employees to be “on side”. If the reduction is to reduce or avoid redundancies, employees are likely to be more amenable to short-time working or being laid off.
- If you haven’t reserved the right to short time working or lay-off in the contract an employee could bring a number of claims such as unlawful deduction from wages, unfair dismissal, breach of contract, redundancy payments (see below) and protective awards. However this current situation is unique and it may be the case that implementing these measures is the only way a business can survive. You need to emphasize this to your employees. If the government imposes more severe measures such as lockdown then we will be in completely new territory. In these circumstances any decision to lay/off and/or impose short term working in an effort to save a business and protect jobs in the long term is more likely to be considered reasonable even if it is not a contractual provision. In these circumstances you should always seek the written consent of employees to any short time working arrangements in writing.
- You will need to consider who is selected for short time working or lay-off. If a whole section of the workforce is affected, selection will be straightforward. If the short-time working pattern or the lay-off requires that you select particular employees, care should be taken to avoid any discriminatory or unfair selection process. Pay will be reduced accordingly during any short time working or lay-off period although employees may be entitled to a guarantee payment (see below) or jobseekers allowance. Consideration will also need to be given to other benefits that are calculated with reference to salary such as pensions and these are usually reduced proportionately.
- A guarantee payment is a payment employers are obliged to pay where an employer does not provide work to an employee throughout a whole day during which he would normally be required to work under his employment contract. The maximum payment is £29.00 a day for 5 days in any 3-month period – so a maximum of £145.00. If the employee usually earn less than £29.00 a day they get their normal rate and part time workers entitlement is worked out proportionally.
- Employees can claim a redundancy payment from you if the lay-off or short-time working runs for 4 or more weeks in a row OR 6 or more weeks in a 13 week period, where no more than 3 are in a row. In these circumstances employees must give you written notice in advance that they want to make a claim.
- It may be the case that redundancies have to be made if the situation does not improve in the short to medium term. In these circumstances the normal procedure relating to redundancy will apply regardless and we can assist you with this process. It goes without saying that you should do all that you can to avoid this situation not just for the sake of the employees but also for the sake of the business who may lose valuable and skilled staff members.
It is important to note that the government have offered little guidance to date regarding assistance to business. We know that businesses will be able to recover SSP for those who self-isolate even if they are not actually ill. However if there is a lockdown and businesses are unable to continue to trade because staff are unable to attend – effectively a nationwide lay-off – we do not know what measures the government proposes to introduce to assist employees and businesses. Hopefully this will become clearer in the coming days.
As a final note businesses should check what insurance cover they have with input from their broker if they have one, to see for example whether and to what extent any losses they suffer might be covered.
For more information about the coronavirus visit Public Health Wales.
We can assist you in ensuring your workplace policies and procedures are compliant and any queries you have relating to HR and employment matters including issues related to coronavirus. Please contact Karl Thomas, Partner and Head of Employment and Dispute Resolution at Loosemores Solicitors via ThomasK@loosemores.co.uk or call 029 2080 3112.