Last night the Chancellor announced £330 billion in loans to support struggling businesses. Despite this, in the midst of the developing Coronavirus pandemic, many businesses face uncertain futures. Lots of employers will be forced to consider what steps they can take to mitigate potentially significant downturns in business whilst supporting employees and avoiding permanent reductions in workforce. Indeed, redundancies can be potentially costly in the short term and may leave organisations with insufficient staff when business improves.
The following are some of the possible options available:
- Homeworking: government guidance is now encouraging people to work from home wherever possible. Where this is a viable option, it can at least reduce the risk of infections within the business. Contact us for a free Homeworking Policy.
- Lay off: provided there is a contractual right to do so, employees may be laid off or put on short-time working. Lay off is a temporary arrangement where employees are not required to work at all for a “reasonable period” whereas short-time working is a reduction in working hours and corresponding pay. Employees will be entitled to five days statutory guarantee pay (within a 3 month period) at a rate of £29 a day but may be able to claim redundancy payments if they are kept off for longer than is reasonable.
- Reduced hours / pay: where there is a downturn in business but it continues to operate, it may be possible to agree with employees to move on to temporarily reduced hours or a reduction in pay. Where there is no contractual right (see above) this must be done with employee consent to avoid claims for unlawful deduction from wages or breach of contract.
- Holiday: requesting or requiring (with notice) employees to take holiday during downturn would ensure they are available when business improves. If not, it reduces liabilities where employment is terminated.
- Unpaid leave: a common approach where there is no lay-off or short-time provision in employment contracts is to ask employees to take short periods of unpaid leave. Employee consent is required and it is worth considering what can be offered to encourage staff to agree, such as continued pension contributions or allowing short-term alternative employment to supplement income.
Government guidance on how it will support businesses continues to develop each day and measures such as relaxing the requirement for a contractual right to make lay-offs is just one possible changes government might make to the above.
We shall continue to provide updates on employment matters as they develop. In the meantime please contact the Employment Team for further assistance.