Public Health England
Health Protection Scotland
Public Health Wales
Public Health Agency in Northern Ireland
Beyond the reimbursement of SSP mentioned in our Absence and Sick Pay Q & A document, at present, the government has announced support packages for employers, details of these packages are available here: https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19
There are also industry-specific support schemes for sectors which are particularly hard-hit. This takes the form of a mixture of grants and rates exemptions.
In addition, there is the Coronavirus Job Retention Scheme (referred to as the Furlough Scheme). This is covered in detail in our General Q & A document on The Coronavirus Job Retention Scheme.
The Furlough Scheme is intended to be the main measure to allow employers to avoid dismissing employees as redundant, but if government support is insufficient to address the issue in your business, there are a number of options an employer can consider, including:
- Temporary lay-off
- Short-time working
- Varying contractual hours
- Paid/unpaid leave (including annual leave)
- Wage reductions
This is where employees are sent home without pay (subject to the right to receive a statutory guarantee payment) due to a shortage of work, generally because of circumstances beyond the employer’s control. Employees remain in your employment in these circumstances.
Colloquially, short-time working is where the employee’s weekly working hours are reduced by the employer due to a shortage of work. However, in the context of claiming a redundancy payment (discussed below), short-time working has a very specific meaning of working so many fewer hours than normal that the employee’s pay drops below half of their normal week’s pay.
To compulsorily lay people off on a temporary basis or reduce their weekly working hours, you must have the right in the employee’s contract of employment to do so. If you don’t have a contractual right to do so, there may be other options open to you, which are discussed below.
Assuming you have the contractual right, the first thing to do is to decide which employees you are going to lay off or place on short-time working. Where shorttime working is contemplated, it would normally be fairest to apply this to all employees of a particular type. Where temporary lay-off is contemplated, and you don’t need to lay off all of your employees, it would normally be fairest to require all employees to take turns at having periods of lay-off.
Once you have decided who is to be temporarily laid off or placed on short-time working, you will need to write to the affected employees, informing them of your decision and the dates on which the period of temporary lay-off and/or short-time working will apply. We can support you with this.
Unless they have a contractual right to a higher payment or a collective agreement provides for a higher rate, someone who is temporarily laid off or placed on short-time working will be entitled to a statutory guarantee payment of £30 per day for the first five “workless days”. (If the employee is normally employed to work less than five days a week, then that figure will be pro-rated to the number of days per week they are contracted to work.) Thereafter, lay-off and any workless days on short-time working will be unpaid.
In theory there is no limit to how long these arrangements can last if you have the contractual right to impose them, but in practice there is a significant limitation. That is that if an employee is temporarily laid off or placed on short-time working for four consecutive weeks or six weeks in any 13 week period, then they have the right to resign and claim a statutory redundancy payment from you.
Yes, if you now have work available for them. You can issue a counter-notice, saying that within the next four weeks, it is reasonably expected that you will be able to give them work for a period of at least 13 weeks without a further period of lay-off or short-time working being required.
Yes, you can make redundancies just as you would at any other time due to a shortage of work. However, all of the normal employment rights people have in a redundancy situation will continue to apply (see below). It may be considered unreasonable by an Employment Tribunal to make a compulsory redundancy without having good reasons not to place the employee on the Furlough Scheme.
Where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a 90-day period, the employer requires to carry out a collective consultation process with elected workforce representatives for 30 days before the first dismissal takes effect. This period increases to 45 days if it is proposed to dismiss as redundant 100 or more employees at the same establishment.
The Furlough Scheme currently ends on 30 June 2020. If you anticipate having to make 20 or more redundancies thereafter (including any redundancies made since 1 April 2020), please contact us no later than 31 May 2020 in order that we can advise on collective consultation in good time. If you anticipate having to make 100 or more redundancies thereafter (including any redundancies made since 1 April 2020), please contact us no later than 15 May 2020 in order that we can advise on collective consultation in good time.
If you are not proposing to dismiss as many as 20 employees at any establishment, then you won’t have to carry out collective consultation, but you will still need to have a fair method of selection for redundancy and carry out individual consultation, particularly with anyone who has the right not to be unfairly dismissed. You should expect this process to take a number of weeks, so please contact us at the start of June 2020 in order that we may advise further.
The two main risks are a “protective award” and unfair dismissal.
Any employee who is dismissed as redundant without collective consultation, where it should have taken place, can claim an award of up to 13 weeks’ pay (uncapped). If one employee successfully raises the claim, all other employees who should have been consulted can “piggy-back” on the successful claim.
Employers can raise a “special circumstances” defence, saying it was not possible to collectively consult in the circumstances. We suspect it will not be enough simply to point to the coronavirus outbreak as a special circumstance – rather, the employer will have to show that in the particular circumstances of their business, it was impossible to wait 30/45 days before dismissing anyone as redundant.
Also, there is clear case law that where an employee with two years’ service or more is dismissed as redundant without collective consultation when it should have taken place, that will make the dismissal unfair.
You might be able to do this, but there could be risks in relation to ‘automatically’ unfair dismissal and/or discrimination and you are strongly advised to discuss this with us to assess these risks before taking action. It’s also important to understand that dismissing an employee with under two years’ service will still count towards the figure of 20, to determine whether collective consultation is required.
You will need to follow a fair process in selecting staff for redundancy and consult individually with them before terminating their employment. We can assist you with the necessary advice and documentation, but you should expect that it could take upwards of two weeks to complete such a process.
Yes. Ideally, you would try to spread this out across your workforce (or the affected part) as fairly as possible. Once any changes have been agreed, they will need to be put in writing and the employee will need to sign their agreement to the changes.
Employers will certainly want to consider if the Furlough Scheme is a better option before seeking to reduce employees’ contractual hours, albeit noting that whilst on furlough, an employee cannot carry out any work for the employer.
Yes, if for any reason the Furlough Scheme does not work in a particular situation, this can be done by agreement. The employee will be entitled to a statutory guarantee payment for the first five (or pro-rata) days of unpaid leave.
During a period of unpaid leave, the norm would be that all benefits other than pay would continue as normal, such as pension, life assurance etc. If this is not to be the case, there will need to be a specific agreement in writing to that effect.
Yes. If employees will agree to pay cuts, this can be done as long as the employees are still paid the minimum wage for the hours they actually work.
Any agreement to a pay cut should be put in writing and should specify how long the agreement will last for. Ideally, the agreement will also specify what will happen with benefits such as pension, life assurance etc during the temporary pay cut.
You may find there is serious resistance to pay cuts if you are furloughing other employees, who will be getting paid 80% of their wages for doing no work. We can help you work out how best to combine furloughing some employees and asking others to take pay cuts, if both steps will be necessary in your business.
Where a worker is on a genuine zero-hours contract (under which it is clearly stated there is no obligation on the employer to offer any work), then there will be no need to consider terminating the contract or agreeing reduced hours. You would simply advise the worker that you have no shifts to offer them for the time being. It would be advisable to give people in this position reasonably regular updates (perhaps fortnightly) on the availability of work.
Zero-hour workers will be entitled to be placed on the Furlough Scheme if they are paid through PAYE, so this may be an option too.
The information provided was accurate as at May 2021 when these resources were written by our team of employment solicitors.
The information provided in this document is intended as general guidance only. The information is not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. Just Employment Law Ltd shall accept no responsibility for any loss which may arise from reliance on the information in this document.
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