Business

20 March 2020

Businesses in the region facing crisis in the wake of COVID-19 are advised of steps they can take to avoid making employees permanently redundant.

However, in doing so, it must be ensured that contracts issued allow them to take such measures

Employment law specialist at Wilkin Chapman solicitors, Laura Clark, is concerned that businesses may find themselves with further problems if they try to enact measures that they are legally not allowed to do.

Laura explained: “Although redundancy is an option in the face of a sudden downturn in business, there are a couple of alternatives that allow businesses to retain staff, while reducing immediate outgoings.”

Laying off employees or bringing in short-time working measures are two options, which Laura and her colleagues have been guiding businesses through in recent days.

“Broadly, laying off employees means the employer provides employees with no work and no pay for a period while retaining them as employees. Short-time working means providing employees with less work, and less pay, for a period while also retaining them as employees. Unlike dismissal, it is a temporary solution to the problem of no or less work,” she said.

But, said Laura: “In order to send people home or reduce their hours in this way there needs to be an express clause in the contract saying that this is allowed. If it is not there, then taking such action could result in the resignation of employees and/or possible tribunal claims. However, whether it is likely that an employee will do this in the current economic climate is a different question.”

If a business had already issued contracts that include a lay-off and short-time working clause, the following information may be helpful, said Laura:

  • When on lay-off or short-time working, employees may be entitled to a “guarantee payment” of £29 per day (£30 from April 6). This is payable for a maximum of five days in a rolling three-month period. Holidays continue to accrue at the normal rate;
  • If an employee isn’t available for work anyway, e.g. if they are unwell, then they are not treated as being laid off, notwithstanding the fact that the rest of the workforce may have been laid off at a time when the employee was away from work ill, since the reason the employee had no work was sickness, not lay off;
  • If someone is laid off or on short term for either four consecutive weeks or for six weeks in a rolling 13-week period, the employee is entitled to resign and treat themselves as dismissed on the grounds of redundancy, meaning that a statutory redundancy payment is payable. The employee needs to have at least two years’ continuous employment to do this. There is a very complicated procedure to trigger this;
  • Introducing lay-off or short-time working can be a very difficult employee relations task. As with any such thing, effective communication with the employees is absolute essential. 

 

Employees without a lay-off/short-time working clause in their employment contract:

The reality is that if lay-off or short-time working isn’t permitted by the contract then the employer cannot do it, explained Laura.

But, she continued, these are unprecedented times and, whatever the strict legal position, employers should seek, wherever possible, to find flexible solutions and work with their employees to see if they can get agreement on reducing hours/cutting pay/changing roles/temporary unpaid leave etc.

Employers should present this to their employees on the basis that they are trying to keep the business running and avoid redundancies wherever possible, added Laura.

She explained how employees could agree to vary their terms even where there is no contractual right to lay-off or short-time working and this could be agreed on a temporary basis for say one month to be reviewed at the end of that period.

 “There is really no need for me to stress that in these unprecedented times, working together and communicating is key. If ever there was a time when we all need to listen and to accommodate where possible, then it is now. It is worth remembering that staff will remember how you handled this, and how you approach the pandemic will resonate amongst your employees for many years to come,” added Laura.

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