Businesses need to have coronavirus contingency planning in place. It is no longer a case of if it will affect us but when.
The Government are urging businesses NOT to make hasty decisions to lay off staff. To help with this, they have introduced a new Coronavirus Job Retention Scheme, which allows businesses to “furlough” staff who are not working and would otherwise be laid off.
There are also other options if you are facing difficult decisions.
As the situation is continually evolving, check www.gov.uk for the latest information.
Business impacts of coronavirus
You may need to consider layoffs or short term working if:
- Less customers are using your services or buying your products
- There are supply chain interruptions or businesses are unable to supply goods or services as normal
- You are a business the Government has instructed to temporarily close (see the Government’s business closure page).
- Increased staff absence means you can’t operate as normal
- Other external factors meaning you cannot operate as wished
What other working options could I consider during the Coronavirus outbreak?
Employees should work from home wherever possible. This will not be practical for all businesses.
Where remote working is possible, staff will need:
- the necessary equipment
- access to any information they need to do their job
- the right information security measures
- relevant IT skills
Set up costs also need to be affordable for your business. Whilst staff may be less productive at home, it is still better than work not being carried out at all.
If home working isn’t practical, could you provide your goods or services in a different way? Or, do your staff have any creative ideas?
See our Coronavirus Impact – Homeworking blog for more information on homeworking.
Is it OK for ‘vulnerable’ staff who have been advised to be socially distant to still work?
You obviously want to encourage staff who don’t feel ill and who are not at risk to keep working. This will allow your business to keep running, albeit in a reduced capacity.
But what if you have staff classed as ‘vulnerable’ who are not showing symptoms, who do not wish to be socially distant, and who wish to continue working?
If working from home is possible, this should be available.
Possible working options with your ‘vulnerable’ team members
Speak with individuals, ask what they would prefer to do, and risk-assess options.
If necessary, take additional precautions to enable vulnerable, but well, staff who want to keep working to do so
- increasing distance between workstations,
- creating separate workspaces
- allowing different working patterns to minimise interaction with others
- moving them into different roles (subject to skills or training)
- provide equipment that is not shared, e.g. hand-held devices, tools, keyboards, kitchen utensils etc.
- suggesting they limit use of any communal staff area or canteen
Carry out a workforce risk assessment to identify anyone who may fall into the category of vulnerable. Consider each case on its own merit. Decisions should be made based on:
- personal circumstances
- their role
- any skills which would allow them to temporarily carry out different duties.
Obviously, you may need to adjust working practices if:
- current Government advisory measures re social distancing change to enforcement measures
- ‘vulnerable’ staff become unfit to work
Update your risk-assessments not to identify if it is now time to ask vulnerable staff to socially distance themselves at home.
Can I ask staff to take paid holiday during the Coronavirus outbreak?
Normally, employers can ask staff to take a limited amount of holiday if they decide to shut for a given period. However, you should usually provide twice as much notice as the period of leave being taken. Current circumstances mean that giving staff notice may not be possible.
You can agree for staff to use paid leave if they volunteer or are willing to do so. However, this should be for a limited time.
Whilst you can encourage this as an option, you shouldn’t enforce it. Annual leave is designed for rest and recuperation. You need to ensure staff can take paid holiday during the rest of the year.
Can I reduce hours or send staff home if we don’t have enough work?
Yes. If your contracts of employment have an explicit clause that enables you to either:
- place staff on short term hours
- temporarily lay staff off.
Time off will either be in line with any agreed company payments or unpaid.
Implied, generic common law enables employers to send staff home if there isn’t enough work. However, you cannot withhold pay. If you do not have an explicit clause in your contracts, you must continue to pay staff their normal salary.
What is short term working?
Short term working is when you offer staff less hours per day, or less days per week. It can also be a combination of the two.
What is lay off?
Temporary layoff applies when you send staff home due to lack of work, which may be with or without pay.
What is the maximum period for short term working or layoffs?
There is no statutory time limit. This will depend on your circumstances and the direct impact on your business.
If I don’t have an explicit clause, what are my options?
You will technically be in breach of contract if you put in place short-time working or layoffs without an explicit clause if:
- you make changes without staff agreement
- you refuse to pay normal salary
Employees could make an employment tribunal claim.
You will need to consult with your workforce and mutually agree any changes to terms and conditions. If you are unable to seek agreement, they will need to be paid as normal.
How can I seek agreement to temporarily change terms and conditions?
Holding honest conversations with staff is a good starting point.
Ask if they will mutually agree to:
- a temporary period of reduced hours at their normal rate of pay
- a reduced rate of pay
- or a period of unpaid leave.
Explore any ideas from your team. Also, be open to working in a different way which makes the best of a difficult situation.
Where changes are mutually agreed, confirm the key points in writing.
Explain to staff that:
- these are temporary, voluntary measures
- changes will reduce financial pressure on the business
- there will be less risk of insolvency
- temporary changes will ensure their original jobs are still there after the pandemic
Obviously, this will be subject to your cash flow or reserves.
What should I include in any written voluntary agreement?
You may have a formal, collective agreement in place. These are negotiated with employee representatives (i.e. trade unions, staff associations). They allow negotiations of terms and conditions like pay or working hours.
If you are introducing something new, meet with your team. Discuss the situation and what this means for them and the business.
Explore every option and find out what they might be open to. They may surprise you.
Where you’ve agreed temporary changes, confirm this in writing.
Key points to cover will include:
- What will trigger the implementation of any changes
- The changes being proposed
- Which staff may be affected
- Estimated time changes will be in place, e.g. initially 1 month
- When the situation will be reviewed and the criteria for doing so
- How changes will be communicated
What are Statutory Guaranteed Minimum Payments?
Where you don’t offer work, employees with 1-month continuous service are entitled to £29 per day for 5 days over a 3-month period. i.e. £145 in total for that 3-month period. This is pro-rata for part-time staff. If normal day rates are less than £29, normal salary applies.
- Make themselves reasonably available for work
- Not refuse reasonable alternative work, including work not normally covered within their contract
- Not be absent due to industrial action
You can decide to offer staff more than the statutory £145 within a 3-month period. If you decide to do so, they will not be entitled to £145 on top of that amount.
£145 is a statutory entitlement. Failure by employers to pay this as a minimum could result in a tribunal claim.
Can employees work elsewhere whilst on periods of short term working or lay off?
Unless a contract clause explicitly prevents them, staff can accept other work during periods of short term working or lay off. They must
- Seek your agreement
- Not work for a competitor
- Return to their original job once your business situation improves
When Does Redundancy Apply?
Employees can ask for redundancy during periods of layoffs and short-term working.
The process for redundancies in these circumstances is very complex. Broadly speaking, employees can claim for redundancy if:
- They notify their employer in writing
- Paid work hasn’t been offered OR they’ve received less than:
- 1/2 a week’s pay for 4 consecutive weeks,
- OR a total of 6 weeks in a 13-week period.
Employers must respond to a redundancy request within 7 days to either:
- accept that redundancy now applies OR
- to make a counterclaim due to the anticipated work within the next 4 weeks, which must last at least 13 weeks.
Under these circumstances, employees need to resign in order to claim redundancy.
Redundancy resignations must be submitted within 3 weeks either from:
- 7 days after the employee gave a written claim (if no counterclaim received) OR
- The date the employer withdrew any counterclaim
What if my business can’t afford redundancy payments?
Employees are entitled to a minimum statutory level of redundancy pay after 2 years’ continuous service.
Where employers agree that redundancy applies, they must pay:
- Statutory notice pay
- Accrued holiday pay
- Any other contractual payment due
- Redundancy pay (for those with 2 or more years’ service)
Where you can’t afford to pay, you will need to prove this as staff are legally entitled to the above payments. In this circumstance, get advice from your accountant and/or legal advisor. You may have to declare insolvency.
If a business is declared insolvent, employees can claim statutory notice pay and redundancy pay from the government.
Further information is available on www.gov.uk
Business Continuity Insurance
Payment of staff wages may be covered under your business continuity insurance. Check with your insurance provider if to see if this applies.
If staff don’t usually work from home, check your Employer Liability Insurance. You may need to update your policy to cover homeworking.
Government Support for businesses through the Coronavirus Pandemic
The UK government will be supporting businesses with a number of measures, including helping with salaries and sick pay, and a business loan scheme.
Coronavirus Job Retention Scheme
UK businesses can get support for 80% of staff salary during the crisis, up to £2500 per month, if employees are not working and would otherwise be laid off. All UK businesses are eligible.
Support for businesses paying sick pay to employees
There is upcoming legislation to allow small and medium-sized businesses to reclaim Statutory Sick Pay (SSP) paid to employees from the government.
Coronavirus Business Interruption Loan Scheme
A new business loan scheme will be run by the British Business Bank and guaranteed by the government. Up to £5 million is available. The first 12 months of loans will be interest-free, as the government will cover interest payments. Full details are available on the British Business Bank Website
Go to the government’s support for business page for details, eligibility and the latest updates.
Tips for Planning Ahead
It’s not clear how long this situation will last or develop in the near future. Businesses are currently ‘working in the moment’ as things change by the day. The ability to adapt will be key. But it is also important to consider what your business might need in a few weeks’ time. How quickly will you be able to return to normal operations and fulfill customer requirements or orders?
If you can build up stock reserves, or complete tasks that normally get overlooked, now may be a good time to get ahead.
Getting ahead will benefit your business in the longer term. It may also help ease some financial pressure for your team. You may be able to offer paid overtime or enable staff to bank hours to use later.
Be proactive. Have good financial planning in place and agree when you’ll make key decisions. This will show your staff you are only taking actions that are necessary.
The Coronavirus pandemic is an exceptional set of circumstances. Hopefully, your staff will appreciate the current and potential business impact. It’s key to be clear that changes are temporary and necessary for the business to continue operating.
Coronavirus Employer Pack
We are offering a Coronavirus Employer pack containing:
- Further written advice to support this blog
- Guidance Notes on the Implications of Home Working
- Letter template for furloughed workers
- Voluntary Agreement template for temporary changes to T&Cs
To request the information pack, or for bespoke advice for your business, please get in touch. Contact Debbie today at firstname.lastname@example.org or call on 07885 370054.