Sarah Astley, an associate solicitor in Harrison Drury’s employment and HR team, details some practical steps employers may look to take to address a changing workplace during the current coronavirus COVID-19 outbreak.
Article last updated March 18
The current coronavirus outbreak has launched businesses into unprecedented times. Employers are grappling with the situation and are forced to focus their attentions to business resilience and protection. The outbreak and subsequent downturn in productivity for many businesses is driving employers to make difficult decisions in order to save its workforce.
This article highlights some of the potential options available to manage the workforce under these conditions. To some extent the actions an employer should take will depend upon the nature of the workplace, the sector they work in as well as each employees’ role and ability to work from home, as well as its workforce’s demographics.
For employers who are experiencing a drastic reduction in workload or even no work at all, there are several temporary solutions for employees. These include lay-off or short-time working arrangements.
Laying off employees means that the employer provides employees with no work and no pay for a period while still retaining them as employees.
This option can be beneficial if there is a downturn in work resulting in fewer employees required on a temporary basis to fulfil requirements. It is also suitable for the temporary closure of the workplace due to insufficient employees being able or available to work.
Short-time working means providing employees with less work (and less pay) for a period while retaining them as employees.
This option is more applicable for contracted employees during a downturn in work which means the business does not need all employees to work their contracted hours.
Before implementing either of these options, the employer needs to ensure that they have the contractual right to apply these strategies. If the employer does not, then it will be in fundamental breach of contract entitling the employee to resign and claim constructive dismissal.
It is also important to note that employees who are already unable to work, for example due to sickness or medically advised self-isolation cannot be laid-off.
Agreeing a change of terms of employment
If there is no contractual right to impose a period of short-time working or lay-off, then one approach an employer may look to take is to agree temporary contractual changes with its employees. Possible changes that could be made include a reduction in hours and pay.
Unless there is a clear right in the contract allowing an employer to make valid changes to terms and conditions unilaterally, imposition would constitute a unilateral variation, potentially giving rise to claims for constructive dismissal.
In light of this, the best way to achieve a valid change to terms and conditions would be to agree the changes with employees. Any agreement should be recorded in writing.
Although employees may not be keen to agree to a reduction in pay or hours, they may see this being the lesser of two evils when compared with potential permanent job losses.
Making a more permanent decision
In the extreme circumstances where a business can no longer afford to pay and support some, or all of its employees, and certain roles and function become superfluous, redundancy may be the only permanent option to resolve the situation.
There are still several approaches that can be made to support employees during this process.
With compulsory redundancy, workers are entitled to statutory redundancy pay if they have been at their employer for over two years, together with their notice pay and accrued holidays.
It is also worth employers considering whether they are contractually bound by any enhanced redundancy payment liability, as this could be expensive at a time when the business is trying to save costs.
It is important to note that employers must follow the correct procedures when making any employee redundant, otherwise this could lead to claims of unfair dismissal or discrimination.
Before the consultation process begins for compulsory redundancy, an employer could consider asking for volunteers for redundancy.
There is no obligation on an employer to do so, but it may be sensible in order to minimise the effect on morale of compulsory redundancies. An enhancement to the statutory package could be offered to employees, in order to make this option more appealing.
However, in difficult financial times this may not be feasible.
The emerging landscape for business
The UK government announced on Tuesday March 17, 2020, that it is making £350bn available in financial support, which is to include £330bn available in Business Interruption Loans to support businesses during this difficult time. It is anticipated that these loans will be made available from March 23, 2020 and will be interest free for the first six months.
The UK government is releasing daily updates regarding coronavirus and its guidance to protect people and support businesses in the UK, therefore its current directives may change.
To seek further guidance and advice about changes to your workforce due to coronavirus, or for general enquiries regarding employment law, please contact Sarah Astley on 01772 258321.