18-03-2020

Protecting your business and your employees during difficult trading periods

As the country continues to grapple with the evolving situation relating to the Covid-19 pandemic, many businesses and business owners are reacting in real time to the government advice relating to social distancing and non-essential travel.

This is understandably a very worrying time for many, and in some cases may result in a need to make cost savings, driven by a drop in productivity or sales; and while the hospitality and events sectors have dominated the headlines to date, all industries are likely suffering from the impact.

Here, we consider the key considerations that business owners and decision makers should keep in mind for the coming months when making decisions, particularly in relation to staff.

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During this period, we stress that you should look over all documentation in relation to your staff’s contracts and what contingency clauses are in place in case your business begins to struggle trading.

If the situation occurs where you are required to close your business for a short period of time it will be likely you will have to lay-off your staff as you will have no work for them for a temporary period. It is important to review your contracts to see whether they include a clause allowing you to lay them off, as otherwise you will need to seek their agreement or you may face claims for constructive dismissal .

 

In some cases, in order to keep your business operating you may ask your staff to reduce their hours. This is known as short-time working., but again you need a contractual right to do this, or the employee’s agreement, or face the risk of a constructive dismissal claim.

If this is a decision that is seeming likely, we first and foremost recommend you check your contracts and then speak with your staff as early as possible and ensure they are aware of the process and how this will affect them so they can prepare. This will be different from business to business.

Employees will be entitled to a guarantee payment during the period of lay off or short time working if their employer is not paying them or their pay has dropped below half a week’s pay. The government outlines that the maximum an employee can receive at the moment is £29 a day for 5 days in any 3-month period (but this figure generally changes on 06 April each year). So, in some instances you may request staff take unpaid leave from the business in order to safeguard against potential future redundancies.

As an employer you do have the right to tell employees when to take their annual leave if required. So, if you are expecting to make a temporary closure of the business for a short period of time you may consider asking staff to take annual leave instead of rolling out lay-offs or short time working.

If you decide to ask employees to take annual leave, you will be required to tell staff at least twice as many working days in advance of the amount of days they will need to take. For example, if you require your staff to take a week of annual leave to allow your business to shut, you would be required to give them two weeks’ notice.

Care and consideration should be given when asking staff to take annual leave, as if measures are unlikely to change you may need to introduce short-time working and lay-offs following this period.

You should also be clear how this will affect individuals’ holiday entitlements going forward and communicate this clearly to help alleviate any staff members’ concerns particularly those who have already taken or booked annual leave.

Whilst there is no limit on how long staff can be laid off or put under short-time working if this period becomes less temporary and continues, you or your staff may start to consider redundancies.

If your employee has been laid off without pay or has been receiving less than half a week’s pay whilst on short-time working for four or more weeks in a row or six or more weeks in a 13-week period they would be entitled to apply for redundancy and claim statutory redundancy pay.

If this is something, they would like to action they will be required to write to you to claim redundancy within 4 weeks of the last day of the lay-off or short time period. Once you receive this letter you have 7 days to accept this claim.

If you expect that work will soon be available and you do not want the employee to be made redundant at this point you can provide staff with a counter-notice. This however must start within 4 weeks and must last at least 13 weeks.

Alternatively, you may not see this period of work starting again and may need to start making redundancies in response to this. This is something every employer would like to avoid but sometimes this is necessary.

If you are making 20 or more employees redundant within a 90-day period at a single establishment you will be required to follow collective consultation rules.

We understand that you may feel overwhelmed during this time and would like some guidance on how to pull together a contingency plan that will best suit the needs of your business and staff.

We are continuing to operate during these times and as it currently stands all our offices remain open.

If you have any concerns speak with our Employment Law team today on 0330 017 6306.

 

(all details were correct at the time of writing - 18/3/2020)