News & Updates
Covid-19: Frequently Asked Questions and Answers for Employers
The situation relating to the Covid-19 pandemic, and the steps being taken by UK Government in response, is developing and changing quickly. At WJM we will keep you up to date on the most recent developments, and will endeavour to keep you updated as the situation changes. We have received a number of queries from employers in relation to the current position and we thought it would be helpful if we set out the advice which has been given.
A. Lay-Off/Short-Time Working
Can we temporarily lay off employees while there isn’t any work for them to do, or put them on short term working? Before an Employer is allowed to lay-off employees or place them on short-time working, there must be a specific contractual provision in place which allows such a step. Alternatively, if there is a custom and practice in a particular sector or industry which allows layoffs or short term working, this could be relied on. But it does have to be a well-established custom or practice.
To be on short-time working an employee must be paid less than half what they would normally receive for a week’s work. An employee is entitled under the Statutory Scheme to statutory guarantee payments of up to five workless days in a three month period. An employee with two years qualifying service who has been laid off on short-time working for four or more consecutive weeks or a total of six weeks (of which no more than three are consecutive) in any 13 week period can serve notice requiring a redundancy payment. Iona has prepared a separate note on this.
B. Voluntary Alternative Measures
What if layoffs are not an option, what can we do if there is a reduced amount of work due to the impact of social distancing measures?
Step 1 – Try and reach agreement with your workforce
The first step would be to try and reach an agreement with your employees about what is going to happen. Like any other contract, a contract of employment can be amended if both parties agree. So, where there is no contractual or other right to impose lay-off or short-time working, employers can seek agreement from employees either to reduce their hours or to take a period of unpaid leave. Employees could also be told they can take paid leave but this could present problems if an employee leaves having taken more than their accrued entitlement. Imposing such arrangements without agreement would of course provide grounds for constructive dismissal claims. Part of the negotiation would involve discussion of the need for compulsory redundancies if no agreement can be reached.
Step 2 – Consider Redundancies
In the first instance, this would mean looking at dismissing employees with less than two years’ service. If that does not produce sufficient savings, the next step would be to look at voluntary redundancy. Thereafter compulsory redundancy with the requisite consultation would follow. You must remember the need for collective consultation where more than 20 redundancies are being considered within 90 days at one establishment. If you think this is likely, you should obtain advice quickly. It is unlikely that social distancing will remove the requirement to consult with representatives, and failure to do so could result in claims for a failure ot consult as well as unfair dismissal.
C. Taking holidays during illness/downturn
Can we ask employees to take holidays during sickness absence or a drop off in business? It is of course open to employers to allow employees to take paid annual leave during periods of illness/downturn in work. Again this might present problems on termination, and if the holidays are then exhausted.
What is the position when an employee is has to self-isolate? Where an employee requires to self-isolate either because they have contracted a new dry cough, have a fever, have been in contact with someone who has the virus or have returned recently from a trip abroad, then this should be treated as a period of sick leave. Leaving aside any contractual provisions, an employee is entitled to statutory sick pay from day one of the absence and employers are entitled to recover up to the first 14 days from UK Government. Bear in mind, it is unlikely that employees will obtain a diagnosis of Covid-19. In the vast majority of cases no actual testing will be carried out and employers will have to rely upon the integrity of their employees.
E. School Closures
What do we do if Schools and Nurseries are closed? Dealing with the immediate impact of a school closure constitutes emergency leave in terms of Section 57A(1)(a) of the Employment Rights Act 1996. This leave is defined as time off for dependants which is required to deal with an incident which involves a child of the employee which occurs unexpectedly in a period during which an educational establishment which the child attends is responsible for him. Emergency leave or time off for dependants is of course unpaid. It is questionable whether this right continues for the whole period of school closure, as employees are expected to find alternative means of dealing with the problem, rather than deal with the emergency themselves for the duration. So it is entirely possible that the “right” to unpaid leave will run out quite quickly. Any leave then becomes both unpaid and unauthorised. However, there will be practical problems, especially if grandparents, a fairly traditional source of help, are themselves in isolation. More imaginative solutions may need to be found, such as working from home, where possible, or sharing care responsibilities with spouses or partners more widely. Employers could choose simply to allow continued unpaid leave. Employers may want to engage with their employees now, to find out how many of their people might be affected by this development, so they can assess the likely impact on their businesses, and explore alternatives.
Remember – this is uncharted territory for everyone, so communication is key. There are likely to be situations arising which are not covered by the above. WJM is here to help with all of your employment queries at this difficult time. If you need any help, please contact one of our team.
F. Other issues
Lastly, you may feel that there will be long-lasting issues for your business, issues that perhaps threaten its viability. If so, please bear in mind that we have corporate recovery specialists in our team who can talk things through with you and offer guidance
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at March 2020. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.