Introduction
We are in unique and uncertain times with coronavirus and the devastating impact it is having on how we live and work. Many organisations are now having to consider business survival in the short and medium term, as we do not really know how long all of the current business interruption will last. This necessitates considering whether you have to temporarily shut parts or all of your business as there is no work. Other issues are about financial reserves and whether you can continue to afford the size of the payroll, which is frequently one of the largest overheads, when little income is coming in. Equally organisations will want to be back on their feet as quickly as possible with an experienced workforce, when life returns to normal or semi normal whilst the economy starts to recover.
In employment law there are other options that can be used rather than the stark and often expensive alternative of redundancy, which is costly and will significantly hamper a rapid resumption back to normal working.
We would encourage you to think through a relevant strategy for your organisation which means grouping your workers by function and abilities. Asking who is capable of doing work at home and who needs to stay at work? Can you scale down certain work activities whilst mothballing others? Consequently, your conclusion may be that some of your employees should be temporarily laid off and some be moved to short time working. These decisions will then need to be constantly reviewed.
So what are these other options to redundancy that will allow you the flexibility to quickly respond to the changing situation?
Temporary Lay off
This happens when employees are not provided with work due to an interruption in work. Normally this could be due to a natural disaster such as flood or fire but it can also be as a result of a loss of a large contract or significant revenue. It is also applicable for a pandemic.
Lay off is only expected to be temporary in duration, and it is often not known for how long but there is a hopeful expectation that work will return. Therefore, it is a response to a lack of work, and as an alternative to declaring redundancies. Providing there is a lay off clause in the employment contractual arrangements, employees are not entitled to full pay but are entitled to a guaranteed Statutory Payment of currently £29 per workless day, rising to £30 per day on 1st April, for a maximum of 5 days over a 3-month period. On days on which a guarantee payment is not payable, employees may be able to claim Jobseekers Allowance, Universal Credit or other benefits via their local Job Centre.
There is no time limit for how long employees can be laid-off, but in the event that the lay off is not temporary they could inform the employer that they should be made redundant and claim redundancy pay if they are laid-off without pay for either:
- Four consecutive weeks
- Six weeks within a 13-week period
If an employee feels that they are being treated unfairly by being laid-off (e.g. unfairly being singled out) they may consider themselves as being Constructively Dismissed. There is no right to suspend without pay i.e. zero pay, unless it is very clearly expressed in writing within their terms and conditions of employment.
There is no time scale specified by law, in relation to giving people notice of being laid off (it often applies in cases of fire, flood or other ‘natural’ disasters but also applies to a lack of customers, supplies etc..) Obviously the more time you can give to people to get used to what might happen in the future, the better but if it needs to happen now, do it now, whilst communicating it as sensitively as possible.
Short time working
Employees are asked to work some of the week but in real terms they are paid less than half a week’s pay. Employees are entitled to normal full pay on the days they work and the guaranteed Statutory Payment for the days they are not asked to work.
Again, there is no time limit on these arrangements but if an employee is put on to short time working (i.e. receives less than half a week’s pay) for either:
- Four consecutive weeks
- Six weeks within a 13-week period
the employee can give notice that they intend to claim a redundancy payment. It is then up to the employer to reassure the employee that they can come back to work as per contract or accept that they are redundant and make the necessary payments.
Summary
Quality communication is key to the success of these alternatives. Employers need to be clear as to why certain groups of workers or individuals are being treated differently to others. The underlying message is that you want to keep people long term even if short term there is little or no work for them to perform.
Even if you are providing no work it is important that you ask people to keep in regular contact as it might be that a small amount of work becomes available, which it might, they can come in and be paid for that, before returning to lay off.
In both cases make sure you tell people that they will maintain continuity of employment i.e. no break in service, they also accrue full holiday entitlement with pay. They could even find other temporary work for the duration of the lay off or short time working.
In some cases, employees may ask if they can take paid holiday during a crisis and this should be seriously considered, in a sympathetic but pragmatic manner.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.
