Due to the massive impact upon trade that the recent Coronavirus issue has brought with it, we are unfortunately getting a high volume of calls from businesses asking our advice on how to reduce their workforce.
Whilst they are never easy decisions to make, it is still important to ensure that if you need a reduction in head count due to the reduction in trade that you do it lawfully and properly to avoid the risk of unfair dismissal, discrimination, breach of contract and unlawful deduction of wages claims.
Please also read our latest guidance on Coronavirus which is regularly updated on our website https://bhayanilaw.co.uk/coronavirus-latest-update-for-employers/ or watch our video.
What options are open to business?
1. Lay off or short time working
If you have a lay off or short time working clause within your contracts of employment you can ask your employees to stay at home if there is not enough work.
A lay-off is if your staff are off work for at least 1 working day. Short-time working is when you cut your staff’s hours.
There’s no limit on how long you can lay your staff off or put them on short-time, however, they could automatically have the right to apply for redundancy and claim redundancy pay if it’s been:
- 4 weeks in a row
- 6 weeks in a 13-week period
They should get full pay unless their contract allows you to implement unpaid or reduced pay lay offs.
If you’re entitled to implement short time working or layoffs, your staff are entitled to guaranteed pay.
To be eligible for guaranteed pay your staff must:
- have been employed continuously for 1 month (includes part-time workers)
- reasonably make sure they’re available for work
- not refuse any reasonable alternative work (including work not in their contract)
- not have been laid off because of industrial action
For more detailed information on the lay-off process click here https://bhayanilaw.co.uk/lay-off-and-short-time-working/
2. Termination of employment
People with less than two years’ service have not yet gained the right to claim unfair dismissal and so you can terminate their contract of employment without the need to follow an onerous process.
You would need to give employees their contractual notice period (you can ask them to work this or pay in lieu of notice) and they are entitled to be paid for any accrued but outstanding holiday pay.
Whilst employees with less than two years’ service do not have the right to claim unfair dismissal, there may be other claims that they can bring that are associated with that dismissal and so we would always recommend seeking advice before you take that step.
3. Reduction in contractual hours
If you gain consent from your staff then you can agree a temporary reduction in their contractual hours in order that you can reduce your wage roll temporarily.
A failure to gain consent may lead to claims for unlawful deduction of wages and breach of contract so this should only be done with explicit consent from your staff to avoid risk.
4. Use of annual leave
You can either request that your staff utilise their annual leave, or a combination of less hours and annual leave within the same week.
If your staff do not willingly choose to use their annual leave you do have the automatic right as an employer to enforce the use of annual leave but you do need to give twice as much notice as the amount of leave you would like them to use.
5. Unpaid leave
If your staff need time off to care for dependants then they do have a statutory right for dependant’s leave but this right only extends to one or two days for an emergency (check your policy to find out what your specific parameters are). This time does not need to be paid.
If they need more time than that to care for dependants then there is neither a statutory right for them to have that time or the statutory right for them to be paid for that time so you can offer that time as unpaid leave.
If your employees agree to take unpaid leave for a period of time then this can be agreed and might give the business some breathing space, whilst still securing employment. Do not refuse to pay wages without agreement as this will constitute an unlawful deduction of wages.
Redundancy is one of the 5 potentially fair reasons for dismissal. You can make redundancies if there is a downturn in work or a closure of a site. Those employees with less than 2 years’ service do not have the right to a redundancy payment and so many employees will be looking to lose these employees first.
If you do feel that you need to make any redundancies it is important that you follow proper redundancy procedures with regard to the consultation and selection process in order to render the dismissal by reason of redundancy a fair one.
7. Zero hours workers
These individuals are not guaranteed any work and you can stop providing shifts to them if you want to do so.
It is unfortunate that so many businesses are going to have to make some difficult decisions that may affect the personal lives of some of their dedicated staff but unfortunately the current climate means that business owners are going to be put in no win situations.
It is currently being advised that, if possible, you should allow your staff to work from home. Make sure you have a Home Working Policy. If you do not have one, we can draft one for you.
For those employees that are able to work from home then there are considerations that you need to take into account such as:
- Contractual provisions
- Reporting and appraisals
- Data protection
- Health and Safety
- Special equipment
We suggest that during this time a temporary homeworking policy is put into place to deal with all of the practical issues that arise around homeworking.
If you need any help or advice in this difficult time, then please do not hesitate to call to speak to one of our team on 0114 3032300 or 020 329 0280 or email us [email protected]
For our Watertight clients we can provide much of this advice free of charge so please do ask.
For BII members we offer a 10% discount on fees.
Please note that this information is current as of 17 March 2020.