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COVID-19 Reduction in work
COVID-19 - Reduction in work
As COVID-19 continues to affect us all, we thought a short summary of various HR issues we are dealing with might be helpful. In this note we cover:
- Reduction in work.
- Sick pay.
- Home working – practical considerations.
Reduction in work
If your business is suffering as a result of recent measures caused by the outbreak and/or imposed by the Government, there are various options available to you when dealing with your workers/employees:
1.1 Coronavirus Job Retention Scheme
This is probably the most attractive option. This requires you to ‘furlough’ workers and notify them that their status is changing; effectively, they are sent home and do not work, but remain as your employee.
You will need to check the contractual status to see if this can be imposed. If you do not have the contractual right to do this, you can seek written agreement with the affected staff to confirm that you are varying contractual terms with them. A signed and dated side letter for these purposes will be fine, and we have appropriate letters available.
You can then submit the detail via an on-line portal to HMRC to recover 80% of their wage cost up to a cap of £2,500 per month. While more details are emerging, it would seem safest to keep paying your staff in full, so there may be a 20% shortfall you need to pay. That said, there is conflicting commentary about whether you can simply pay your staff the amount you can recover. If you reduce your employees’ pay by 80%, you may find the Government only reimburses you 80% of the amount paid; we will update this note when we know more.
We also don’t yet know if you can include in the 80% your on-costs for employer’s NIC, pension and apprenticeship levy (if it applies).
1.2 Lay-off
This sees your staff being provided with no work and no pay. Ideally, your contracts of employment allow you to impose this. If not, you should speak to us about updating them and will have to seek agreement with your workforce to adopt this.
If you impose this without the contractual right or agreement, you risk claims of constructive unfair dismissal.
Those put on ‘lay-off’ will be entitled to a statutory guarantee payment which is £29 (£30 from 6th April 2020) per day for five ‘workless days’; namely a day on which no work is provided. The statutory guarantee payment reduces pro-rata for part-time staff.
There is no limit in the amount of time someone can be off work for this, although after four weeks (or an average of six weeks in a 13-week period) those employees with more than two years’ service can request redundancy. Therefore, you need to be careful that when faced with reduced cash-flow, you do not get hit with high redundancy costs.
If an employee requests redundancy, you can serve a counter-notice but only if you are able to demonstrate that you have 13 weeks work available and during that period there will be no further lay-offs (or short-time working).
1.3 Short-time working
This is where you provide work and pay that is less than 50% of what they normally do and earn. As with lay-offs, you need the contractual right to impose this, but can achieve it by way of agreement if not.
As with lay-offs the same rights to a statutory guarantee payment and to request redundancy apply, so these need to be considered when looking at this option.
1.4 Reduction in pay/work
If you need less work, but only, say, a 20-40% reduction (i.e. not more than 50%), you can discuss this with your staff.
You will need to secure your staff’s agreement that they will work slightly less hours and, in return, receive slightly less pay. They may not agree, of course, but if they do, you can achieve an immediate reduction in pay that may see you through.
Where the reduction is less than 50%, it means the employees have no right to request redundancy after 4 weeks nor any entitlement to a statutory guarantee payment.
1.5 Redundancy / dismissals
Ultimately, if needed you can impose redundancies where none of the above are appropriate. Those employees with continuous employment of more than two years can claim unfair dismissal (other claims like discrimination may also be present), so you should take advice on the most appropriate process to follow to avoid the many pitfalls when dismissing employees.
For those employees with less than two years’ service, you may be able to terminate their employment much more quickly and with far less ramification, although professional advice should always be sought to ensure there are no other claims available (e.g. discrimination) that will crystallise on termination.
Part 2 - Sick Pay, will to follow tomorrow.
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