DIFFICULT TIMES BRING DIFFICULT DECISIONS!!
Most businesses are trying their best to adhere to the government’s recent direction on social distancing and this means many, where it is feasible, are arranging for employees to work from home.
But for many businesses, because of the industry they operate in or the particular work that they do, (for example those in the hospitality and retail) this is not an option and closing the doors means simply sending staff home.
The reality is that most business are very fearful of the impact the current pandemic will have on cashflow and what this means in terms of the continued viability for the existence of their business.
Equally, aside from the very real health worries, most employees equate not working with not earning and will also be concerned to ensure they have enough money to keep them and their families afloat in these very worrying times.
Both are very understandable concerns and both groups must examine their own particular circumstances to fully understand what their rights and obligations are.
I set out in this article some basic points to consider and am available by telephone to follow up should anyone require.
Starting point
The basic starting point is that under a contract of employment people are entitled to be paid if they are ready willing and able to work at the place of work recorded on the contract.
Can I impose working from home and say my employees must work from home?
There is currently no statutory right to allow an employer to ‘force’ home working, so the first thing a business must look at is whether there is a mobility clause in the contract of employment.
If so it will almost certainly cover a business requiring an employee to work from home.
That said, even in the absence of a contractual mobility clause, in the current climate, it would almost certainly be a ‘reasonable’ and ‘lawful’ employer request, that if not followed by an employee, could give rise to the potential for disciplinary action.
Homeworking is not an option for my staff, what can I do?
Where an employer makes the decision to close the doors, send staff home and homeworking is not an option for their staff, the employer remains obliged to pay their employees on the basis they are still ready able and willing to work. There are different considerations at play where the staff member elects to self-isolate, but that is not the focus of this note.
Unless the employer has huge cash reserves and is willing to use this to pay staff in these circumstances, they are going to have to look at other options. The cold hard reality is that most businesses don’t and have to look at other option s- for their own survival!
These other options are:-
- Lay off or short time (LOST for short);or
- Redundancy
LOST – What is it?
Lay off is a form of temporary redundancy. It is when a business basically says to an employee we have no work for you, go home and we are not going to pay you.
Short term has a statutory definition which basically means we have less work for you, we are going to supply you with less than half of your normal work and pay you for the work that you do.
In order to rely on LOST, there does need to be an express clause in the employment contract. Saying the employer has the right to lay off employees or put them on short term working. The rights to do either of these things, cannot be implied into the employment contract.
The reality is that it is not uncommon to see a LOST clause in modern employment contracts, especially in manufacturing.
The essence of a LOST clause is that the employer is reserving the right not to pay employees in certain circumstances – even if they are ready willing and able to work.
Note: If an employer sends someone home from work without pay and there is no LOST clause in the contract, then that almost certainly that can give rise to employee claims for breach of contract, unlawful deduction from wages and also, potentially, constructive unfair dismissal
LOST – How does it work?
Even when laid off or on short time working, employees don’t get ‘nothing’. They are still entitled to what is known as a ‘guarantee’ payment. Currently this is £29.00 per day (but his will go up to £30.00 per day from 6th April). There is however a maximum of 5 days guaranteed pay payable in a rolling 3-month period, so that is a maximum payment of £145 over 3 months (or £150 after 6th April).
It is relatively small sum but employers need to be aware of it.
An employee’s entitlement to holiday pay continues to accrue as normal any period of LOST.
If someone is on LOST, for 4 consecutive weeks (or for 6 weeks in a rolling 13-week period) the employee is entitled to resign and treat themselves as dismissed by reason of redundancy – meaning the employee has a statutory right to a redundancy payment. The employee will need to have at least 2 years employment to do this.
There is a fairly complicated procedure to trigger this, which is broadly as follows:-
- The employee needs to send a letter within 7 days of the 4 consecutive weeks (or 6 weeks in a rolling 13-week period) notifying the employer that they wish to be made redundant under LOST;
- If the employer does nothing within 7 days of getting that letter, the employee is entitled to resign within 3 weeks and claim statutory redundancy. The employee has to give their contractual notice when resigning. If the employee doesn’t give their contractual notice, they don’t get the redundancy payment;
- To stop that, the employer can send a letter back (this is known as a counter notice) within 7 days of getting the employees letter, saying that within the next 4 weeks, it expects to return to normal for at least a 13-week period.
- This will stop the automatic redundancy. The employer sending this letter will stop the employee from getting their redundancy payment- even if it is not true.
- If it turns out not to be true the employee can go to an ET and ask the ET to decide whether he is entitled to a statutory redundancy payment but the reality is that can take a year before it will get in front of a tribunal
- If an employer sends the counter-notice without believing it to be true – just to avoid paying a statutory redundancy payment, this is most probably a breach of trust and confidence, entitling the employee to resign and claim constructive dismissal and of course the redundancy payment.
Redundancy
The statutory definition of ‘Redundancy’ is basically that a redundancy situation arises when a place of work closes down or where there is a reduction in an employer need for employees to do work of a particular type.
Aside from the more well know and usual ‘procedural’ redundancy hurdles, employers who close their doors and have to look at the option of redundancy, may well be doing so with significant more staff numbers than they have ever done so before. It is these ‘mass redundancy’ situations I will comment on below
When more than 20 redundancies are being contemplated at one establishment legislation states that the employer has to consult for a minimum of 30 days before the dismissals with either a trade union or elected employee representatives.
If there are over 100 people being made redundant, the employer must consult for at least 45 days.
If the employer fails to do so, they can be ordered to pay a protective award of up to 90 days pay per employee.
There is a potential statutory defence for failing to consult, which is basically if there are special circumstances which render it not reasonably practicable to comply (for example, if there was a sudden disaster). That said, even if the statutory defence were to apply, it still requires employers to take ‘reasonable steps’ to comply with the requirement to consult.
In the current climate it is entirely arguable that COVID 19 – as a sudden disaster that makes it necessary to close a company – makes it not reasonably practicable to consult, however employers still have to make reasonable attempts to do so.
Advice & assistance
I appreciate none of this information is being delivered in a ‘positive’ news scenario, but it is important for both employers and employees alike to be aware of their rights and obligations in the current climate.
Whilst our offices remain closed, I am still contactable by email and telephone to provide advice and assistance.
Email: gervase.mcgenity@granitelegalservices.co.uk
Telephone: 079 4056 8291
