As a business ourselves, we anticipate you may already be experiencing a reduction in turnover or are bracing yourself for an uncertain few months. In these unfortunate situations, you must decide what to do with your staff who are now sitting idle and not able to fulfil their roles.
You do have a number of options when deciding how to reduce your staff overheads while business is poor, or even non-existent; but a lot will depend on what written employment contracts already provide for.
If you are worried about the effect of the pandemic on your staff, you could consider the following options:
- Working from home: If your employment contracts do not already allow you to require your staff to work from home (where possible), try to agree it with staff and record any agreement in writing.
- Instructing employees to take annual leave: Unless varied by the employment contract, you can require an employee to take annual leave by giving notice that is at least twice as long as the leave the employee is being instructed to take. For example, you must give two weeks’ advance notice for one week’s annual leave. Although it’s not required, notice should be in writing, and the employee will be entitled to holiday pay as normal.
- Temporary layoffs and short-time working: Laying off employees means keeping them as employees, but not being able to pay them because of a reduction in work available. Short-time working means providing them with fewer hours and therefore, less pay than normal. In both cases, you can only impose these if the employment contracts already allow it to do so. If not, any lay off or short-time working period will have to be agreed with employees. It is vital that any agreement is recorded in writing – and ideally, acknowledged with the employee’s signature – because a failure to pay an employee in full could constitute an unlawful deduction from wages unless agreed in writing beforehand.
- Redundancies. Unlike the three options above, this is a “permanent” step because a redundancy is a dismissal, the employment relationship will end so should be seen as a last resort. You must consult with employees before making any redundancies. Where it is proposed that less than 20 employees will be made redundant at one workplace within a 90-day period, then no minimum consultation period applies, but strict consultation rules apply for more than 20 employees.
- Employees made redundant are entitled to work their notice period or be paid in lieu, to be paid for accrued but untaken holidays and potentially payment for other benefits. Employees with 2 or more years’ service will also be entitled to statutory redundancy pay.
It is of course a worrying and precarious time and the Government have set out their intention for reliefs and grants; their proposals can be seen HERE and we expect this to be regularly updated.
You should also check your business interruption insurance to ensure you are familiar with the terms and conditions and for what you may be able to claim.
For friendly, impartial and expert advice on any of these issues, please get in touch with Campbell McKellar - Solicitor, Company & Commercial or Linda Wylie - Solicitor, Employment & Dispute Resolution who will be happy to help you.