In depth

Update 4: coronavirus advice note for employers

Gateley Legal

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New legislation and changes made to Government guidance will have an immediate impact for employers dealing with employees and other workers absent due to Coronavirus.

The Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020 (SI 2020/287) which we explained in our last update gave those employees isolating from others in accordance with advice on coronavirus disease a right to SSP have been quickly followed by the Employment and Support Allowance and Universal Credit (Coronavirus Disease) Regulations 2020 which remove the 7-day waiting period that claimants for employment support or universal credit would have usually had to wait. 

Further emergency legislation is expected to be announced in the next 48 hours and more amendments to the SSP provisions are likely.  

The Government has also now ‘withdrawn’ its advice regarding 14-day self-isolation for those who are returning from a country which has coronavirus. 

That guidance has been superseded by the “Stay at home: guidance for people with confirmed or possible coronavirus (COVID-19)”. This recommends that only those employees who have symptoms – a high temperature and a new cough – should self-isolate for a period of 7 days. 

Whilst some Government websites still refer to 14 days and the ACAS Guidance still states that If someone returns from an affected area they should self-isolate and either use the NHS 111 online coronavirus service or call 111 for NHS advice. This appears to be at odds with the Government withdrawing its guidance relating to those returning to the country. 

It is worth noting that in Scotland NHS Inform has published answers to common questions which includes:

“I was previously told I had to stay at home even though I was well. I still have no symptoms. Do I have to complete the full 14 days at home?

If you’re well you don’t need to stay at home. You can return to your normal activities as long as you don’t have a fever or new continuous cough.”   

This may place some employers in a difficult situation as other employees may have concerns regarding the possibility that colleagues returning from abroad will be infected. However, given the current Government advice, it would appear that they should be allowed back into the workplace. If the employee is requested to remain away from work whilst fit to return, they should be paid as normal.

This may add to the huge financial impact that COVID-19 is having in some business sectors. Many are facing having to make redundancies or lay off.

COVID-19: Focus on Lay-Off and Short-time working

The economic impact of COVID-19 has yet to be felt in full but businesses across all sectors throughout the UK are turning their attention to the options available to them at each stage. In this note, we have turned the spotlight on the options for businesses who may need to reduce operations or close as a result of the crisis.

We have seen a downturn in demand for work – what are our options to limit costs?

Most employees do not have an implied right to be provided with work but do have an implied right to be provided with pay. Businesses facing a downturn, therefore, have a difficult line to tread as the normal contractual position is that an employee is entitled to full pay even if they have no work to do.

  1. Make redundancies: It would be open to you to commence consultation with a view to dismissing staff by reason of redundancy. This would not be without short-term cost to the business as employees with over 2 years’ service would be entitled to a statutory redundancy payment (plus any enhanced contractual entitlement in existence) and all employees would be entitled to notice pay. The process (assuming less than 20 employees are affected) would take a week or so to complete and may be practically difficult to administer given the current advice on social distancing. Making redundancies also always carries with it the risk that unhappy employees will seek to challenge their selection through unfair dismissal claims, so a fair selection process is key.

    Where 20 or more employees are to be redundant within 90 days at one establishment (place or work), collective consultation applies.  This means a 30 day period (or 45 days if 100 or more to be redundant) must elapse before any dismissal can take effect.

    This crisis is evolving on a daily basis but one thing is clear: it will not last forever. You may not wish to take the step of dismissing time-served employees where the downturn is unlikely to be permanent.

  2. Lay-off: There is a statutory regime governing the right to lay off employees. You would need to review your contracts of employment to see if they contain an express lay-off clause. If they do then the concept of lay-off would allow you to provide your employees with no work (and no pay) for a period whilst retaining them as employees. It is a temporary solution to the issue of no or less work. There is no particular limit on how long lay-off can last for but,  after four or more consecutive weeks or a total of six weeks (of which no more than three are consecutive) in any period of 13 weeks an employee is potentially able to claim that he is, in fact, redundant and claim a statutory redundancy payment.  

    If you don’t have a lay-off provision in your contracts of employment then, if you unilaterally attempt to lay employees off you will be in breach of contract and risk claims for constructive dismissal and also unlawful deductions from wages. Unless you can reach agreement with your employees about a way forward (seeking their assistance to help the business to survive) and agree and sign off on amendments to contracts then, if you do not provide an employee with any work but they are ready and willing to work, you would be liable to pay them in full

  3. Short-time working: Like lay-off above, there is a statutory process governing the right to place an employee on short-time working (broadly defined as working less than 50% of their normal working time). Again, as with lay-off, there must be a contractual term providing for it. As with lay-off, the employee can force the issue if short-time working continues beyond a certain period by making an application for a redundancy payment. 

Is there any entitlement to pay if we lay-off?

If lay-off is actioned in accordance with the statutory scheme, then there is a concept of statutory guarantee pay which would potentially entitle employees to up to a maximum of £29 per day for five days in any 13 week period of lay-off. 

If you lay-off unilaterally without any express contractual right to do so then you are likely to be liable to pay employees full pay provided they are ready and willing to work. This is not, therefore, a realistic option.

We don’t have a lay-off clause in our contract but have done it before when times have been tough – do we have the right to do it now?

You would have to rely on the fact that there is a term allowing lay-off can be implied into the contracts of your employees through custom and practice. For a term allowing lay-off to be implied into a contract:

  • There must be a custom of laying-off within that particular business.
  • The custom must be both:
    • "reasonable, certain and notorious"; and
    • such that "no workman could be supposed to have entered into service without looking to it as part of the contract".

This is a strict test and an employer should be very confident they can satisfy it before they rely on an implied term to lay off employees.

We don’t have the right to lay-off, are there any other options available to us?

Practically speaking you could look at your workforce to ascertain whether there are any consultants, agency staff or other persons engaged otherwise than as direct employees. Terminating or reducing the scope of these agreements first is a good way to start to manage costs.

As you would do if the business was facing a redundancy situation, it is always open to you to discuss the issues with your employees with a view to reaching an agreed way forward which protects the business and employee’s jobs for the future but recognises that short-term variations will be necessary to keep everything running. Any agreement should be confirmed in writing and signed by all employees.

As an alternative to the contractual right to lay-off or place on short-time working, negotiating changes to pay and or working hours may be the best option to avoid redundancies. Many employees will prefer to accept a pay cut rather than lose their job. 

It is also possible that temporary changes to the employment laws may provide more options in the coming weeks. Given the rapidly changing situation and the impact that COVID-19 is having on businesses, it has been announced that daily media updates are now to be given by the Prime Minister or other senior Ministers.

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