If you have been affected by a downturn in work due to the coronavirus, then as an employer you will have to decide what you do next with your workforce. You could employ 1 staff member or 1000 but the issues that affect you are the same.
These are your options:
1. You terminate employment. There is no work. You cannot afford to pay your staff. Simple answer is you terminate their contracts of employment and sadly send them home. The normal redundancy rules will apply. Consult the contracts of employments to see what redundancy provisions have been agreed but if there are none then statutory redundancy provisions apply. In a nutshell, an employee will normally be entitled to statutory redundancy pay if they are an employee and they have been working for you for 2 years or more. Try and explore all avenues before you resort to this.
2. You reduce their contractual hours for the short term until work picks up for example offer them 3/5th contract. The employee will have to consent to this. You will have to give them a clear explanation of why you need to do this and explain the alternative you have is to make them redundant. Be wary though forcing an employee to take this reduction could amount to a fundamental breach of contract and the employee could have a claim against you.
3. You reduce their salaries. Be prepared to explain the reason why and what alternatives you are faced with (i.e terminating their employment). You must be able to justify this step (if you are faced with an employment claim) and you must take the employees consent to this drastic step.
4. You temporarily lay them off for the period you expect to be affected by the coronavirus pandemic. This is called “furloughing”. They go home and they do not work at all for you during this period. You continue to pay them 80% of their salary and you reclaim from the Government Coronavirus Retention Scheme. You can pay them 100% (effectively topping up the extra 20% yourself) but you will only receive back 80%. Once there is enough work for them to do, you call them back and normal work life resumes.
5. You can ask them to use their holiday allowance at this specific time. However, you are obliged to provide notice of at least twice the amount of time as the leave you want them to take. You can agree with your staff to vary this requirement in the circumstances, but they have to agree. In reality, with the lockdown period being uncertain this may not be a viable option.
6. If you cannot afford to pay your employees during this period, then you could ask them to take unpaid leave. If they refuse then you may have to resort to option 1, terminating their employment with the resulting redundancy issues. You could try and utilise option 5 and furlough them on the basis that they will be paid when you receive the money from the Government. You might want to give them the option to take an unpaid sabbatical for 6 months. This has been a good offer in the past as some employees want to take up the chance to go travelling or spend time with their family. You may have employees who have been thinking about this and take you up on the offer. However, with money being tight all round, right now this may not be an attractive option.
As an employer, these are uncertain times, and now more that ever your relationships with your employees will be tested. We offer a fixed fee package to help you manoeuvre this difficult time. If you need help give us a call on 0161 491 8520.