Employment Issues In A Crisis
Practical steps to assist employers protecting their business in response to the Coronavirus crisis
Many businesses, and employers in particular, will be facing difficult decisions in light of the current workplace challenges caused by the COVID-19 outbreak. These include changing working practices and patterns, and most essentially decisions that need to be made to safeguard their businesses. The situation is hugely unexpected and worryingly uncertain as to its duration. In this briefing, we focus on options available to an employer who has to balance a sudden need to reduce employment costs with the desire to retain a skilled, healthy workforce for the future.
Short-term measures, such as recruitment freezes, encouraging working from home across the board to prevent cross-contamination of your workforce and maximising flexibility for those with caring responsibilities are all hugely important, but may not be enough.
Therefore, consideration will inevitably focus around some of the following areas:
1. Reduction of the self-employed workforce
The self-employed contractor community can be reduced relatively easily and cost-effectively, by terminating arrangements in accordance with contractual notice provisions. Typically contractors have shorter notice periods than employees but be alert for long fixed-term contracts which might require larger payments.
2. Agreeing a period of unpaid time off work, sabbaticals, lay-off or reduction in working hours (and pay) with staff:
Employees must consent to this type of fundamental change to their employment contracts but in uncertain times it is a very useful response that can avoid or reduce the need for more drastic steps having to be taken. Although some employees may be willing to take unpaid time off work in light of the current climate, or accept reduced hours at reduced pay, others may find little incentive in doing so. Consider how to make this an attractive option – perhaps guaranteeing the continuation of certain benefits or creating a clearly defined period.
3. Deferring bonus payments and salary increases: This would decrease costs for this year, but will impact upon employee morale. Any decision should be effected consistently across the workforce. The company’s ability to do so will depend on its contractual provisions.
4. Redundancy process:
The business may have no choice but to make a permanent headcount reduction. A fair redundancy selection procedure should be followed in order to protect against unfair dismissal claims. If 20 or more redundancies are contemplated or required, please contact us urgently as a prescriptive, time-limited procedure will need to be followed before dismissals can be made. In terms of employee entitlements, statutory redundancy payments will be payable for those with more than 2 years’ continuous service, (as well as any enhanced redundancy pay which is set out in contracts or policies). Anyone who is dismissed, irrespective of length of service, will be entitled to their notice pay (whether the notice period is worked, or they receive a payment in lieu of notice).
- Any contractual arrangement must be carefully recorded and documented;
- Review periods (for example, return to work dates) should be diarised; and
Remember to keep in touch with employees or contractors who are not working over this period and maintain good relationships that survive the downturn.
No business wants to be taking these decisions and will not do so lightly. Please contact us for further guidance on any of these matters. We wish you, your families and workforces all well.
Please contact our Employment Lawyers, Nicola Tager or Lucy Cinnamond for further information or advice.