Crucial advice on how businesses can handle lay-offs and short-time working issues as Coronavirus hits the economy has been issued by Thursfields Solicitors.
The leading Midlands law firm issued the guidance on dealing with unexpected downturn in work after the government advised the public to avoid social interaction.
This has led to a dramatic drop in footfall and trade across many sectors, particularly in the entertainment and retail trades, leaving many businesses unable to pay staff and considering redundancies.
Jade Linton, a senior associate solicitor in the Employment & HR Law department at Thursfields, said: “The Coronavirus pandemic has led to unprecedented times, with many employers faced with the need to make changes to their workforce.
“One of the first things many firms are considering is when and how they might implement lay-offs or short-time working, and it’s important to understand these subjects and to handle them correctly.”
Ms Linton explained that a lay-off is when an employer provides no work and no pay to staff for a period of time, while retaining them as employees, whereas short-time working means providing staff with less work and less pay for a period of time, while also retaining them as employees.
Either option is generally temporary in duration and only used in circumstances which have clearly led to a temporary reduction in work.
She said: “In some cases, an expressed contractual right within an employee’s contract of employment will permit an employer to lay them off or put them on short-time working.
“This right may also in certain cases be implied if it can be shown it has been established over a long period of time, for example by custom and practice.
“But in the absence of such an expressed or implied contractual term, an employer risks breaching the employment contract, and to avoid the risk of litigation they should seek the employee’s consent to make such changes.”
Ms Linton advised that in these cases employers should arrange virtual or face-to-face meetings with the entire workforce or affected department(s), explaining how challenges like client demand or cancelled events have prompted the changes.
She said employers should never assume staff are fully aware of the difficulties facing a business and that regular communication channels should be kept open during such times.
Where agreements are reached, they should be finalised in writing and kept on personnel files, and employers should also make regular updates to staff about the latest position and the impact this is likely to have on lay-off or short-time working periods.
Ms Linton said: “The important point here is that a lack of consistency, transparency and communication is a breeding ground for risk and potential litigation.”
She said that in the event of no agreement being reached, an employer may need to consider alternative options.
This could range from redundancies to varying contracts without agreement, by terminating the existing contracts and re-engaging staff on new contracts with revised terms.
Ms Linton said: “This is a complex process and may trigger collective consultation obligations and potential litigation so employers should seek specific advice in advance.
“Employers should also be aware that if they exercise the right to lay-off staff or put them on short-time working, there are circumstances where the employee may become entitled to claim a statutory redundancy payment.”
Another option could be asking staff to take holidays at times chosen by the employer, for example deciding to close for two weeks and everyone having to use holiday entitlement during that closure.
Ms Linton said: “If you decide to do this, you must tell staff at least twice as many days before as the amount of days they need to take. And again, remember your messaging.
“Employees are likely to be disgruntled by the fact they have to take holiday outside of the periods they planned, so explain the need for the requirement and what you’re hoping to achieve, such as saving jobs.”
She added: “These are difficult times for employers and staff alike and transparency and co-operation will be needed from both parties to navigate this changing landscape. Before taking any steps, we recommend employers take specific legal advice.”
Any business which needs advice on making necessary workforce changes can call Ms Linton on 0121 796 4024 or email her at email@example.com.