Elliot Hawker
Mar 18, 20205 min
Over the previous few days, the commercial impact of COVID-19 has dawned on employers resulting in a multitude of calls and emails to NucleusHR about staffing throughout this unsettling period.
Many
small employers appear to be nervous and whilst some are struggling to
cover the customer demand throughout times of high absence, most are
concerned about how to temporarily reduce their staffing costs whilst
they cope with the downturn.
So,
how do we do this? As Employers we need to know how to flex our
workforce so that we can minimise the short-term impact of COVID-19.
Let’s share some of the most frequently asked questions that NucleusHR
has received over the last few days.
Can I reduce my salary costs?
This
has been the most frequently asked question over the previous week.
Businesses are preparing themselves for the worst-case scenario, and
whilst their business may not yet have endured any financial impact,
they foresee this happening throughout the course of the pandemic.
So, in short, the answer is, yes.
Firstly,
we would ask you to consider whether you need to make permanent or
temporary savings. Most employers are forecasting that this period of
uncertainty is likely to last for approximately 3-6 months. In those
circumstances, nearly all employers are wanting to try and retain their
teams ready for when normal service is resumed. In these situations, we
are looking at a temporary lay-off or short time working.
What is the difference between a temporary lay-off and short-time working?
A lay-off is if you decide that your employees are not required to come into work for at least one working day.
Short-time working is when you decide that your employees are not required to work their normal
hours each day but are requiring them to work their normal days.
Can all employers do this?
In
order to activate a temporary lay-off period, without pay, you will
need to have reserved the contractual right within your Contract of
Employment or have a activated a lay-off period in the past (i.e. have
set a precedent).
If
you do not have either of those situations, you will need to rely on
the good will of your team to agree to a temporary lay-off in order to
avoid any permanent staffing cuts (i.e. a redundancy).
You can require employees not to attend work, however, without the above, it would typically attract
full pay, therefore, defeats the object in most cases of Corona.
How long can I use a “lay-off” for?
There is no time limit for how long you can apply a lay-off or short-time working for your employees.
You
should however be mindful that employees have the right to apply for
redundancy and claim redundancy pay if it has been four weeks in a row,
or six weeks in a 13 week period.
We
have been encouraging employers to keep a close eye on the time period
used when using short-time working or temporary lay-offs, this will
avoid the costs associated with redundancy, notice pay and of course
retain the talent for future months.
So, I don’t have to pay staff that are laid off?
Employees
would be entitled to guaranteed pay during a lay-off. The guaranteed
payment is £29 per day (or the normal daily rate if less than £29 per
day) for up to five days in any three-month period – so a maximum of
£145.
Thereafter any lay-off is unpaid, providing that your contract and/or precedent provides for such provisions.
Employees
that have worked any day (short time working) would not be entitled to
guaranteed pay for that day, simply their proportionate rate of pay.
Are there are times that employees would not be eligible for the Guaranteed Pay?
To receive guaranteed pay, employees must meet the following criteria:
• have been employed continuously for one month (includes part-time workers)
• have reasonably been available for work
• not refuse any reasonable alternative work (including work not in their contract)
• not have been laid off because of industrial action
What happens if I cannot open my business until after the pandemic? Can I make permanent staffing reductions?
Yes,
in these circumstances, if a temporary lay-off isn’t practical then a
more permanent approach to salary cutting may be necessary.
What is a redundancy?
A
redundancy is when you can dismiss an employee because you no longer
need anyone to do their job. Whether the business is changing what it
does, how it does it, changing location or in this situation, there has
been an economic downturn and a business can no longer afford to support
that role.
You
must remember that redundancy should not be used as a vehicle to
dismiss an employee who is simply not performing. For a redundancy you
must demonstrate that the employee’s position will no longer exist.
Can I tell my employee that I just can’t afford them anymore?
Not
without the risk of an unfair dismissal claim being successful. There
are strict and often viewed as complex requirements for an employer to
comply with when making redundancies. It is always best to take advice
from your HR support team.
Is there a minimum length of service required for redundancy?
To
be entitled to redundancy pay an employee will need to have accrued two
years’ service. This is similar to requiring two years’ service in
order to claim unfair dismissal.
What do I need to consider when making redundancies?
When considering redundancies, you will need to think about a multitude of matters such as:
• Possible
alternatives to redundancies (existing staff to work flexibly, short
time working, possible lay-offs, laying off self-employed contractors,
restricting recruitment, reducing overtime etc.)
• There
are strict consultation and possible representation requirements
depending on how many employees are likely to be made redundant,
specific advice should be sought on your duty to consult, failure to
consult could render any subsequent dismissal unfair resulting in costly
financial penalties.
• Consider requesting and accepting volunteers for redundancies.
• It
is worth remembering that as employees you aren’t just liable for the
cost of the redundancy payment, but also the contractual notice pay.
• Remember employees do retain the right to time off to look for alternative work.
Redundancies
are a complex area of the law and we encourage you to take separate
advice prior to commencing any redundancy consultation.
Can I ask my employees to take a salary cut throughout the period?
In essence, yes, you can ask. Bear in mind that you cannot unilaterally reduce an employee’s salary without their consent.
Throughout
the economic downturn in 2008, a client of NucleusHR did approach all
of their employees and asked them to take a 20% pay reduction in order
to safeguard jobs throughout the recession. All employees voted to do
this in return for a day off each week, a period which lasted for 18
months.
It may surprise you what employees are prepared to do in order to continue working for you.
Are employees obliged to agree to my suggestions to safeguard jobs?
No,
in reality they aren’t. There are lots of creative ideas when looking
to make salary savings, our advice is to work with your employees and HR
support teams to try and agree a way forward.
If
you need any advice, help or support throughout this uncertain time,
please do not hesitate to contact Toni on 07960 418494 or email toni@nucleushr.com