During these uncertain times, there are lots of questions being asked and high-levels of certainty. To help provide peace of mind and some clarity, our legal experts have answered some of the most commonly asked questions for both employers and employees.
If you are in need or further advice or trusted legal support, please do not hesitate to contact our team by filling out our online form or calling 0330 123 1229
What is “lay-off” and “short-time” working?
Lay-off occurs where an employer provides no work to an employee and normally provides less, or no, pay to them.
Short-time working is where an employer reduces the amount of work available to an employee such that they work reduced hours, normally resulting in them receiving pay only for the hours actually worked.
Lay-off and short-time working is used to cover periods where for whatever reason the employer has a shortage of work, and they are usually used in industries such as construction and retail.
Can I choose to lay-off my staff or reduce their working hours?
In order to lawfully lay-off staff, or to reduce their working hours under short-time working, the employer will either need to have an express clause providing for this under the contract of employment, or otherwise reach agreement with the employees to introduce such measures temporarily as an alternative to redundancies. In some industries there may be an argument that lay-off and short-time working can be implied into a contract of employment through ‘custom and practice’ but such cases are now very rare.
If an employer places an employee on lay-off or short-time working without an express right under the contract, or through agreement with the employee, then they will be in breach of contract with resultant potential claims for unlawful deduction from wages and possibly constructive unfair dismissal.
What rights do my staff have during a period of "lay off"/"short-time" working?
In normal circumstances, unless the contract states otherwise, an employee on lay-off will have no right to pay other than minimal statutory guarantee pay which is payable only for 5 days in any three month period, and is just £29 per day i.e. a total of £145 per week. For short-time working, the employee only has a right to receive pay for the hours actually worked.
However, an employee who has been placed on lay-off or short-time working for four consecutive weeks or six weeks in any thirteen week period can seek to claim a statutory redundancy payment. The employer can avoid this, though, if they can show that they will be able to provide at least 13 weeks consecutive work and full pay moving forward.
Are employees permitted to take pre-arranged annual leave during a period of lay-off or "short-time work"?
Yes, an employee can take annual leave during periods of lay-off or short-time working as normal. It is, however, debatable as to what their pay would be for holiday taken and whether it would be based on their normal pay when not on lay-off/ short-time working or on their reduced or nil pay through lay-off/ short-time working, although we believe it is likely to be the former. This will no doubt be tested in the courts after the current crisis recedes.
What is furloughing?
‘Furlough’ or ‘furloughing’ was not, at least until the speech of Rishi Sunak, the UK Chancellor, a commonly used term in UK employment law, and instead was more heavily used in the US. It is now probably the most googled term in the UK! In summary, it relates to a period of absence from work due to a shortage of work. The term is now being used to refer to leave under the new Coronavirus Job Retention Scheme which will provide for an employer to receive a grant for 80% of salary/ wage costs capped at £2500 where an employer has no work for an employee and cannot afford to pay the employee.
The details of the scheme remain unclear at the time of writing, but it is expected that the grant under the scheme will be available to all employers who, due to the Coronavirus, have to remove employees from their work. The employee will remain employed but be designated as a ‘furlough worker’ with HMRC to enable the grant to be paid which will then be passed to the employee through a reduced salary/ wage payment. The scheme will cover the period from 1 March 2020 but will only accrue at the time the employee stops work, and it will last until the end of May 2020, although the government may extend this. It is important to note that an employee can do no work for the employer during the furlough leave period. We understand that a minimum leave period will apply, so it is unlikely to be permitted to alternate employees on furlough leave.
Unless the employer has a lay-off clause in the contract of employment, the employer will need to negotiate with the employee for them to be designated as a ‘furloughed worker’. We do not expect that employees will object, particularly if the alternative is redundancy, although in certain cases where the employee is a high-earner, the employer may have to look at negotiating acceptance by the employee by ‘topping up’ payments, although there is no statutory requirement to do so.
Can I ask my employees to take unpaid leave?
It is possible to ask an employee to take unpaid leave and, if this is agreed, then it will form an agreed temporary variation to the contract of employment. However, it is much more likely that the employer and employee will agree for the employee to go on ‘furlough leave’ instead to receive payments in accordance with the Coronavirus Job Retention Scheme.
Some of my staff have agreed to take unpaid leave, do they still accrue holiday during this period?
Holiday will continue to accrue during periods of lay-off, short-time working, unpaid leave and furlough leave.
Can I ask my staff to take holiday?
Provided that an employee is not ill, an employer can require an employee to take annual leave at a prescribed date. However, in order to do so, the employer must give notice of at least double the period of holiday which it requires to be taken, e.g. two weeks’ notice for an employee to take one week’s holiday. Many employers during the current crisis are requiring employees to take a proportion of their holiday entitlement by a set date, to prevent employees returning to work after the crisis with substantial accrued holiday entitlements.
Can I cancel a worker's annual leave?
An employer can cancel an employee's period of annual leave, if it gives the required notice, namely notice of at least the same length as the period of leave to be cancelled. For example, if the employee has booked a week of annual leave, the employer must give at least one week’s notice of cancellation. Ordinarily, if an employer cancels a period of leave without a clear business reason and this results in the employee not being able to go on a booked holiday and suffering financial loss, the employer could face a claim for constructive dismissal. The employee may be able to argue that the cancellation is a breach of the implied duty of mutual trust and confidence, entitling them to resign. This is less likely to be an issue in the current crisis given the limitations of travelling and the requirements to conduct social distancing.
Do I need to pay staff who are self-isolating?
Employees who are self-isolating due to suffering from symptoms of Coronavirus, or where members of their household are suffering from symptoms, will be entitled to Statutory Sick Pay (SSP) as the government has extended the right to payment of SSP to include self-isolating on the grounds of public health guidance. The first 14 days of SSP will be reclaimable by a small or medium employer (an employer with less than 250 employees). SSP is payable from day one (rather than after the normal three waiting days) for Coronavirus related absence.
It is not clear as to whether a self-isolating employee would be entitled to payment under a contractual sick pay scheme, although we believe it likely that they will not if they are not actually ill as they will not be ‘sick’. We think it will be a stretch to extend the definition of incapacity in the SSP rules to company sick pay schemes, although ultimately this will be a matter for the courts/ tribunals to determine.
We feel a distinction needs to be drawn between an employee self-isolating due to suffering from symptoms or where a member of their household has symptoms, and an employee who is shielding or socially distancing due to being a vulnerable person, as our current understanding is that the changes to the SSP rules will not extend to the latter, although further guidance might clarify this.
Finally, where an employee is ill due to Coronavirus, they will be entitled to sick pay as normal, whether SSP or contractual.
A new employee is due to start next month, can I withdraw the job offer?
If the offer is conditional or the employee has not accepted the offer yet, then it may be possible to withdraw the offer before the conditions have been met or acceptance is communicated. However, if the offer was unconditional, and the employee has accepted the offer, then it will not be possible to withdraw the offer. However, the employer can terminate the contract before the employment has started by giving the amount of notice required under the contract or where no contract is in place with no notice as statutory minimum notice only applies after a month’s employment. A new employee cannot be put on “furlough leave” as the scheme applies only to those employees on the payroll as at 28 February 2020.
Please note, all advice and opinions offered in this article are subject to change in line with the latest government advice