Social distancing measures and the recently announced school closures are likely to reduce demand in some sectors even further.
In addition to measures to support business in general, on Friday 20 March the government announced unprecedented measures to support employment. Employers will be able to apply for a grant to cover 80 per cent of the salary of employees up £2,500 per month, backdated to 1 March where those employees are placed on ‘furlough’. Furlough is not a term generally used in UK employment law but, from the chancellor’s statement, layoff is likely to qualify though short time working may not.
It is not yet clear how the new furlough payments will interact with existing rights laid-off employees have to guarantee payments or even redundancy payments.
Further, we do not yet know whether furlough will also apply where employees cannot work, for example as a result of the school closures, rather than where there is no work for them to do. More details will follow but we do know that this scheme will be administered by HMRC and the first grants are expected to be paid in April. Meantime employers may also be considering other actions.
In dialogue with employees and, where relevant, trade unions, there are, however, a number of short-term measures that employers can explore as alternatives to more permanent action.
As a short-term measure, employees may be prepared to take paid holiday over the coming weeks. As well as exercising any relevant contractual rights, under the Working Time Regulations 1998, employers can give notice to require employees to take their statutory leave.
Some employees, faced with not being able to attend work for personal or family-related reasons, may be prepared to take extended leave of absence. As an agreed variation of contract, continuity of service for the purposes of employment rights would be preserved.
One option that may be welcomed by eligible employees is the opportunity to use parental leave; this allows for 18 weeks of leave per child who is under 18.
Normally restricted to four weeks per year, the employer can relax this requirement and allow more leave in a year and/or the taking of leave as single days as opposed to in full weeks
Those with babies or who have recently adopted could consider whether they want to convert any remaining maternity leave into shared parental leave to allow them to transfer entitlement to the parent impacted by the falling demand.
If feasible, they can share up to 50 weeks of shared parental leave and 37 weeks of shared parental pay between them.
Some organisations, like supermarkets and delivery services, have an urgent need to recruit more workers. Organisations with reduced demand could relax exclusivity provisions in contracts so that their employees can take up short-term appointments with others. Some employers may still need to consider lay-off, short-time working or even redundancies.
Lay-off and short-time working can only be imposed where there is a contractual right. If not, then employees may agree to them to preserve their employment in the longer term.
Employees have limited rights to guarantee payments (£29 per day for five days over a three-month period) and, if the layoff or short-time working lasts for longer than four weeks in a row or six out of 13 weeks, they may claim redundancy payments if they have more than two years’ service.
If an employer imposes these measures without consent it risks claims for unlawful deductions from wages, unfair dismissal, breach of contract, redundancy payments and protective awards.
If redundancies are necessary then, at the time of writing, the existing rules require collective consultation (if 20 or more employees are involved), fair selection, individual consultation and consideration of alternative employment.
Electing employee representatives, consulting them and individuals whilst preserving social distancing, will present challenges and will require creative thinking.
There is a limited exemption to the consultation obligations where ‘special circumstances’ render it not reasonably practicable for employers to comply.
Even if ‘special circumstances’ do apply, then the employer must still fulfil any obligations of collective consultation which it is reasonably practicable to comply with.
The situation remains a rapidly changing one and employers need to stay aware of latest government advice and guidance. Some creative thinking and an open dialogue with employees can potentially minimise the requirement for compulsory action, leaving organisations better configured to take advantage of the upturn in due course.
Annelise Tracy-Phillips is a senior associate in the Employment Law team at independent UK law firm Burges Salmon.