Approaching a downturn in work

Covid-19 (the Corona virus) pandemic has led to unprecedented times across our workforces. With the Government advising the public to avoid public interaction many industries and sectors have noticed a dramatic drop in business leaving many unable to pay staff and considering redundancies.

Employers faced with the need to make changes to their workforce may be considering when and how they might implement lay-offs or short time working.

Lay-offs and short time working

Lay-off is where for a period of time an employer provides no work and no pay to staff while retaining them as employees.

Short time working means providing employees with less work and consequently less pay for a period of time while retaining them as employees.

The regime is generally temporary in duration and only used in circumstances which have led to a temporary reduction in work.

When can an employer use lay-off or short time working?

An express contractual right within an employee’s contract of employment will permit an employer to lay off employees or put them on short time working.  The right to lay-off employees or place them on short time working may also be implied if it can be shown it has been established over a long period of time by custom and practice for example.

In the absence of an express or implied contractual term which allows lay off or short time working, an employer risks breaching the employment contract.   To avoid the risk of litigation, an employer should seek the employee’s consent to make such changes.

Employers should explain why they need to make these changes.  This may involve a virtual or face to face meeting with the entire workforce or affected department(s) at which the need prompting the change is explained including the impact client demand, cancelled events etc.  Employers should never assume employees are fully aware of the difficulties affecting a business and should always keep regular communication channels open during unprecedented times such as this.

Where an agreement has been reached this should be finalised in writing and kept on the personnel file. Thursfields recommend the employer make periodic updates about the current position and the impact this is likely to have on the period of lay off or short time working. Lack of consistency, transparency and communication is a breeding ground for risk and potential litigation.

In the event of no agreement being reached and there being a reduced requirement for employees to carry out work of a particular kind, an employer may need to consider alternative options, such as redundancies or varying the contract without agreement (by terminating the existing contract and re-engaging the employee(s) on a new contract with revised terms).   This is a complex process and may trigger collective consultation obligations

and so employers should seek specific advice in advance.

Employers should be aware that if they exercise the right to lay off employees or put them on short time working, there are circumstances where the employee may become entitled to claim a statutory redundancy payment.

These are difficult times for employers and employees 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.

Download Thursfields HR guide on how to approach a downturn in work here – https://www.thursfields.co.uk/wp-content/uploads/2020/03/HR-Coronavirus-How-to-approach-an-unexpected-downturn-in-work.pdf

If your business requires any advice on making necessary workforce changes, please contact Thursfields Employment team on 0345 20 73 72 8 or info@thursfields.co.uk