In these uncertain times even established employers may be seeing a reduction in demand and are therefore considering reducing staff costs or levels. We put together some guidance last week, looking at developments, but wanted to respond to the queries we are have been getting since then.
There are a variety of options to consider around reducing staffing costs, where work has reduced:
Holiday
Encouraging your team to use their holiday entitlement is one way to reduce staffing levels in work. Your contract of employment may give you the right to dictate when those days are taken, most likely with notice. If not, you can still set holiday dates for your team providing you give them two days’ notice for every day you want them to take. So if you set five days’ holiday, you need to give your team member ten days’ notice of this. Flights may be cancelled but this does not prevent people taking time off work. You can also decline requests for holidays for operational reasons, providing that the employee is still able to take their statutory entitlement within the holiday year.
Sick leave
For periods of self isolation or illness sick leave is the first thing to consider. Statutory sick pay is now payable from day 1 of an absence related to COVID-19. For SMEs (as of 28 February 2020) up to 2 weeks SSP will soon be funded by the government.
The repayment mechanism isn’t yet in place but so make sure to keep robust records of staff absences and payments of SSP. The good news is that you won’t need to provide a GP’s fit note.
Lay-off and short-time working
A lay-off is when you ask an employee to stay at home on a temporary basis, without pay. Short-time working is when the employee continues to work but on a reduced number of days per week, or hours per day. This is one way to temporarily reduce your staffing costs and levels without resorting to redundancies. However, you must have a contractual term or an agreement before you can use these options as they are without pay. While there’s no limit to how long you can ‘lay-off’ your team, be mindful that they are entitled to apply for redundancy and claim redundancy pay if it’s been:
- 4 weeks in a row
- 6 weeks in a 13-week period
The entitlement to pay for those on temporary lay-off or short time working is ‘guarantee pay’ to a maximum of £29 a day for 5 days in any 3-month period (so £145 in total). Those who earn less than £29 a day will get their normal daily rate and those who work part-time, the pay is worked out proportionally. On days when a guarantee payment isn’t payable, it may be possible for the individual to claim benefits.
If you choose this action our advice is to talk with your team members. Be transparent about your decision making. Avoid making a decision on who to lay-off based on criteria that could be discriminatory – either directly or indirectly. Avoid, for example, choosing part-timers, or those with young children who would find it easier to manage the school closures. Focus instead on selecting those with fewer skills, less flexible skills or bringing in fewer sales.
As with any change or disruption, it is a good idea to have a communication system in place to keep your teams up to date. That way there are no surprises when a decision impacts on their position, and can they voice their own ideas on possible remedies or solutions to support your business.
Parental Leave
A further option for those with children is Parental Leave. Parents are entitled to 18 weeks’ unpaid leave for each child and adopted child, up to the child’s 18th birthday. The statutory limit is four weeks per year for each child, to be taken in one week blocks (unless the child is disabled). Employers have the option to agree more unpaid leave – of this type. This may be something to consider if the individual needs to take time off during school closures, and could reduce the risk of redundancies as your staffing costs will be lower during this time.
Time off for dependants
This is another form of leave, again unpaid, unless your contract or handbook states otherwise. The purpose of the leave is to deal with an emergency involving a dependant. This could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care. Employees may take a ‘reasonable amount’ of time off to deal with the emergency, but there’s no set amount of time dictated. The current virus would be an opportunity to consider this type of leave, and it would be at the employer’s discretion how long to allow before other alternatives are needed.
Restructures and redundancies
Sadly the impact of Covid-19 may well see employers reducing the size of their teams. There are prescribed processes that should be followed if a restructure or redundancies are essential. The consultation requirements are more onerous where they involve making 20 or more employees redundant in any 90-day period. With fewer than 20 redundancies planned, there are no set requirements. However, in the event that an employee appeals to an employment tribunal, they could decide that you’ve dismissed your staff unfairly if you do not act in a reasonable manner, which includes consultation.
The government website with up to date information and support for businesses is a great source of information. If you need a helping hand with any of these issues please do give us a call on 01582 252500 or use our contact form.