COVID-19, or coronavirus, is creating an unprecedented challenge for many employers. In particular, companies in the entertainment and hospitality industry have been drastically affected by the Government’s advice that people should avoid pubs, restaurants, and unnecessary social gatherings. This article addresses some of the most frequent questions that we have been asked about COVID-19 and an employer’s obligations to its workforce.
Some employers are seeking to lay off staff on a temporary basis due to plans to temporarily close their business or scale it significantly back. When an employer lays off employees it does not have to provide them with work, and it does not have to offer them full pay. However, an employer can only lay off staff if it has an express contractual right to do so. This is not uncommon in the industrial sector, but rare in other sectors. During a layoff, an employee is entitled to receive a statutory guarantee payment. This is limited to just £29 per day for 5 days in any three-month period. If an employer does not have the right to lay off an employee, it must seek the employee’s agreement. In these difficult times, some employees are agreeing to layoffs or unpaid leave to avoid redundancy. However, employers should not seek to impose layoffs if they do not have the right to do so. Employers who do this could be liable for claims of unlawful deductions of wages or constructive unfair dismissal (if the relevant employee has over two years’ continuous service).
In some cases, employers are already making redundancies. This is particularly true of the hospitality sector.
While times are difficult, employers should bear in mind that they still have a duty to consult with their employees and to look for alternatives to redundancy. Making redundancies in haste could lead to potential claims for e.g. unfair dismissal.
It is important to note, too, that in the event that an employer seeks to make more than 20 redundancies within 90 days at one establishment, collective consultation is also required. Dependant on proposed numbers, the consultation period will be for 30 or 45 days with elected employee representatives or a recognised trade union. A failure to do this can lead to a protective award of up to 90 days’ gross pay per affected employee. This is in addition to other employment claims that the affected employees may have. Unlike unfair dismissal, employees can claim this protective award regardless of their length of service.
Employers can avoid collective consultation in special circumstances (something the COVID-19 outbreak could potentially constitute). However, there is a high bar for this, and we would strongly recommend seeking legal advice before making any large scale redundancies.
Statutory Sick Pay (“SSP”)
Initially, there was doubt about whether people who were self-isolating due to COVID -19 should be entitled to SSP. Traditionally, SSP has been reserved for people who are unable to work due to incapacity.
However, new Government guidance states that an employee is treated as being unable to work due to incapacity if they are complying with advice from Public Health England, NHS National Services Scotland or Public Health Wales. Accordingly, somebody self-isolating due to mild symptoms would be entitled to SSP, even though they would ordinarily be able to attend work.
SSP is currently £94.25 a week. Usually, an employee is unable to receive SSP until they have been ill for four or more days in a row. However, as of 13 March 2020, an employee affected by COVID-19 has the right to receive SSP immediately.
The effect of COVID 19 on more generous company sick pay schemes will depend on the wording of the relevant policy.
Sending employees home
Employees who are able to work from home should continue to receive full pay. Given the situation, it is unlikely to be considered unreasonable to request that an employee work from home where possible. In any event, many employees will have mobility clauses in their contracts.
In some cases, employees will not able to work from home. If an employee is sent home on health and safety grounds and cannot work, they should be entitled to full pay (unless they are deemed incapable of work for the reasons above). An employee could still be laid off in these circumstances (if that is possible).
It is expected that the Government will intervene and issue guidance and it is to be hoped financial assistance for both the employer and employee in the event that businesses are forcibly closed, for example, if pubs are made to shut, as they have been in some other countries.
On 17 March 2020, the Government announced a £330 billion stimulus package to assist businesses with COVID 19. The Government also intends to introduce specific employment measures. It is unclear what these will be and ideas such as a right to lay off staff and assistance with payroll costs have been suggested. The employment team at Simkins is keeping up to date with these measures.
If COVID-19 is affecting your business, the Simkins employment team is here to help.
We understand that these are exceptional circumstances and that many businesses will need to act quickly to remain viable. We can guide employers through this process and help to ensure minimum disruption and future risk.
Should you require any assistance in this area, we obviously will be very happy to assist. If you have any questions about how to deal with COVID-19, please feel free to contact us, either through your usual contact or by calling our employment team using the details below.
Susan Thompson +44 20 7874 5637
Victoria Willson +44 20 7874 5716
Andrew Lloyd +44 20 7874 5643