A practical step-by-step guide for employers:
Consider the affect that the COVID-19 pandemic has had on your business - is workload the same as normal, higher than normal, or less than normal?
Consider the impact that the change in workload has had on your finances.
Look at the resourcing needs you think you will require over the next 3 month period given we all hope that the downturn in work is only temporary. We expect that these will fall into 4 “buckets” of employees:
A. Those employees where there is a full workload to do (and sometimes more than normal in some sectors, in which case you may need to recruit more people e.g. food retail and manufacture, and pharmacy)- for these people, it is business as usual.
B. Those employees where there is a reduced amount of work to do- for these people, you should consider asking them to:
i.) agree to “short-time” working e.g. working shorter hours each day or less days per week (with an associated reduction in pay) but, firstly, check to see if their contract of employment allows this or whether you need their express consent;
ii.) agree to take some of their accrued but untaken holiday leave (this will help those whose pay has been reduced due to short-time working but will not assist employers who have cash flow issues)- note that the government has said that employees can now carry over up to 4 weeks of unused holiday leave for 2 years and so there is less of a concern that there will be a backlog of leave to take in the second part of the year;
iii.) agree to take a period of unpaid leave (albeit their express consent would be required to do this) but rather than it being on no pay, you could agree, for example, that they take 2 months’ of unpaid leave spread over 6 months (like Virgin have done) to help with the their cash flow; or
iv.) agree to furlough some of the people in the department where work has reduced and make use of the CJRS- but note that whilst employers have a discretion to decide which employees out of a department are to be furloughed, they must still comply with discrimination laws.
C. Those employees who work in a part of the business where there is no work to do but you expect that is just temporary and will pick up again in due course. For these people, consider asking them to be furloughed. As it is the whole department that needs to be furloughed, there is no need to undertake a selection process.
D. Those roles which are no longer required at all given the work is unlikely to return and if it does, it will be a long way off- for these, you may need to consider making redundancies (and so long as you have considered whether furlough is an alternative option as part of the redundancy consultation exercise and that an otherwise fair process has taken place) those dismissals should be fair.
Consider those employees who are currently out of the business:
A. If you have people on sick leave or self-isolating, keep track of when their sick leave/ self-isolation period is due to end. If they are in a group of people whose work has reduced or has disappeared then consider asking them to agree to go on furlough leave- and follow the necessary process outlined in this note.
B. If you have people on maternity leave or any other kind of family friendly leave, remember that if they work in an area of the business where the work has reduced or disappeared then they can also be furloughed and any statutory maternity pay (or other statutory pay) can be included as a “wage cost” under the CJRS.
Consider those employees in the following categories who may still be working but who you should try and protect as best you can: over 70s, vulnerable or pregnant. Is there a way to put those people on furlough leave under the CJRS ahead of others? This will take them out of the business and also mean that they receive more money than just SSP.
For those that have agreed to furlough, employers will need to:
A. notify (in writing) the relevant employees of their decision to furlough and request their written consent;
B. collate all of their returned signed letters and place these on their file as a record of a change to their contract of employment; and
C. determine what size grant you will need to request in respect of each of them in readiness for the live government portal to go live (based on wages as well as employer NICs and automatic pension contributions).
For those that have been asked to go on furlough leave but who have refused, consider your other options, which may include:
A. asking them to take a period of unpaid leave (either fully unpaid or spread over a longer period so that it is on reduced pay) - but they are unlikely to agree to this if they did not agree to furlough;
B. asking them to take a period of paid leave from their pot of accrued but untaken leave- remember you can utilise the provisions of the WTR to require them to take this (or any relevant contractual provisions), but note it will not help from a cash flow perspective;
C. unilaterally imposing a period of furlough- but note that this would be unlawful and so could lead to breach of contract claims;
D. terminating their employment on the grounds of redundancy- after having following a proper redundancy consultation process, but note that those employees would be due a notice payment and a redundancy payment (statutory or contractual) which may not be feasible depending on finances. NB: also, depending on numbers this may trigger collective consultation requirements;
E. terminating their employment for “some other substantial reason” (SOSR), relying on business need or their refusal to consent to the change in contract. There is a chance that this would be an unfair dismissal and so you may want to consider offering them re-instatement but as a furloughed employee to help mitigate any losses.
NB: also, depending on numbers this may trigger collective consultation requirements.
For the group of furlough employees, submit a claim under the scheme at the time of processing their payroll for the month with all required information to HMRC. (This will happen when the portal for the scheme goes live - more information is expected on this).
Upon receipt of the grant, pay the sums to the employee (if received in time for the next pay run) or use it as a reimbursement of wages already paid to furlough employees.
Keep the situation under review and look out for any government updates.
We hope that this note is helpful. Do contact the Knights Employment Team if we can assist with any specific queries.
This note is not intended to provide legal advice. Please contact us if you require specific legal advice on your situation.