Employment Law Coronavirus update

Anne Mannix
18 March 2020

Many employers at the moment are balancing keeping a workforce going through measures such as home working, even if productivity is reduced – and that is debatable- against having no work for people to do nor money to pay them.

What about when there just isn’t the work to do?

  • Employment contracts customarily give the employer some say on when holiday can be taken, so maybe require employees to use some accrued holiday although this won’t be a huge amount if the holiday year began in January.
  • Where there are cashflow concerns, request that all workers take a significant pay-cut for a few weeks in the hope that this will help the business to continue a little longer. Employers must get workers to consent to such a change, or otherwise workers could claim unlawful deduction of wages. Employees could claim constructive dismissal, but that would leave them without a job at all, and given the extraordinary circumstances they are facing, employers may have a fair reason to dismiss employees who don’t agree. Note that there are restrictions on salary reductions for employees who are sponsored skilled workers under the Tier 2 visa category. A salary reduction must not bring a sponsored skilled worker’s salary below the minimum thresholds for their visa type or their job.
  • Lay-offs or short-time working are governed by statutory provisions that require a contractual right. Many manufacturing type employees may have this in their contracts already. If not, employees laid off or put on reduced hours without the right to do so may have claims for constructive dismissal or for unlawful deduction of wages. Again, the situation is slightly more complex where an employee is a sponsored skilled worker. Normally, employers must terminate sponsorship if unpaid absences in a calendar year exceeds 4 weeks in total. The Home Office announced in February that employers do not have to terminate sponsorship where authorised, unpaid absences exceed 4 weeks. It will be worth keeping an eye on this permission, which could result in sponsored skilled workers becoming destitute and unable to leave the UK after long periods of unpaid absence.
  • Even where there is no contractual right to lay-off or the right to put on short-time working, employees with at least one month of employment and for whom the employer does not have work may be entitled to a statutory guarantee payment (SGP) which is payable for up to 5 ‘workless days’ in a 3 month period. If employees agree to reducing their hours temporarily and that results in them ceasing to work for a particular day, that could still be a workless day for which they are entitled to SGP. A ‘day’ is the 24-hour period from midnight to midnight. An SGP is of limited monetary value: the rate of guarantee pay per workless day is capped at £29 per day (going up to £30 after 6 April)
  • Redundancies – employers may be forced to make these and soon particularly in the leisure/hospitality sectors where government advice is to stay at home or reduce non-essential social contact.

As this situation develops, the government is updating its guidance/help to employers, so changes are possible and specific legal advice should be taken.

Anne Mannix
Partner - Employment
Anne Mannix is a Partner Solicitor at Spencer West. She specialises in employment law, partnership law, business protection and the employment aspects of corporate deals, restructuring and redundancy.