As the government introduces further, unprecedented measures to slow the spread of Covid-19, we have compiled responses to some common questions that have been raised by employers in relation to the existing legislation.

Once the new measures have been clarified, we will provide further updates.  However, if you require any immediate assistance with the new "furloughing" provisions (see below for a brief explanation), please contact a member of Prettys Employment Team.

What is “lay off” and “short-time” working?

“Lay off” is legally defined as a period of time during which an employee has not been provided with any work or pay in circumstances when they would otherwise be required to work. 

It is a technical term that is often used to describe a redundancy situation.  However, redundancy and lay-off are not the same: during a period of lay-off the employee remains employed (subject to the below); in a redundancy situation, the employee's employment is terminated.

“Short-time” work is legally defined as a temporary reduction in the hours or days worked by the employee, following a diminution in the amount of work available and results in the employee’s remuneration for the week being less than half a week’s normal pay.

Can I choose to lay off my staff or reduce their working hours?

Any change to your employees' working hours or pay, will constitute a variation of contract and the normal principles relating to contract variations apply.

This means that you will either need to have an express contractual right to lay them off or place them on short-time working, or you will need to obtain your employee's agreement to the change. 

In the absence of an express contractual right and/or without the employee's agreement, implementing such changes unilaterally will be a breach of contract and may entitle the employee to resign in response and claim constructive unfair dismissal and/or unlawful deduction from wages.  We recommend that you check your contracts before proceeding and, if the position remains unclear, seek legal advice.

What rights do my staff have during a period of "lay off"/"short-time" working?

Where employees have at least one month’s continuous employment and there is an occurrence which affects the normal workings of the business in relation to the type of work the employee does, they may be eligible for a statutory guarantee payment.

This payment is limited to five days in any three month period for full-time employees, pro-rated for part-time employees.

Where the "lay-off" or "short-time" period has lasted for a period of four consecutive weeks, or a total of six weeks (of which no more than three are consecutive) in any 13 week period, employees may be entitled to terminate their employment and claim a statutory redundancy payment.

Your employees will need to serve you with notice of their intention to claim a redundancy payment and, if you believe they are reasonably likely to return to work within four weeks from the date of that notice, for a period of at least 13 continuous weeks (during which they would not be laid off or kept on short-time working for any week), then you can serve a ‘counter-notice’ contesting your liability to pay the employee a redundancy payment.

Statutory redundancy pay is calculated using the employee's normal pay before the period of lay off/short-time working.

Are employees permitted to take pre-arranged annual leave during a period of lay-off or "short-time work"?

Yes.  The employment contract continues during lay-off or short-term working so the employees' rights in terms of annual leave will be unaffected.

What is furloughing?

“Furloughing” is the practice of agreeing with employees that they will not work for you for a given period of time.  It is a new scheme introduced by the Government in response to the Covid-19 crisis and designed to avoid businesses making redundancies.  It will allow employers to claim a grant of up to 80% of their wage for all employment costs, up to a cap of £2,500 per month, per “furloughed” worker.

The scheme will initially run for a three-month period, back-dated from 1 March 2020.  Further details will be announced by the government shortly.

Can I ask my employees to take unpaid leave?

It is unlikely that many contracts will include an express provision allowing an employer to require their employees to take unpaid leave.   However, this may be something that you can agree as an alternative to redundancies/lay-offs.  The normal contractual variation principles will apply and any such arrangement should be properly documented.

Some of my staff have agreed to take unpaid leave, do they still accrue holiday during this period?

Strictly speaking, yes.  The employment relationship continues during this period and, arguably therefore, holiday will continue to accrue as it would with other types of statutory leave, such as sick leave and family-related leave.

However, it is worth noting that the European Court of Justice has distinguished between lay-offs and, for example, sick leave, in that unlike sick leave, a laid off worker can still undertake recreational activities and thus benefit from the rest and relaxation objective  of holiday. As such, there is an argument for suspending the accrual of holiday – although please note that legal advice should be taken before applying this principle to any laid-off workers.

Can I ask my staff to take holiday?

Yes.  However, how quickly you can enforce this depends on whether you have a contractual right to do so.

If your contracts include an express contractual provision allowing you to require staff to take holiday on particular days, then the normal rules around exercising that provision reasonably will apply (i.e. giving reasonable notice).

Clearly however we are in unchartered territory at the moment and, given that the alternative is that you may be required to make redundancies or reduce working hours, a more immediate requirement to take holiday may be deemed to be “reasonable", depending on the circumstances.

If you do not have a contractual right to require staff to take holiday, you will need to rely, instead, on the statutory notice provisions.  This means that you will need to give staff notice of at least twice the length of the period of leave that you are asking them to take.  For example, if you want your staff to take 5 days' holiday, you will need to give them 10 days' notice.

Please note: if an employee is currently on a period of sick leave, you will not be able to compel them to take their statutory annual leave.

Can I cancel a worker's annual leave?

Possibly. As an employer, you are entitled to require workers not to take statutory annual leave on certain dates. However, where you have already authorised leave to be taken and you unreasonably cancel the leave, this may result in a breach of the implied term of mutual trust and confidence. This could expose you to the risk of constructive unfair dismissal clams.

It is therefore advisable to try to agree this with the employee first.

Do I need to pay staff who are self-isolating?

Those who follow advice to stay at home and who cannot work as a result will be eligible for statutory sick pay (SSP), even if they are not themselves sick.  Online self-isolation notes are now available from the NHS website (https://111.nhs.uk/isolation-note/).

The rules are also being temporarily changed so that SSP is paid from first day of absence (and not from the fourth) and backdated to cover absences from 13 March 2020.  Employers will also be allowed to recover SSP from the Government. Further details of the repayment mechanism is expected in the coming months.

Clearly, workers may not actually be sick when self-isolating so will not automatically be entitled to their contractual sick pay. ACAS has said, however, that it is ‘good practice’ to offer this to employees. 

What are my health and safety obligations towards my employees?

You have a duty to protect the health, safety and welfare of your employees. This includes providing them with a safe working environment, a safe system of work and personal protective equipment.

We recommend that employers carry out a risk assessment to identify any high-risk groups, such as those who work in close proximity to each other, who have high levels of contact with members of the public and who are particularly vulnerable because of underlying health conditions or age.

In particular, you should encourage good hygiene practices within the workplace and allow staff frequent opportunities for handwashing.  Those who can work from home, should be permitted to work from home.

A new employee is due to start next month, can I withdraw the job offer?

If the offer has been made but not yet accepted by the candidate, there is no contract in place and the offer can be withdrawn. 

If an offer has been accepted, and any conditions attaching to that offer have also been satisfied, a contract will be in place.  Withdrawing the offer will constitute a breach of contract, unless notice of termination is given in line with the contract.  

Whether or not you are required to pay notice will depend on when the offer was withdrawn, how much notice the candidate was entitled to under the contract and when they were due to start employment with you.

Please note that this guidance is an overview of the relevant law as at 25 March 2020. What you can do will vary from business to business. Therefore, please contact us for specific advice relating to your circumstances.

Expert
Sheilah Cummins
Senior Associate