Responding to employment challenges posed by coronavirus

Published on
4 min read

The escalating Government response to control the spread of coronavirus has left most businesses with enormous challenges. What legal tools are available to make the necessary adjustments to the way their workforce is deployed?

Lay-off and short time

You may want to consider providing some of your employees with no work and no pay, or reduced work and reduced pay, on a temporary basis while retaining them as employees.  This is only possible where there is an express term or implied term (by custom) in your employees’ contracts allowing for this.

If there is no term allowing for this, this can be done with the employee’s agreement, or without agreement but acting in breach of contract (at risk of claims for constructive unfair dismissal, unlawful deduction of wages or damages for breach of contract).

This area of the law (a complicated system of guarantee payments and redundancy notices and counter notices) has been transformed by the Government’s launch of the Coronavirus Job Retention Scheme on 20 March for UK based businesses. Full details are awaited, but the scheme will pay 80% of employees’ wage costs (up to a maximum of £2500 per month) for a minimum of three months, where workers have been laid off since the start of March.  Agreement with staff (or recognised trade unions) will be required, but this is likely to be an attractive option both for businesses and their employees during the current crisis.

Variation of terms

Another option to consider is consulting with employees / trade unions to agree a temporary reduction of pay, hours or benefits (including to enhanced sick pay), or to agree lay-off/short time working arrangements where not contractually entitled.  Variation of terms may also be necessary when seeking to re-deploy staff where they are needed most.

Although this is something employees might not usually agree to, they may do in the current exceptional circumstances if the alternative is wide-scale redundancy or permanent closure/insolvency. This may be a practical first step before jumping to redundancy consultation.

This could require collective consultation (if affecting 20 or more employees in any one establishment) of either 30-45 days (depending on the numbers affected), which would practically be difficult given the prohibition on mass meetings and where staff are unable to work from home.  Some creative solutions may be required to ensure compliance at least with the substance of the legislation, and, in exceptional circumstances, it may be possible to rely on the “special circumstances” defence in relation to at least some of the detailed formal requirements.

Notice requiring employees to take statutory annual leave

You are entitled to require your employees to take their annual leave on specified dates (unless your employees’ contracts of employment restrict you from doing this).  This option would need to be handled carefully, transparently and on an equal basis to avoid discrimination or breach of trust and confidence.

Asking for volunteers for unpaid leave or redundancy

You could ask for volunteers to take voluntary unpaid leave or redundancy.  This would need to be offered transparently, on an equal basis and without undue pressure to avoid discrimination or breach of contract.  This may also result in the loss of key staff and extra cost if there is an attractive enhanced redundancy scheme in place.

Redundancy consultation

The usual rules regarding process apply (including collective consultation obligations, as above), and you would need to consider how to conduct this remotely.  Further, the cost of making staff redundant will mean the cost savings are only achieved in the longer term.  You will also have lost staff who may be needed once the crisis passes.

Reducing non-employee headcount

Employers could explore options for terminating arrangements for indirect labour such as agency workers/contractors where there is no risk of an unfair dismissal or redundancy claim (since they are not employees).  However be aware that discrimination claims from such workers remain possible.

Securing Government assistance

A package of assistance for affected business has been announced and should be available in the week commencing 23 March.  Employers would be expected take the availability of these measures into account when considering steps to impose variations to contractual terms or declaring redundancies, as well as the availability of the Coronavirus Job Retention Scheme.

The implications of the latest stay at home guidance

Under tighter restrictions announced by the Prime Minister on 23 March, some types of business have been told to close completely.  If your business is not one of those, then staff can still travel to come to work where this “absolutely cannot be done” from home. 

This new guidance adds that social distancing rules (ie all employees must be at least two metres apart from each other) must be applied in the workplace setting.  Earlier guidance explains the other steps that employers must take to safeguard their staff from the virus (see for example here).


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