While there is no doubt that we are in uncharted waters, and I understand the sentiments of Chancellor Rishi Sunak, who in his statement on 17 March announced: “We have never in peacetime faced an economic fight like this one”, I am imploring clients to follow the advice from the infamous quotation from Lance Corporal Jones “Don’t Panic Mr Mainwaring.”
The Government has pledged £330bn to help support businesses and will provide access to loans and business rates holidays. Furthermore, Mr Sunak has specified that if these pledges are not sufficient, further funding will be made available and additional measures will be introduced. The Government is going to do everything it reasonably can to support businesses, but there are steps that business owners can take now to try and steady the ship.
The priority of course is to stymie the spread of the virus and there is plenty of advice on Government websites including ACAS in respect of self-isolation, sick pay and the consequences of the various scenarios faced by employers. Working from home is an obvious solution where appropriate, but this can create its own difficulties with business owners having to consider the contractual position/right to request staff to work at home (not a big concern in my book given the situation we are facing), the health and safety of staff working from home, and any equipment or technological issues. However, numerous businesses are not in a position for their staff to work from home and may therefore be forced to look at reducing costs to ensure their business survives and that as many employees continue to be paid as possible.
Making staff redundant or reducing their pay or hours are not decisions to be taken lightly. Many of us are hoping that our businesses can survive without staff being detrimentally affected, and that once we are through the worst of it, we will need strong and committed workforces to help our businesses regain the momentum most were experiencing prior to the outbreak of Covid-19. Indeed, only last week, most business were operating as normal and their biggest concern was recruiting enough skilled staff to meet the needs of their customers.
If having weighed up all of the factors you decide that you have no choice but to reduce staffing numbers or costs, you do have options. The first and most obvious is to talk to your staff! If your staff are willing to agree to a temporary pay cut, reduction in hours or voluntary redundancy then the risk of fall out is extremely low, and you have the best chance of maintaining a committed workforce. If you have “lay off” and/or “short time” provisions in your staff contracts of employment, then you are likely to have a contractual right to lay your staff off for a temporary period, and/or reduce their working hours for a number of weeks. For the avoidance of doubt, if there are no such provisions in the contracts of employment, then to impose such arrangements, without the employees’ consent, will be a breach of contract, so tread carefully.
In the absence of agreement or lay off clauses, there are other options including imposing variations such as four-day weeks. However, it is unadvisable to implement such arrangements without first taking legal advice – imposing a detrimental change without following the correct procedure may well result in employees resigning and/or pursuing claims against your business, which is the last thing most business owners need right now!
While finally, if you are proposing to vary the contracts of and/or make 20 or more employees redundant in a 90 day period, then you will have additional obligations to include a requirement to notify the Secretary of State (failure to do so being a criminal offence) and consult for at least 30 days prior to any dismissals taking effect.
This all sounds very doom and gloom, but it doesn’t need to be; don’t panic, seek advice and speak to your staff. If you follow these three steps there is every chance your business will not only survive but emerge stronger. Here at Wolferstans we have a specialist team who can guide you through these murky waters, and we have already advised on each of the situations described in the article above over the past two days. Businesses are moving fast, make sure you give your business the best possible chance by having the information and knowledge to make the right decisions for your business.
Partner, Solicitor, Head of Business Services