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Temporary Workplace Closures
Earlier in December we wrote a blog (http://www.ukqcs.co.uk/adverse-weather-faqs/) giving guidance to employers on some of the HR issues which can arise from adverse weather conditions following some severe floods earlier that month.
Unfortunately the Christmas period saw further significant flooding across Lancashire, Yorkshire, Cumbria and Scotland with serious damage and devastation to family homes, communities and businesses.
Many businesses, across all sectors, have been affected. Indeed, we saw news of elderly residents of a care home in Cumbria being evacuated on lifeboats after becoming trapped within the home due to flooding.
The reality is that there is no quick fix either as flooding damage can take months to sort out in terms of drainage, dehumidifying, restoration, re-decoration and so on.
We have had a number of client’s already seeking advice on the HR/Employment issues arising from their business being flooded and the need to close the business for a temporary period.
Inevitably many businesses will be insured (but not all) and whilst it maybe possible to claim back the costs, including any lost income, arising from the flooding, there will inevitably be an immediate impact on cash flow with no income coming in, a lot of expense going out and staff still expecting to get paid even if you can provide them with work.
Legally, staff are entitled to be paid if they are ready and willing to attend work pursuant to their employment contract even if the employer is unable to provide work, whether due to a down turn in work or as a result of a natural event like flooding or even a fire at the workplace.
So what HR options are available to employers who need to cut the wage bill as a temporary measure until the business is back up and running?
- Lay offs and short time working;
- Reduction of hours of those employed under Zero hour contracts;
- Mutually agree a reduction in hours for those on fixed hour contracts;
- Give notice to exercise holiday leave;
Lay Offs/Short Time Working
Without getting to technical, it maybe possible to lay some or all of your employees off having regard to the needs of the business whilst it deals with the aftermath of any event resulting in a temporary workplace closure. Remember you may want to retain some staff to help with clearing up etc.
A lay off is where you send the employee home and do not provide any work to them with the result that they are denied the opportunity to earn their normal wages. Short time working is where there is a reduction in the work provided by the employer such that the normal pay for any week is less than half a weeks normal pay.
To implement lay offs or short time working, it is essential you have a contractual right to do so or that you mutually agree this with an employee. We would recommend all employers to ensure that their employment contracts allow them the express right to lay an employee off or place them on short time working.
If no such contractual right exists, a unilateral decision to lay off/place on short time working would be a breach of contract and could give rise to claims for constructive dismissal, unlawful deduction of wages claim and breach of contract.
Where an employee is laid off or placed on short time working they would be eligible to receive a statutory guarantee payment (currently payable at a rate of £26.00 for each workless day, for a maximum of 5 days).
Beware, where a lay off or period of short time working lasts for 4 consecutive weeks or an aggregate of 6 weeks in a 13 week period then the employee would gain the right to give notice of his intention to claim a redundancy payment.
Any employer considering lay offs or short time working should take advice before exercising their contractual right to do so.
Zero Hour Contracts
In the care sector there are a lot of staff who work under zero hour contracts across a number of different providers. When considering how to reduce your wage bill for a temporary period consider whether any of your staff are on zero hour contracts such that there is no obligation to provide work in any one week.
A note of caution here is to ensure that where you choose not to provide any work under a zero hours contract, you are doing so in circumstances where the contract is genuinely a zero hours contract and not one that has, over a period of time, morphed into implied contract to give a set number of hours per week i.e. someone who has been engaged by you for the past 2 years and has consistently, week in week out, been provided within a minimum number of hours.
Agree a reduction in working hours
If you don’t have the contractual right to lay off, you could agree with staff to vary their working hours on a temporary basis to help reduce the wage bill. Key here would be obtaining their agreement, without undue pressure or influence.
Many employers forget that they can give notice to employees to take their statutory holiday leave at specified times. The Working Time Regulations 1998 allow employers to serve notice on an employee requiring them to take leave at a specified time by giving twice as many days notice in advance of the start of intended leave as the number of days leave to which the notice relates i.e. 2 weeks leave would require 4 week notice.
This should be the last consideration, assuming you want to retain your staff wherever possible and have every intention to be back up and running ASAP. In short you would be bringing their employment to an end on the basis of a workplace closure expected to be more than 4 consecutive weeks. A proper process should be followed and advice taken.
The best advice we can give is not to make any hasty decisions. Take advice, explore all the options provided, liaise with your insurers and identify what labour needs to be retained to deal with the clear up/provide limited ongoing services etc. Only then can you make a decision which achieves your objectives.
Oliver McCann, Employment Partner, Napthens LLP – QCS Expert Employment Law Contributor