How can I retain my employees during the coronavirus outbreak?

Harrison Drury’s employment and HR team, details some practical steps employers may look to take to address a changing workplace during the current coronavirus COVID-19 outbreak.

Article last updated March 25

The current coronavirus outbreak has launched businesses into unprecedented times. Employers are grappling with the situation and are forced to focus their attentions to business resilience and protection. The outbreak and subsequent downturn in productivity for many businesses is driving employers to make difficult decisions in order to save its workforce.

This article highlights some of the potential options available to manage the workforce under these conditions. To some extent the actions an employer should take will depend upon the nature of the workplace, the sector they work in, each employees’ role and ability to work from home, as well as workforce demographics.

The government’s recent announcements have somewhat changed this approach. On Friday March 20, a Coronavirus Job Retention Scheme (CJRS) was announced to reassure a lot of employers about retaining, and more importantly being able to pay, their staff during these difficult times.

Temporary solutions

For employers experiencing a drastic reduction in workload, no work at all, or have been forced to close due to the government ‘lock-down’, there are several temporary solutions.

The main solution which has emerged during this crisis is the use of the government CJRS scheme. This scheme has been designed to retain jobs and avoid people being made redundant or laid off.

If CJRS is not appropriate or suitable in your situation, it may be necessary to look at other options that may be available to you, such as lay-off and short-time working.

Laying off employees means that the employer provides employees with no work and no pay for a period, while still retaining them as employees.

This option can be beneficial if there is a downturn in work resulting in fewer employees required, on a temporary basis, to fulfil requirements. It is also suitable for the temporary closure of the workplace due to insufficient employees being able, or available, to work.

This concept is incredibly similar to furloughing an employee under CJRS but the employee is not paid, as opposed to receiving some pay as a furloughed employee.

Short-time working means providing employees with less work (and less pay) for a period while retaining them as employees.

This option is more applicable for contracted employees during a downturn in work, which means the business does not need all employees to work their contracted hours.

Before implementing either of these options, the employer needs to ensure that they have the contractual right to apply these strategies. If the employer does not, then it will be in fundamental breach of contract entitling the employee to resign and claim constructive dismissal.

It is also important to note that employees who are already unable to work, for example, due to sickness or medically advised self-isolation, cannot be laid-off.

Agreeing a change of terms of employment

If there is no contractual right to impose a period of short-time working or lay-off or if furloughing your employees under the CJRS is not appropriate as you still require some work to be done by your staff then it may be more appropriate to look to agree temporary contractual changes with employees. Possible changes that could be made include a reduction in hours and pay.

Unless there is a clear right in the contract allowing an employer to make valid changes to terms and conditions unilaterally, imposition of new terms would constitute a unilateral variation, potentially giving rise to claims for constructive dismissal.

In light of this, the best way to achieve a valid change to terms and conditions would be to agree the changes with employees. Any agreement should be recorded in writing.

Although employees may not be keen to agree to a reduction in pay or hours, they may see this being the lesser of two evils, when compared with potential permanent job losses.

Making a more permanent decision

In the extreme circumstances where a business has no option other than to look at reducing staff numbers on a more permanent basis, redundancy may be the only option to resolve the situation.
Again, it is worth mentioning that the government support and schemes, such as the CJRS and Business Interruption Loans – as detailed in our earlier blog are designed to avoid the need for redundancies and therefore these schemes should be seriously considered as part of any redundancy process.

There are still several approaches that can be made to support employees during this process.

With compulsory redundancy, workers are entitled to statutory redundancy pay if they have been at their employer for over two years, together with their notice pay and accrued holidays.

It is also worth employers considering whether they are contractually bound by any enhanced redundancy payment liability, as this could be expensive at a time when the business is trying to save costs.

It is important to note that employers must follow the correct procedures when making any employee redundant, otherwise, this could lead to claims of unfair dismissal or discrimination.

Before the consultation process begins for compulsory redundancy, an employer could consider asking for volunteers for redundancy. There is no obligation on an employer to do so, but it may be sensible in order to minimise the effect on morale of compulsory redundancies. An enhancement to the statutory package could be offered, in order to make this option more appealing.

However, in difficult financial times this may not be feasible.

The emerging landscape for business

The UK government is releasing daily updates regarding coronavirus and its guidance to protect people and support businesses, therefore its current directives may change.

To seek further guidance and advice about changes to your workforce due to coronavirus, or for general enquiries regarding employment law, please contact the team on 01772 258321.