Workforce Planning - FAQs for Charities Impacted by Coronavirus
In these FAQs, we address some of the difficult employment issues that may arise for charities and their staff in relation to workforce planning.
- What are the other options if measures put in place to slow the spread of the coronavirus lead to a shortage of work for our staff?
- What does lay-off mean?
- What does short-time working mean?
- Can all employers lay-off or place their employees on short-time working?
- What if there is no express or implied contractual right to lay off charity workers or reduce their hours?
- How long can an employee be laid off or placed on short-time working?
- Do employees have the right to receive any payments during lay-off and short time working?
- Can I ask staff to take holiday?
- What are the long term options if there is a sustained reduction in the work or we are forced to suspend some of the charity's activities indefinitely?
- What can the charity do if we have made an offer of employment to a new starter but there is now no work to provide to them, can the offer be withdrawn?
What are the other options if measures put in place to slow the spread of the coronavirus lead to a shortage of work for our staff?
In addition to the Job Retention Scheme, charities have a number of other options available to them in terms of managing work shortages. These options include agreeing with staff to work fewer hours, laying-off employees temporarily, placing employees on short-time working arrangements or asking them to use accrued holiday while there is a shortage of work.
What does lay-off mean?
When an employee is 'laid off', they are not provided with work or pay. Their employment relationship with the charity continues and their rights and length of service continue to accrue. Like the Job Retention Scheme, lay-off is intended to preserve the employment relationship where there is a temporary and short term shortage of work. However, if it lasts for a prolonged period, the employee is entitled to assert that they are, in fact, redundant and claim then a statutory redundancy payment.
With the announcement of the Job Retention Scheme, we would assume that employers are more likely to 'furlough' their employees than utilise a contractual clause to lay them off without pay.
What does short-time working mean?
Short-time working is where a charity provides an employee with less work and less pay than usual and due to the reduction in work, the employee's remuneration for the week falls below half their usual pay. Where hours are reduced but remain above half of the employee's normal working hours, this is not classed as short time working and is instead a temporary variation to their work pattern and pay.
A week for the purposes of short-time working is in the case of a weekly-paid employee, the seven days ending on the day to which their pay is normally calculated and in the case of all other employees, the seven days from Sunday to Saturday. The calculation date for the purposes of a week's pay is the day before the first day of the lay-off or short-time working.
Short-time working is inconsistent with the Job Retention Scheme which requires the employee not to be undertaking any work at all.
Can all employers lay-off or place their employees on short-time working?
This depends. Some employers reserve an express right to do so in their employment contracts. In this situation, the employee can be placed on lay-off or short-time working in accordance with the terms and conditions of their contract and the statutory provisions.
For employers who operate in sectors where temporary work shortages can be common place such as construction or hospitality, they may have an implied right to lay off or place staff on short-time working through custom and practice. However, for most charities it is unlikely that an established custom and practice in relation to lay off and short term working exists. Consultation to agree a reduction in hours and pay is likely to be more applicable in a charity context.
What if there is no express or implied contractual right to lay off charity workers or reduce their hours?
Unless employees agree, there will be a breach of contract where an employer lays off an employee, reduces their hours or rate of pay or puts them on short-time working when they do not have an express or implied contractual right to do so. This may entitle employees to either:
- Seek damages for breach of contract or make a claim for the unlawful deduction of wages; or
- Claim that the charity's action amounted to a constructive dismissal, giving rise to potential claims for unfair dismissal and/or redundancy pay.
To reduce the likelihood of such claims, employers should consult with staff with a view to obtaining their consent to vary their terms of conditions of employment to expressly allow for lay off, short time working or reduced hours. Employees should be advised that they are being asked to agree to these changes as an extraordinary measure to preserve the employment relationship and delay or hopefully avoid compulsory redundancies as a consequence of the temporary cessation of work due the recommended measures to manage the transmission of the Coronavirus.
How long can an employee be laid off or placed on short-time working?
Unless there is an express clause in the employee's employment contract, there is no limitation on the amount of time that an employee can be laid off or placed on short-time working. However, after a prescribed period has lapsed, employees may be entitled to make a claim for statutory redundancy.
The prescribed period for an employee to become eligible to make a claim for statutory redundancy is at least:
- four or more consecutive weeks; or
- a total of six weeks (of which no more than three are consecutive) in any period of 13 weeks,
during which time the employee was laid off or kept on short-time working (or a combination of both).
The usual rules for employees to qualify for statutory redundancy payments continue to apply i.e. the employee must have two or more years' continuous service.
Please note however, where there is no genuine prospect of an increase in work and an employee is kept on lay-off or short-time working so that their employer can avoid making a statutory redundancy payment, that employee may have a right to claim that this is a breach of the implied term of mutual trust and confidence and could pursue a constructive unfair dismissal claim.
Do employees have the right to receive any payments during lay-off and short time working?
Employees may be entitled to claim for a statutory guarantee payment (SGP) from the charity during periods of lay off or short time working when they have not been provided with work. SGP is not payable where an agreement has been reached to reduce the employees hours of work but they have not dropped below 50% of their normal weekly hours.
Full time employees can make a claim for SGP for up to 5 workless days in any three month period. This is pro-rated for part-time employees who work less than a 5 day week. A "workless day" is any day that the employee would normally work under their employment contract but is unable to do so because the employer does not provide work.
SGP is calculated based on the employee's normal daily working hours and must be paid up to a statutory daily cap of £29 a day or £145 in any three months. The rates are low and as such SGP may not be of much comfort to employees. The rate does go up in April each year but in recent years has only increased by £1 per workless day per year.
An employee will be eligible for a SGP if they i) have at least one month's continuous employment with their employer, ii) by virtue of the current pandemic, the workless day is not due to industrial action, iii) they have not unreasonably refused an offer of alternative work and iv) they comply with the reasonable requirements imposed by their employer.
Alternatively, some charities may have their own guarantee pay scheme which applies in place of the statutory scheme. Such schemes cannot be less than the statutory amounts.
If employers do not pay SGP to eligible staff, this would amount to an unlawful deduction of wages and employees would be entitled to make a claim against their employer.
Can I ask staff to take holiday?
It may be sensible for charities to encourage its workers to use up any accrued but untaken holiday during periods where there is less work or the charity is forced to suspend its activities. Under reg. 15 of the Working Time Regulations 1988, a charity does have the right to require staff to take their statutory holiday, if an agreement cannot be reached.
The charity must ensure that it informs staff at least twice as many days before the intended holiday as the amount of days' holiday it requires staff to take i.e. if staff need to take 3 days holiday, they should be notified 6 days in advance of this.
Best practice is to have clear communications with staff about why they need to use their holiday instead of coming into work and seek to resolve any concerns about how it will affect further holiday entitlement or plans.
Although the information about the Job Retention Scheme released to date does not specifically refer to holiday, it is likely to continue to accrue during period of furlough. If this is the case, the charity may wish to encourage furloughed employees to use some of their holiday entitlement during their furlough to avoid a large number of staff all seeking to take accrued holiday at the end of the year which could prove costly and disruptive.
What are the long term options if there is a sustained reduction in the work or we are forced to suspend some of the charity's activities indefinitely?
Many employers could be impacted in the medium to long term by the economic implications of the coronavirus such as supply chain disruptions, site closures and reduced customer footfall/orders. If there is a sustained reduction in the work available for staff rather than just a temporary dip, employers may have no other option but to consider redundancies. This is the case for charities too.
Initially the preference may be to carry out a process of non-compulsory redundancies where the charity can ask employees if they would like to volunteer for redundancy or take early retirement. In such circumstances it is important to have a fair and transparent selection process and tell employees that they will not automatically be selected just because they applied. The offer of both voluntary redundancy and early retirement must be made across the whole workforce, employers cannot single out specific individuals as this could lead to discrimination claims.
If compulsory redundancies are still necessary, the charity must follow a fair consultation and selection process. They must identify which employees will be made redundant by scoring the pool staff who are at risk against objective and relevant selection criteria. Scoring must be consistent and without discrimination. If an employer is likely to make 20 or more redundancy at one site, they must ensure that they comply with the collective consultation requirements which include engaging in consultation with recognised trade unions or employee representatives, ensuring that there is moratorium on any dismissals during the prescribed consultation period and notifying the Secretary of State. Failure to follow the collective consultation requirements could result in the employer being required to pay up to 13 weeks' pay in compensation for each employee.
It is important to note that if an employee is unfairly selected for redundancy as a result of asserting their right to statutory parental leave for example to look after children where schools have closed due to COVID-19, the employee will be entitled to make a claim of unfair dismissal.
What can the charity do if we have made an offer of employment to a new starter but there is now no work to provide to them, can the offer be withdrawn?
If the job offer is dependent on references or other checks, it is a conditional job offer and can be withdrawn if such conditions are not met. Where a job offer is not conditional, a binding contract is formed once the offer is accepted.
The correct legal position is that the contract should properly be terminated by giving notice or payment in lieu of notice. Retracting the offer without properly terminating any contract could give rise to a claim for breach of contract by the employee. The prospects of success of a claim depend on whether the employee has already resigned from existing employment and has suffered any loss. If there are no losses, they cannot recover any compensation. If the offer has been made but not accepted, there is no binding contract and the offer can be retracted. In either case there are of course reputational issues if potential employees feel they have been poorly treated.
If employers wish to defer the start dates of employment then the same principle applies. If there is a binding contract with an agreed start date, then employers can only defer this this with the agreement of the employee. If the offer has not yet been accepted, employers could revise the offer by changing the start date and the employee can then choose to accept or reject the revised offer.