My business have been disrupted and I may need to lay off employees – can I do this?
You will only be able to do this is there is an express right to do so in the employees employment contract allowing for the right to be laid off without pay. If it is not in the contract or agreed otherwise then you will need to pay employees for this time, which would defeat the object. In our experience not many businesses will have lay-off provisions in their contracts, in which case most will be reliant on so-called “furlough leave” (which is also likely more attractive to employees too). Beware forcibly laying off employees on no or reduced pay without a contractual right or express agreement to do so and it would likely be a fundamental breach of contract, meaning that the employee could sue for unpaid wages or resign and claim constructive dismissal.
On 20 March 2020 the government announced the creation of the Coronavirus Job Retention Scheme. This allows employers to “furlough” their employees as an alternative to making them redundant. They can then apply to HMRC for a grant of up 80% of the wages of each “furloughed” employee up to a maximum of £2,500 per month. If your employee’s employment contract does not include a provision for this then you will require their consent to be “furloughed”. This is hoped to be up and running by the end of April 2020 and will be backdated to 1 March 2020. We don’t yet have all the details on this scheme, including how it applies to those who have already been made redundant.
Employers are being urged to contact HMRC to explore this option as an alternative to making any redundancies.
All arrangements with staff must be clearly communicated and documented to help ensure that businesses don’t inadvertently commit to or assume liability for costs/payments above and beyond those covered by the government.
Other alternatives which business may want to consider is temporarily agreeing changes in duties, if there is particular work which needs to be done. Employers and employees can also agree that employees are able to take on alternative outside work to supplement their income.