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Coronavirus 1 - Reducing Your Wage Bill

(Written 20th March 2020)

On Tuesday 17th March, I interviewed Ken Allison a well known HR expert in person in relation to Coronavirus and "what do I do with my staff?” Ken provides no nonsense answers to help the business owner.

This is the brief synopsis to a variety of questions: If you are really interested I can send you the five short videos.

Needless to say I’m not a qualified HR expert, so please do get professional advice, but this may help. You should also note that Boris is changing things hourly.

Laying Off

A Lay Off clause is an unusual provision, usually just in construction and manufacturing.  Allows you to manage and lay workers off without redundancy on a lowered wage, approx. £120 per week.  The employer takes the hit.  The employee has the right to ask for redundancy after 4 weeks.  It needs to be written in, otherwise breach of contract. 

Cutting Salaries (Salary Sacrifice Arrangement)

Under normal circumstances, cutting salary is a breach of contract.  However, most people will understand and be flexible in these times.  Invite people to agree to a salary cut – if 80% or so agree then you can impose after a “reasonable” procedure.  If a staff member doesn’t agree and decides to leave they could reserve their position under constructive dismissal.  If it goes to a tribunal it will take 6 months at least.  Another option is to fire and reinstate under a new contract.  If you are thinking of doing this, take specialist advice.

Redundancy

Follow the process:

- If over 2 years’ service, have to do so reasonably with a period of consultation offering alternatives and to choose in a fair and objective way.

- If under 2 years’ service, no need for any process.

A lot of cash can go out of the business if redundancy is paid – if this forces the company to go bust, redundancy from the state is very low.

Employee needs to stay at home to look after vulnerable dependent

Businesses have no legal obligation to someone not turning up for work, particularly when less than 1 year’s service.  Could terminate.  If over 2 years it’s different, the employer has to be “reasonable” – which in current circumstances could include being more flexible.

Talk!  The employee could take annual leave, parental leave and the employer could compromise on pay.  Remember, other staff will be looking to see how you behave and treat their colleagues.

What if an at-risk person presents for work?

This is difficult, but the employer is legally obliged to pay if preventing someone from working. 

What is the entitlement to someone in self-isolation?

Before this week, employees were entitled to SSP (approx. £74 per week), if recommended to stay off work by their GP or 111.  From now, this has been extended to cover employees showing the symptoms of CV19.   Employees are entitled to contractual sick pay if they are unfit for work, but this may be unsustainable currently.  If you pay, state it is “for the moment” so you are able to roll back if necessary.  Get into a dialogue with your employee – can they work from home, take holiday etc.?

The word “reasonable” is used a lot in employment law.  What is reasonable under current circumstances is almost certainly a different reasonable to last month.

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