COVID-19  •  HR Focus

HR and coronavirus: Employment Trends and Tips

Options open to businesses to manage their staff and salaries include forms of paid and unpaid leave, accessing government support programmes, and in some cases layoffs and redundancies.

Recent weeks have been frantic for HR teams and business leaders who are having to weigh up their options in times of crisis, says Melanie Stancliffe, Employment Partner at the law firm Cripps Pemberton Greenish.

Businesses are assessing their current needs and cash flow, in addition to gaining an understanding of new government pledges and support for employees and workers. Many are facing difficult decisions in relation to their workforce, and scrambling to contain the impact of the outbreak on their businesses.

Absence, sick pay and holiday

Should an employee contract the virus and go off sick, they are eligible for sick pay, with the amount varying between companies. The government has set the statutory minimum at £95/week from day one of self-isolation.

Some companies are obliged to or are deciding to pay more, up to full salaries, for employees who are off sick with coronavirus. These companies may have to rethink their strategies in light of the new guidance around social distancing and staying at home prolonging the time that an employee is off from work.

Many businesses are offering their employees support through an Employee Assistance Programme, an employer funded benefit that offers employees confidential counselling and advice on a wide range of work and personal issues, as remote working, isolation and job security have created stress in the workplace.

Companies may also require employees to take paid leave by using their allotted holiday. While this does not free up cash in the short term, it enables companies to ensure productivity once business returns to normal, when employees might otherwise be on leave. They can also consider a period of unpaid leave, by agreement with employees. This can take different forms, including sabbaticals.

 

Layoff and reducing working hours

In the event that companies are considering making layoffs, it is important to note that the employee contract must allow for that eventuality, and it is advised that the employer trigger the process in writing.

Employees who have been laid off are eligible for a Statutory Guarantee Payment, based on your normal pay, with an upper cap of £29 per day, and a maximum of five days' pay in any three-month period, so it is less favourable than the pay during furlough leave scheme.

Businesses can also consider the reduction of hours or pay of their employees. In these cases, it is important that the contract allows for the employers to do this (or that the employee agrees). Many UK contracts stipulate that ‘reasonable change’ can be made to employment – and some employers may use this clause to pursue these options. If the contract does not allow for reductions, it may be possible to inform and consult with employees to effect the change in their employment circumstances by mutual agreement.

 

Furlough & redundancy

The UK Government has introduced a new ‘furlough’ scheme, whereby businesses can claim a grant covering 80 percent of the wages for a furloughed employee, subject to a cap of £2,500 a month plus the employer’s National Insurance and pension contributions on that 80 per cent. The scheme covers a three-month period from 1 March to 1 June, which may be extended.  Employers can apply it retrospectively to staff already laid off or made redundant.

The scheme can include full- and part-time employees, those on agency, flexible or zero-hour contracts. One potential downside is the slight delay - the money is only recoupable from the HMRC portal being set up, meaning that businesses have to payroll the cash up-front and recoup them in June.

It is always a sad result when businesses have to make redundancies. In these instances, they need to be fair and reasonable, and consult with their employees.

Redundancy also incurs upfront costs. Employees with more than two years at the company are entitled to redundancy pay, notice pay and payment of the holiday they have accrued and not used. They may also be entitled to more depending on their package.

Appropriate reasons for redundancy include ‘reduced need or business closure,’ and it is advised that businesses observe a fair and open process with employees entering redundancy.

 

Self-employed

The UK Government has recently introduced a support package for those self-employed, with similar payments to furlough. The scheme will allow you to claim a taxable grant worth 80 percent of your trading profits up to a maximum of £2,500 per month for the next 3 months, and to keep working.

The government has also said that this may be extended if needed. To qualify you must be self-employed or a member of a partnership and have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19.

 

Melanie Stancliffe, Employment Partner, Cripps Pemberton Greenish, presented portions of this material to a French Chamber Webinar, ‘The Impact of COVID-19 on employees’ on 25 March. She is also co-Chair of Chamber’s Human Resources Forum.

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