|Coronavirus (COVID-19) FAQS|
Disclaimer: These FAQs are intended to provide information and guidance on the HR and employment law implications of the Covid-19 situation. They do not constitute legal advice and should not be relied upon as such.
Lay-off and short-time workingFollowing feedback, we are adding “last updated” information to individual sections when we update them. If a section does not state when it was “last updated”, please assume that it was last updated on 30/03/2020.
1. What if we need to temporarily close our business and send staff home, e.g. because of supply chain disruption, or reduced demand for products or services?
Today’s supply chains are increasingly global in nature and many are therefore vulnerable to potential disruption due to the coronavirus, e.g. if factories are located in countries operating lockdowns and are therefore unable to fulfil orders.
If UK businesses are therefore unable to obtain parts in sufficient volume, they may need to consider closing some of their production facilities or reducing production – not because of the virus itself but because they will not have the parts they need to continue production at normal levels.
In these circumstances, employers may need to consider temporarily laying off their employees, or putting them on short-time working.
Contractual clauses expressly permitting lay-off or short-time working are relatively rare in practice.
Employers that impose a lay-off or short-time working without contractual authority to do so could potentially face claims for unlawful deductions from wages, breach of contract, or even constructive unfair dismissal.
If an employee is already on sick leave when lay off/short-time working begins, whether because they are self-isolating or for another reason, then they cannot be on put on lay off or short time working at the same time.
Employees will understandably be concerned about any temporary closure decision; good communications, which explain the reasons for the business closure and commit to keeping staff updated on a regular basis will therefore be key to reducing anxiety and maintaining good employee relations.
2. What about if public health advice is to close businesses?
However, if the UK goes into a full lockdown similar to those in place in other countries, employers that are then required to close are likely to be able to rely on the Coronavirus Job Retention Scheme to cover at least part of their employees’ pay during such enforced closure (see the section ‘Furlough under the Coronavirus Job Retention Scheme’, above).