Alternatives to the Coronavirus Job Retention Scheme

Alternatives to the Coronavirus Job Retention Scheme

The Government’s recently launched Coronavirus Job Retention Scheme has been described as an “unprecedented” step to help employers subsidise their staff’s wages.

Covering up to 80 per cent of an employee’s wage costs, capped at £2,500, the scheme is due to go live imminently – with the first payments being made by the end of April.

However, as the Government’s guidance makes clear the Scheme is only available where an employee is not working.

There may also be other reasons why employers and workers are either unable or unwilling to use the Scheme, so it is important that they consider alternative options.

Options available to businesses as an alternative to furloughing employees can be categorised as follows:

Seek agreement from affected staff to reduce pay/ hours/ take unpaid leave

  • Seek agreement to a temporary reduction in:
  • Salary
  • the number of days/hours that they work
  • Seek an agreement to a temporary period of unpaid leave.

In essence these are all fundamental changes to an employee’s terms and conditions of employment.

Such drastic changes to terms and conditions of employment will therefore need to be negotiated and agreed with the affected employees on a one to one basis. Any such agreement should be confirmed in writing by a letter of variation to their contract.

This could be negotiated on the basis that it’s an alternative to redundancy. With the Coronavirus job retention scheme now open to employers though this may not be as an attractive an argument for an employer to try to put forward.

Be warned also that trying to unilaterally impose such significant changes to terms and conditions risks those employees with over two years’ service resigning and bringing a claim for unfair dismissal exposing an employer to financial liability.

An award for unfair dismissal comprises of a basic award, calculated in the same way as statutory redundancy entitlement, together with compensation for loss of earnings of up to one year’s salary capped at a maximum of £88,519 from 6 April.

Unilaterally trying to change an employee’s terms and conditions also exposes an employer to claims of breach of contract and unlawful deduction of wages.

In circumstances where the employee will not agree to such a fundamental change to their working arrangements the alternative route available to an employer is to terminate the targeted employee’s existing contract on notice and offer them a new contract with the reduced contractual entitlements.

Be warned against this though, as it is a high-risk strategy that also exposes an employer to a claim of unfair dismissal in the case of those employees with over two years’ service where they are unwilling to accept the new contract.

Whilst the loss of earnings element of any award will be reduced, being made of the pay differential between the respective salaries, as the employee is under a duty to mitigate their losses, such a route still needs to be handled very carefully.

With regard to employees with less than two years’ service the position is more straightforward. These can be dealt with by terminating their current contract on notice and offering them a new one on the reduced terms without the risk of a claim for unfair dismissal.

That gives an employer more flexibility and agility in terms of this category of workers.

Temporary suspension or withdrawal of bonus schemes

This is another option that would potentially be worth exploring for employers to save costs.

It is worth noting that these performance related schemes cannot be claimed for under the Job Retention Scheme anyway, so even those using the Government’s help should consider withdrawing them.

Where the outline of performance related pay is included within an employee’s contract, you may need to seek a variation to these clauses.

Encourage staff to take annual leave

An employer could encourage staff to take annual leave if the business is struggling.

An employer ought to expressly reserve the right to ask staff to take holiday at a specific time in its contracts.

Under statutory rules the position is it is obliged to provide notice of at least twice the amount of time as the leave you want them to take.

Temporary layoff/ short term working

Employers can temporarily lay off staff, but unless they have specific layoff clauses in their contracts, employees need to be paid their full wages during this time.

Employers with layoff clauses in their contracts would only need to be paid the statutory guarantee pay – currently £29 a day for five days (limited to a maximum of £145 within any three-month period), increasing to £30 a day from 6 April.

The statutory right to temporarily lay off staff is only available if there is a contractual right in the contract of employment.

This is not a common clause seen written into contracts of employment (it may be in future!) so not a route available to many employers.

Offer unpaid sabbaticals

An employer could ask staff to take up the offer of an unpaid sabbatical of a couple of months. They would need to agree this.

Frankly though it’s not a very attractive option to put to staff given the Coronavirus Job Retention Scheme is now available.

Postponing new starters or withdrawing job offers

Regarding new joiners, employers may have to consider postponing their recruitment.

In terms of any job offers already made and accepted, any withdrawal may give rise to a claim of breach of contract to the extent of the relevant individual’s notice entitlement.

Making staff redundant

This should only be seen as a last resort for employers given the alternative options available as outlined above.

Redundancy in essence involves the loss of a job or at the very least a significant reduction in work.

In the event that an employer did decide they wanted to go down this route then good grounds would need to be established for making redundancies and proper procedures followed (involving giving waring of potential redundancy, followed by consultation and then notice) to avoid claims of unfair dismissal for staff with over two years’ salary.

Making staff redundant with over two years’ salary takes time – typically consultation would take at least a couple of weeks and then notice of up to 30 days needs to be given.

Employees with over two years’ service have an entitlement to statutory redundancy pay. This can be calculated by clicking here.

For staff with less than two years’ service they do not have unfair dismissal rights and can simply be terminated on notice. There is no entitlement to statutory redundancy entitlement.

The Coronavirus Job Retention Scheme is specifically intended to avoid businesses in every sector, including the law, going down this route.

Holiday rules relaxed to allow annual leave to be carried over to next two years

Holiday rules relaxed to allow annual leave to be carried over to next two years

The Government has announced that existing rules around annual leave will be relaxed to allow workers who have not used their statutory annual leave entitlement this year due to COVID-19 to carry it over into the next two years.

Most full-time British workers are entitled to 28 days holiday each year, including bank holidays.

However, unless allowed for within an individual’s existing work contract or an employer’s workplace policies, this entitlement cannot normally be carried between leave years (the 12-month period during which holiday time is recorded), which means that a worker can lose their paid holiday time if they do not use it.

Employers are required by law to try and ensure their workers take their statutory entitlement in any one year, with penalties issued against those who fail to do so.

The new measure introduced by the Government will allow workers to carry up to four weeks of unused leave into the next two leave years, thus reducing the chance of an employer being penalised and freeing up the time for employees in key sectors.

It is hoped that this change will allow staff to continue working as part of a national effort against the Coronavirus without them losing out on missed holiday.

The changes amend the existing Working Time Regulations that apply to almost all workers, including agency workers, those who work irregular hours, and workers on zero-hours contracts.

Despite the change, there remains an obligation on an employer to ensure that their workers have an adequate opportunity to take their holiday.

This holiday cannot be replaced with a payment in lieu unless the worker is leaving their employment.

Here to Help

This is one of several key changes made to employment regulations as a result of the Coronavirus pandemic. If you are struggling to manage these changes or would like assistance with your employment matters during this challenging period, please contact us

Leap year and the impact on employment

Leap year and the impact on employment

As the world gets ready to mark a leap year, it is worth considering the potential impact that it may have on pay and your holiday entitlement.

Typically, most people have 253 working weekday days each year, but the edition of the 29th February (despite it falling on the weekend), means that this average is now 254 working weekdays.

For most this will mean an additional day’s work with no reward, but for some, it could mean additional pay and more holiday time.

Salaried Workers

For most of those working full time on an annual salary, they will not receive any additional pay for their extra day of work, as it will have already been factored into your salary.

This is because monthly pay is calculated as a twelfth of an individual’s pay packet, regardless of the number of days in each month. Those working pro-rate part-time for an annual salary will also not receive any additional pay.

The only exception to this rule is if your contract has a specific clause about extra pay on leap years, in which case you receive pay for the additional day you work.

Those on a very low salary should check whether the additional day tips them below the national minimum wage, as they may need to notify their employer if this is the case, as they would otherwise be underpaying and could be subject to a fine.

Hourly/Weekly Paid Workers 

Those paid by the hour or by the day can be asked to work the extra time, but they must be paid for it.

Unfortunately, if you are paid on a weekly rate then you only get paid for each full week you complete, meaning the extra day won’t mean more pay.

Shift workers or those on a zero-hours contract who work an extra day should also get additional time towards their holiday accrual.

If you are unsure of the rules surrounding leap years and employment rights, why not speak to our team today

A quarter of employees question how their firm handles bullying and harassment

A quarter of employees question how their firm handles bullying and harassment

According to the latest research, a quarter of employees believe that their company doesn’t deal with bullying and harassment in an appropriate manner.

The report published by the CIPD found that 15 per cent of workers have experienced bullying in the last three years, yet more than half of those people did not formally report it.

As a result, the CIPD is urging businesses to train managers to handle conflicts in a more appropriate manner.

In addition, the research found that approximately 4 per cent of employees said that they had been sexually harassed in the last three years, with the CIPD stating that the problem is ‘stubborn’.

The CIPD is calling for firms to embrace a ‘speak-up culture’ with a complaints procedure that is thorough and well-publicised.

The report emphasises that managers should be aware that certain issues can be resolved informally, but that each case must be considered individually as to whether a more formal approach is required.

Nurse with 38 years’ experience “unfairly dismissed”, says Employment Tribunal

Nurse with 38 years’ experience “unfairly dismissed”, says Employment Tribunal

An Employment Tribunal has ruled that a nurse was unfairly dismissed after activating a hospital trust’s whistleblowing policy procedure.

According to reports, Ms Fairhall, a senior staff member with over 38 years’ experience, raised several safeguarding concerns with hospital bosses over her team’s workload, mental and physical health and lack of training.

The NHS nurse also alerted officials to concerns over patient safety, including one death which she thought was “preventable”.

However, after disclosing her concerns, Ms Fairhall was suspended on the grounds “to allow an investigation to take place following allegations of potential gross misconduct relating to concerns regarding your leadership and also concerns in relation to inappropriate and unprofessional behaviour including bullying and harassment”.

After 18 months and several investigations and appeals, the nurse was dismissed.

Hearing the case, the Employment Tribunal found the hospital trust’s investigation into the alleged misconduct to be “inadequate and unreasonable in all the circumstances of the case”.

“No explanation was given for the unreasonable delay in interviewing the relevant witnesses, particularly those who are said to have expressed concerns about the claimant’s behaviour,” said Tribunal Judge Johnson.

“No explanation was given as to what was to be the remit of the investigation or of any instructions given to the investigating officer.”

The Tribunal added that the “disciplinary hearing itself was unfair and unreasonable from the outset, in that it did not set out with any precision the allegations of misconduct which the claimant was expected to answer”.

A remedy hearing is set to take place over the coming weeks.

For employment law support, get in touch with our expert team today.