The impact of the coronavirus (COVID-19) pandemic is placing businesses of all sizes under unprecedented strain and pressure. The rapid and drastic reduction in demand or lost business is forcing employers to consider drastic action to reduce staffing costs.
One option employers may wish to consider is the use of short-time working, however whether this is possible or appropriate may depend on a number of factors.
Short-time working occurs when the employer reduces the number of working days or hours an employee is required to work, and the employee’s wages are then reduced accordingly, allowing the employer to minimise labour costs for a limited period of time. It is usually considered as an alternative to compulsory redundancies.
Can I implement short-time working in my business?
Employers can implement short time working where there is contractual right to do so – this will take the form of an express clause within the employment contract or collective agreement, or may exist where an employer can demonstrate that it has been established over a long period by custom and practice. If there is no contractual right to do so, it may still be possible to achieve short time working through seeking and achieving consent of all employees as a means to avoid redundancies.
Employers should be very wary of imposing short time working unilaterally (i.e. where no contractual right exists or agreement with individuals has been reached). Such action creates a high risk of claims for unlawful deduction from wages, unfair dismissal, breach of contract, redundancy payments and protective awards.
How would I implement it?
Communication is critical in implementing short time working, whether or not the employer has a contractual right to do so. As staff take-home pay will be reduced, there needs to be a clear communication as to why the approach is being taken and how implementation will take place. Where all staff are affected the implementation is more straightforward, however if the limitations will only affect particular employees, care must be taken to avoid any discriminatory or unfair selection processes.
What payments do employees receive for the unworked hours?
Employees on short time working may be entitled to:
- A specific payment (if detailed within the contract/collective agreement)
- A statutory guarantee payment (see below*)
- Jobseekers allowance.
Employers should also consider the impact on any benefits, for example pension.
*A guarantee payment is a payment which employers are obliged to pay under statute where an employer does not provide work to an employee throughout a whole day during which he would normally be required to work under their employment contract.
The maximum guarantee payment is currently £29 per day and is usually limited to five days in any three-month period (i.e. £145).
How long can we implement short time working for?
If an employee is placed on short-time working (receiving less than half a week’s pay) for four consecutive weeks (or for six non-consecutive weeks within a 13-week period) because of a shortage of work, they can give written notice that they intend to claim a redundancy payment.
Is it appropriate to use short time working during the coronavirus (COVID-19) pandemic?
Short time working is a temporary measure for a short term situation and may not be appropriate in all businesses, given it is unclear how long this pandemic will last. It may, however, provide employers with some breathing space to fully assess the impact of the pandemic on their business without having to immediately resort to redundancies.
If you would like to understand more about short term working or require advice on other people management matters please contact Clover HR on 0121 516 0299 or email us at firstname.lastname@example.org
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