Businesses prepare for coronavirus impacts

Employment law expert, John Merry, said he had been contacted by numerous businesses, including large national concerns, who were worried about the prospect of suspending operations, either because of precautionary measures, actual staff shortages or such things as supply chain breakdown or lack of customer demand.

Mr Merry, head of the employment team at Lanyon Bowdler, said: “We have been advising employers who are concerned about the cost of staffing in the event of temporary workplace closures.

“Unless there is some other arrangement in place, if a business prevents its employees from working by shutting down, the employees will be entitled to be paid in full.

“Requiring employees to use holiday entitlement can mitigate the cost of this to some extent. We recommend that employers retain the contractual right to direct employees when to take holiday, in case of such an eventuality.

"Without that, employers can direct employees to take holiday that they are entitled to by law – 28 days for a full time worker – as long as they are given notice of twice the length of the holiday to be taken.

“However, in many workplaces most if not all holiday will already be allocated to scheduled shutdowns or pre-booked holiday.

“The real solution, therefore, is for businesses to include lay-off or short-time working clauses in employment contracts, which entitle the employer to reduce working hours, or lay off employees altogether, on reduced, or no, pay – subject to an obligation to pay statutory guarantee pay of £29 for up to five days in any three month period.

“For employers who do not have such clauses in place, they can be newly imposed – but certain procedures need to be followed.

“If 20 or more employees are affected, collective consultation is required, and the change can’t be implemented for at least 45 days if 100 or more employees will be affected, or 30 days if fewer will be affected.

"An ‘HR1’ form will also need to be lodged – as odd as this might seem, with the Insolvency Service – at the outset of the process.

“Individual consultation will in any event be necessary with employees with two or more years’ service.

“Although this might sound complicated, and liabilities can certainly be incurred if contractual changes aren’t dealt with properly, with the right advice these processes should be relatively straightforward and risk-free.

“The coronavirus outbreak is a stark reminder of how important it is to include lay-off provisions in contracts for all employees, because they help protect businesses in the event that they cannot trade, such as can also occur in other circumstances - flooding, fire, severe IT problems, foot and mouth outbreaks and so on.”

Other employment issues surrounding the coronavirus outbreak, and other aspects of employment law, were due to be discussed at a series of free seminars in the coming weeks, but these have been cancelled.