Employment Law and Business Disruption Guide

Transcription

1 Cumbria Employment Solicitors Employment Law and Business Disruption Guide Introduction 1. In light of the damage the flooding around Cumbria has done to numerous businesses, the Chamber of Commerce in conjunction with Cumbria Employment Solicitors has put together the following guide dealing with common employment law issues that arise where normal continuity of business is disrupted, for example due to flooding. 2. This information is intended to be a practical guide to the issues to consider rather than definitive or comprehensive legal advice. 3. If additional information or assistance is required then feel free to contact Michael Bauer at Cumbria Employment Solicitors on (who is happy to provide free guidance to flood affected businesses) or the Chamber of Commerce on which has access to a wide range of support for affected businesses. 4. The key issues addressed are as follows: Temporary closure; Inability to pay staff; Layoffs and short-time working; Relocation; Change of duties Staff absence; Redundancies and business closure; Miscellaneous. 5. Whilst the following guide identifies various legal issues that can arise, it is likely that most staff will be co-operative and understand that the current challenges require everyone to muck in, do what they can to help and appreciate that there is a common interest in getting the business through the situation. 6. Therefore, it is hoped that in most cases the clear communication of: The plan to address the immediate challenges; What is expected of staff in the short-term; The likely duration of any adjusted working arrangements; The longer term plan (when it is known); will be sufficient and the reliance on contractual/employment law rights will be unnecessary. 7. However, such goodwill will not be universal and the longer difficult conditions last, the more likely that there will be issues. Therefore, the focus below is on the underlying employment law rights that are relevant to the situation. Cumbria Employment Solicitors Address: Leavy Holme, Millhouse, Hesket Newmarket, CA7 8HS Telephone: Fax: office@empsols.co.uk Website: Principal Michael Bauer VAT Registration No Authorised and regulated by the Solicitors Regulation Authority (SRA number )

2 Temporary Closure 5. Sadly, a significant number of businesses are facing at least a temporary closure whilst their business premises are assessed, necessary remedial work is undertaken and/or new premises are secured. It may be that in such circumstances there is a reduced need for staff to attend work at all or that staff are expected to carry out different duties (e.g. clearing up or covering the duties of absent colleagues). 6. The starting point for managing staff is the content of the staff contracts and you should check to see if the contract expressly allows the business to: Change where staff work; Vary duties; Adjust hours or to lay-off. 7. If the contract does contain such rights (or if staff are on zero hour or variable contracts) then these can be exercised in accordance with the terms of the contract although there is also an expectation that such will be exercised reasonably by giving as much notice of the changes as is reasonable and allowing staff some time to adjust. Clearly, in situations of unplanned changes forced on a business by flooding, the degree of notice, consultation and adjustment that will be judged reasonable is likely to be reduced and, if challenged, would be likely to be sensibly interpreted by a Tribunal. 8. Alternatively, if there are no such contractual rights then care will need to be taken as reducing staff hours or laying off staff even temporarily is likely to amount to a fundamental breach of contract and entitle staff either to claim constructive dismissal (depending upon their length of service) or claim the difference between their reduced pay and their normal wage. 9. Whilst accepting that many businesses are facing a genuine emergency and that there is not the time and room for manoeuvre to allow for in-depth consultation and negotiation with staff, if there is scope to explain the situation to staff and secure their acceptance of the adjusted working arrangements (even on a temporary basis) then this should be recorded in writing as such agreement will limit the scope for future challenge/claims. 10. However for some businesses, this may well be a situation where there is little choice but to breach the express legal rights of staff and simply impose the required changes as the alternative may to be put the entire business in jeopardy. Whilst such decisions may be challenged, do what you can to record the thinking behind such decisions and make what efforts you can (also noting them in writing) to secure staff agreement. This may assist in the event of a future challenge. Inability to Pay Staff 11. Some businesses may be facing severe cash flow problems and may not be in a position to pay staff wages owed or wages due going forwards. 12. In relation to pay for past work, clearly such amounts are due and owing and the failure to pay (however understandable) is a breach of contract and an unlawful deduction from wages. It may also trigger resignations that, depending on length of service, could give rise to constructive dismissal claims. However, if there are insufficient funds to pay staff 2

3 then despite the legal implications there is little that an employer can do except (ideally in writing): Accepting that the amounts are due; Keeping staff fully informed; As far as is possible, indicating when payment will be made. 13. In terms of future pay, there may be scope to reduce staff hours with a view to reducing pay. Again, if the key issue will be whether or not there is contractual provision to do so and the points made in paragraphs 6-10 above apply. Also see the points made below regarding lay-offs and short-time working. Lay-Off and Short-Time Working 11. Sometimes contracts give the employer the right to either lay-off staff (i.e. send them home and reduce their pay accordingly) or reduce hours or contracts are variable (e.g. zero hours or bank staff contracts). If the contract does not allow such steps to be taken then a reduction in hours/pay (even if there is no work to do) is likely to amount to a breach of contract and an unlawful deduction from wages. It may also trigger resignations that, depending on length of service, could give rise to constructive dismissal claims. 12. If there is such a contractual right to reduce hours or lay-off then exercise it in accordance with the contractual terms. Subject to satisfying the relevant conditions, staff who are laid off or put on short-time may be entitled to Statutory Guarantee Payments for up to five days in any period of three months for a full-time employee, or pro rata for an employee who works fewer than five days a week. Such staff are also entitled to take holiday during periods of lay-off. 13. In addition, there are complex rules that allow staff who are laid-off or on short-time to request redundancy rather than to remain laid-off 14. If there is no such layoff/short time working clause in the contract then the points made above about reducing hours/pay apply. Seeking to agree reduced hours with staff will be key and if such agreement can be reached then it is sensible to confirm the position in writing. Relocation 15. If it is necessary to relocate the business on a temporary or long-term basis then there are likely to be implications for staff. 16. Again, the starting point is the employees contracts of employment. If the contracts make provision for a change of location then, as long as the change is in accordance with the contract then there are likely to be limited issues. It is important to note that any such change should be implemented reasonably and therefore giving staff as much notice of the change as is possible (accepting that this may be limited in an emergency) and being understanding of particular issues that arise for individual staff is also sensible. 17. In the event that there is no contractual provision to change workplace then there is case law that allows an employer to change the workplace and/or the nature of the work in exceptional circumstances as long as the change is justified, temporary and the employee does not suffer detriment in contractual benefits or status. In the current 3

4 circumstances, such conditions may well be satisfied. It would be sensible to explain the following to staff (ideally in writing): The proposed change of duties/location; The reasons for the change; The likely duration of the change. 18. In certain circumstances and subject to a fair procedure being followed there is also scope for an employer to impose new contractual terms (e.g. regarding place of work, hours and duties) on staff. Ideally, specialist advice should be obtained before taking such steps. Change of Duties 18. It may be that in the short term there is a need for staff to carry out alternative duties (e.g. assisting with the clean up and covering the duties of absent staff). 19. If the terms of the contract make provision for such adjustments to duties then the relevant changes should be implemented in accordance with those terms. Again, steps should be taken to communicate the reason for the changes and explain that the changes are temporary. Proper consideration should be given to individual issues facing particular staff (e.g. in respect of disability or particular out of work commitments) but again it is likely that if there is give and take that things will run relatively smoothly. 20. If there is no contractual provision allowing change of duties then the points made in paragraphs 17 and 18 above apply. Staff Absence 21. It is possible that there will be increased staff absence that will not be covered by sick leave procedures as the absence will be due to staff struggling to get to work, having childcare issues or taking time off to deal with domestic flooding rather than due to illhealth. 22. Presuming there are no contractual obligations regarding compassionate leave then, subject to the comments below this is likely to be a matter of discretion for the employer with the main options being: Allow a period of paid leave; Allow a period of unpaid leave; Allow a period of holiday. 23. In addition, employees have the right to take a "reasonable" amount of unpaid time off work to take "necessary" action to deal with particular unexpected situations affecting their dependants. Therefore, if (among other things) there is disruption to childcare arrangements (including schooling) then an employee is entitled to a reasonable amount of time off (unpaid) to deal with the crisis. 4

5 Redundancies and Business Closure 24. In the event that the business must close employees are generally entitled to the following: Notice pay; Redundancy pay (subject to having two years continuous service); Accrued but untaken holiday pay. 23. Generally, there would be an expectation that an employer would go through a fair redundancy process that would involve fair warning and appropriate consultation with the individual staff. However, in the event of severe business disruption (e.g. flooding) necessitating the immediate closure of the business then there may be scope for a business to argue that there is no need for consultation as the consultation would have been futile. 24. If there are insufficient funds to pay the amounts due to staff then there is scope for staff to complete RP1 forms (obtainable from the Redundancy Payments Office and Job Centres) to recover the amounts due to them, subject to the necessary conditions being satisfied. 25. Clearly, such decisions are of great significance and advice should be sought before making any final decisions. Miscellaneous 26. If an insurer refuses to cover certain aspects of a claim and you doubt the fairness of such a decision then you should complain to the insurer forthwith and request written confirmation of the basis of any such decision. If this does not resolve matters then there is always scope (once the internal complaints procedure has been concluded) to proceed to the Financial Ombudsman Service ( or ). 27. In relation to business premises, it is often the case that the relevant lease suspends the obligation to pay rent during periods when the premises are unusable and you should check the terms of your lease to determine whether or not such protection applies to you. If you require further information on any of the issues raised above then feel free to contact either the Chamber of Commerce on or Michael Bauer of Cumbria Employment Solicitors on