What are my options if I don’t want to furlough my staff?

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Whilst furlough seems to be a popular option amongst employees, it may not be right for every business.

The Government guidance makes it clear that it is a scheme designed for those who would otherwise be laid off – so what if there is still some work to do?

There are options if you don’t want to furlough your staff such as redundancy, lay-off, short-time working, a temporary variation of contract and employer-enforced holiday, all of which are discussed below. If you would like bespoke advice tailored to your business and your staff, contact our employment team here.

Redundancy

The option to make your staff redundant is available ‘as normal’ during these uncertain times. Redundancy is typically used to dismiss employees whose roles are no longer necessary for the running of the business, or where a place of work has closed. It is very important to seek professional advice on the reason behind your decision to make redundancies.

There is an obligation on employers to avoid redundancies where possible and so a choice to do this rather than utilising the furlough scheme could, in some cases, result in a claim for unfair dismissal.

As this is a type of dismissal, certain obligations are owed to employees such as:

  • statutory redundancy pay
  • a notice period (or payment in lieu of notice)
  • a consultation with the employer
  • the option to move into a different role (if available)
  • time off to find a new role.

These obligations apply if you are making less than 20 employees redundant at a single location. Consultation is important and a failure to follow a fair process, even in extreme times, could result in a claim for unfair dismissal. If you plan to make more than 20 employees redundant at a single location, then you will need to follow collective consultation steps in addition to those listed above which can make the process longer and more complex. There are also obligations to the Secretary of State.

It should also be pointed out that if you have put staff on furlough leave and you think that you will need to make them redundant after the furlough scheme ends on 1 June 2020 you can run the redundancy process whilst they are on furlough.

For further guidance on furlough leave, click here.

For bespoke legal advice about redundancy, click here.

Lay-off

It is possible to lay-off staff on an unpaid basis, however, the way in which you do so will depend on whether you have a lay-off clause in your contract. The consequences for lay-off will then vary depending on whether that member of staff has two years’ continuous service or not.

If you have a lay-off clause in your contract then you can lay off employees in accordance with that clause. Some lay-off clauses do not mention a notice period to enforce the lay-off. If that is the case, it would be best to go with what is reasonable in the circumstances.

If you do not have a lay-off clause in your contract, you can seek consent to lay-off the employees for a period (see below). However, if you do not have consent and you proceed to lay off employees anyway, claims for unlawful deduction from wages could follow.

They could also resign and leave you vulnerable to constructive and ordinary unfair dismissal claims, for those who have over two years’ continuous service.

Short-time working

As work may start to drop off due to the COVID-19 crisis, it may suit your business better to operate with skeleton staff on reduced hours as opposed to sending them home completely under the furlough scheme.

Similar to the commentary above regarding lay-off clauses, your ability to put staff on short-time working will depend upon whether you have the relevant contractual provision in place.

You will need a clause in the employment contract in order to put staff on short-time working, or seek the employees’ consent to do so (see below), otherwise, they may be able to claim unlawful deduction from wages, or resign and claim constructive unfair dismissal.

Temporary variation of contract

Another flexible and helpful option is to seek a temporary variation of contract with your staff. What this means is that the employer and employee can come to an agreement to vary the terms of the employment contract for a specified period of time.

For example, if you want to put staff on short-time working but you do not have the contractual provisions which allow you to do this, you could simply ask the employee if this is something they’d agree to. If they do, you can vary the contract temporarily.

Furthermore, if you want to lay-off staff temporarily and bring them back when work picks back up again, you could agree with the employee to temporarily vary the contract and put them on a period of unpaid leave.

Generally, if both the employer and employee willingly agree to vary the contract for a temporary period during these unprecedented times, it is possible as long as you execute the variance properly.

For guidance on how to do this, please contact our employment team here.

Employer-enforced holiday

The government has amended the Working Time Regulations 1998 (“the WTR”) to allow untaken statutory annual leave entitlement to be carried over into the next two leave years. This is meant to help staff who are working in the national effort against coronavirus do not lose out on their annual leave entitlement.

For more information on the government’s amendment, please click here.

The government, however, has not changed Regulation 15(2) of the Working Time Regulations which allows employers to decide when workers can take holiday. The employer must make sure that the length of notice given to the workers is at least twice the period of leave it requires the worker to take. For example, if you want your workers to take three days as holiday they must give at least six days’ notice of the same.

Therefore, if you are unsure of the impact COVID-19 will have on your business, you could tell workers to take annual leave in the interim until things become clearer. Any such leave would have to be taken at the normal rate of holiday pay.

Zero-hours contracts

Those who are on zero-hours contracts will not have terms in their employment contract where the employer is obliged to provide X amount of hours of work. Therefore, if your business is experiencing a downturn of work and you are concerned about paying wages in the short term, you can simply opt not to provide your zero-hours workers with any work.

This may vary depending on the wording of their contract.

Self-employed contractors

If your business often engages self-employed contractors to carry out work for you, then you can approach this similar to if they were a zero-hours worker. Of course, this will vary depending on the precise phrasing of your contract with them, however, you can opt not to provide them with any work until the downturn of work picks up again.

Further information

For further guidance on furlough leave, click here.

For specialist advice creating to coronavirus, please get in touch using our dedicated Employment Law email address: COVIDEmpLaw@ashtonslegal.co.uk

For specific advice for your business, please get in touch with our specialist Employment Law team through this website or by calling 0330 404 0778.

Our partners at Ashtons HR Consulting are also on hand to assist you.


This information is correct at 11.ooam on 15 April 2020.


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