Employers are probably unsure about what to do for the best in these difficult times.
On Friday, the government announced a new set of financial measures to help people and protect jobs.
Along with the business rates grants, delay of VAT payments and statutory sick pay (SSP) refunds, these measures will help a lot of businesses and hopefully save jobs.
Employers must decide the best course of action for not only your business but for your employees.
If your business has to close temporarily, your employees still have a right to full pay, unless a lay off clause is in their Contract of Employment.
Here are the 5 options available:
1. Stay at Home and SSP
- If an employee has symptoms of Covid-19, however mild, they must stay at home for 7 days
- If any employee lives with someone else who has it or needs to self isolate they must stay at home for 14 days
- You need to pay employees SSP of £94.25 per week for 14 days starting from day 1, only if a direct result of Covid-19
- Keep records of sickness and SSP payments
- The employee can self-certify for 7 days but needs to complete an isolation note from NHS 111 after this https://111.nhs.uk/isolation-note/
- You will be entitled to a full refund from the government for SSP related to Covid-19, details to be announced soon
2. Coronavirus Job Retention Scheme
- The new government scheme that pays 80% of an employee’s wages up to £2,500 per month
- You can fund the extra 20% but you do not have to
- It is initially for 3 months and is aimed at protecting jobs
- You need to communicate with your employee and classify them as a “Furloughed Worker”
- The employee is kept on the payroll and should not undertake any work during this time
- HMRC will reimburse this and are urgently setting up a system for reimbursement
3. Holiday Pay
- If an employee has accrued holiday leave you could offer this as an option as they are entitled to it
- Unless otherwise stated in the employment contract statutory leave is 5.6 weeks holiday per year
4. Short time working, layoffs and unpaid leave
- Offer staff reduced hours to help but they do not have to accept
- Lay off an employee (ask them to stay at home or take unpaid leave) when you temporarily cannot give them paid work – as long as the employment contract allows this
- You need to agree these options with the employee
- Employees are entitled to Statutory Guarantee Payments of £29 per day for 5 days in any 3 months if you do not provide them with a full day’s work during the time they’d normally be required to work.
- They can then claim a redundancy payment from you if the lay-off or short-time working runs for 4 or more weeks in a row
- This is a final option and obviously one that needs careful consideration and must be done correctly otherwise there could be serious legal implications
- If an employee has been employed by you for more than 2 years they are entitled to a redundancy payment. Unless otherwise stated in the employee’s contract of employment it is calculated as follows:
- half a week’s pay for each full year the employee was under 22 years old
- one week’s pay for each full year they were 22 or older, but under 41
- one and half week’s pay for each full year they were 41 or older
- You also need to give the statutory notice periods, unless otherwise stated in their employment contract:
- at least one week’s notice if employed between one month and 2 years
- one week’s notice for each year if employed between 2 and 12 years
- 12 weeks’ notice if employed for 12 years or more
- The employee has to be paid full pay throughout their notice period, or be paid in lieu of notice depending on the circumstances
- All these details can be found on the government website
- You must follow the correct procedure otherwise you could be liable to a tribunal if it is an unfair dismissal. For further guidance consult a HR professional
As these are unprecedented times and the situation is changing on a daily basis, it is important that any decision you make is carefully thought through.
We highly recommend that you should carry out a cash flow forecast so you have a better idea of the financial position of your business.
This will help you make more informed decisions, especially as there will be a lag between paying your staff and being reimbursed.
If you need assistance with this or would like further advice, especially regarding HR, then please contact us on 01642 927265 or [email protected] We have our own HR expert who can help.