Business Hibernation

Guidance notes as at 20th April 2020.  Please also check out the Webinar below

 

What are the people considerations when putting your business into hibernation?

Hibernation is the current case for many businesses at the moment where business owners or directors have agreed to place either the majority, or all, of their workforce on furlough leave under the current Coronavirus Job Retention Scheme enacted by the UK Government over the course of the last few weeks.

As we all know, the current situation is one that nobody saw coming or was really prepared for and things have been moving rapidly over the last few weeks and months. We hope to be able to give you a better understanding of the current position relating to Furlough leave and some practical tips that you can put into place immediately in your business or workplace. As always, if something is unclear or you need help, please contact us at Sagegreen HR.

This information is based on guidance in place as of Monday 20th April 2020, though the guidance is rapidly changing –  very specific information has already changed in the last few days and this will continue to be the case because this has been rolled out at such speed across the country.

Continued below……………………

Webinar

 

What is the Coronavirus Job Retention Scheme (CJRS) and is it the only option?

The CJRS scheme is not to subsidise wages, but to protect jobs. It has been put in place for damage control to try to limit the number of businesses who find themselves collapsing and leaving huge numbers of people without jobs. The scheme allows employers to claim support from the UK Government to pay 80% of an employee’s wages whilst they are placed on “furlough leave” which is a term that previously had not been used in UK employment law.

Furlough leave is therefore a variation to the employment contract and must be by agreement by the employee either confirming this status by signing an agreement or consenting via email.

Furlough leave is not the only option available to a business. The other options are;

1. Forcing the use of annual leave

This could be for a Company shutdown and is likely to be for one or two weeks. There is no financial support to the business to do this but it would obviously decrease the amount of accrued but outstanding annual leave entitlement. It helps if this is expressed in the contract, but a business could enforce this regardless by giving twice the amount of notice of the time they are requiring employees to take as leave, e.g. 10 days’ notice to take 5 days leave.

 2. Short Time Working and Lay-Offs (LOST)

These can only be used if expressly written into contracts, or again by seeking to consult to vary the contract.

Short Time Working is where the employee’s number of weekly working days and/or number of weekly working hours are reduced as is their pay to reflect the reduction.

Lay-Offs are where there is no work available and the employee is sent home without pay, except for Statutory Guarantee Pay.

Both of these areas can be complex and it is important that any business considering these as an option discuss it with an HR professional beforehand.

 3. Redundancies

The last thing most businesses or employees would want is to have to consider redundancies and there is also a question in the circumstances as to the reality of some businesses being able to pay redundancy and notice payments. There are also rules around consultations periods and correct processes to follow.

Our advice would be to look at this from a longer term perspective and think about the kind of employer you want to have been through this crisis and how the way you treat your employees today could impact on your reputation – for better or worse – in the months or years ahead. For example if you can be quite clear about your reasons for asking for employees to vary their contracts or working arrangements you are more likely to have their commitment to work with you than if you try to impose a change without any consultation or attempt to reach an agreement.

We have heard of employers who have put their employees on Furlough and then asked them to continue to work. This is fraudulent and HM Revenue and Customs has urged furloughed employees to report firms which are still asking them to work, with any company found to be abusing the scheme facing criminal action.  We would urge anyone thinking of doing this to reconsider as we do not believe HMRC will hesitate to prosecute. All it will take is one disgruntled employee to pick up the phone and no doubt this is action that could be delayed and taken many years into the future.

Employee’s concerns v’s rights v’s business needs

The decision to furlough an employee is one for the business to make – not the employee’s. It is where there is little or no work for the employee, or in some well-thought out and planned cases where the work cannot be done from home. It’s also important not to just take a “blanket approach” without thinking it through.

The business should consider concerns of individual employees. Are they reluctant to come to work? Is it about fear of lack of safety in the work place? Is it about a sense of entitlement? Or is it because of circumstances at home such as living with a vulnerable person or needing to take on carer responsibilities. Perhaps they are now home schooling their children. You will only know this by speaking to your employees.

Popular views created by television personalities or some news reports are that people should be furloughed and to some extent this contributes towards employees feeling that they are entitled to take furlough leave! If there is work that can be done the employees may feel an entitlement to Furlough and business owners will need to think carefully about how to manage this resistance.

One example that we have experienced is where some drivers in one business were placed on furlough, others were not. Some of those placed on furlough leave were unhappy and others unhappy they weren’t. Depending on individual reasons, the business could have decided to swap them around, BUT that depends on the business considerations, such as skills, qualification e.g. dangerous goods licences – it’s a business decision!

How do I choose who to keep and who to furlough?

None of us have a crystal ball and like any plans, they are subject to adapt and change depending on how a number of factors pan out or develop. But it is important to have an initial plan so that you have a starting point, but also bear in mind that it needs to be flexible and can be adapted as this situation evolves.

By using a set of selection criteria will help to be able to demonstrate fairness in selection. As an example, you could consider;

  • Which roles can or could continue to work from home?
  • What key skills do you need to retain in your business?
  • Are there issues around travel / transport / accommodation for those going to client sites?
  • Could you furlough around important periods or deadlines?
  • Could you rotate furlough between groups of employees?
  • Are there tasks in hand that need seeing through by certain individuals?
  • What concerns do individuals have?

As long as Furlough leave lasts for at least 3 weeks to enable eligibility to claim under the scheme, people can be rotated around on and off Furlough leave so that it can potentially be shared equally, there is no minimum period between episodes of furlough either. Also bear in mind that furlough doesn’t have to be in “batches” of 3 weeks, it could continue for 3 weeks and a day, 4 or 5 weeks or even continue until the end of the governments scheme.

Keep records of decisions that have been taken and why one person rather than another was selected for furlough leave. Each case should be considered on its merits and it’s important to take HR advice if you are faced with a refusal to work when it is available.

Are there any other considerations?

Using sub-contractors

We have been asked by differing clients whether or not it is appropriate to use sub-contractors whilst employees are on furlough leave and to be honest, this very much depends on the circumstances and whether it can be justified. For example, take those who work on construction sites away from home. If there were multiple issues around travel, accommodation, fear amongst the workforce about being on sites and compounded by these sites then beginning to close due to client decisions, and therefore a downturn in available work, it may be justifiable to use sub-contractors on a short-term basis. It is always worth discussing these things through with one of the Sagegreen HR team before considering using sub-contractors.

Secondary Employment

Another situation to be aware of is where your employees may be looking to pick up secondary employment to help them with financial shortfalls. This is acceptable under the scheme, but for you it is worth understanding if it breaches any conditions in the contract of employment or conflicts with their existing contract with you. The test is whether they could return to work for you and fulfil their contract with 24 hours’ notice, if they couldn’t, they are breaching their contract.

Networking

There are differing viewpoints on Networking – some are being very clear cut about it and not attending or finding substitutes, others are still attending but are not promoting their business or asking for business, seeing it as continuing building relationships. Ultimately, this is the decision of the business owner or Directors and whatever their decision, they must be prepared to take responsibility if the HMRC decide that it is working and therefore they are either unable to claim funds through the CJRS scheme or have to pay funds back in retrospect.

Volunteering and Training

Whilst volunteering is acceptable, if this is your employee for your business the HMRC will easily find evidence of income generating activities which are being undertaken if this is for your business – be cautious!

Training and personal development is to be encouraged but cannot be forced. This will depend very much upon your organisational culture whether you can encourage people to use any of the many free options for personal development whilst on Furlough leave and whether or not your employees buy into the idea of lifelong learning.

Furlough itself is not subject to National Minimum Wage (NMW) regulations as employees are not working. However, where training is undertaken by furloughed workers or apprentices, at the request of their employer, workers are entitled to be paid at least the NLW/NMW for this time. In most cases, the furlough payment of 80% of a worker’s wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the furlough payment does not meet the appropriate minimum wage for the time spent training, employers will need to pay the additional wages.

What hasn’t changed?

Usual sickness rules still apply, so if an employee becomes unwell, they will have 3 “waiting” days before they can be paid SSP, so paid on day 4. The exception is where the sickness is due to Coronavirus in which case they can claim SSP from the first day of absence. We would expect Employers to keep contact with any employee who is sick in the normal manner, and offer any support that would normally be offered under their contract. Employees on sick leave cannot be Furloughed. Those who are shielding can go onto Furlough leave.

Maternity and other parental leave regulations have not changed and remain in place as normal however you do need to bear in mind that a reduction in pay for a pregnant worker may affect their maternity entitlement as the pay is calculated for the duration of maternity based on their earnings leading up to the qualifying week (the 15th week before the baby is due).  We are not suggesting you do anything other than the right thing here but the reason we are flagging this up is because if you need to select people for Furlough, and one of them is pregnant,  this could potentially result in a claim made against you on grounds of loss of earnings. Those on continuing maternity leave cannot be placed on furlough leave.

Discipline and grievances can continue and one of the reasons we advise that there is a written agreement to Furlough leave is because it makes it very clear that the employee still has responsibilities towards you and that these have not changed. We would anticipate that the kind of problems that may occur would be things like:

  • Use of Social Media and chat groups which could include gossip about the company, other employees or clients or customers
  • Breach of confidentiality
  • Working for your competitors or poaching your customers
  • Misuse of your equipment, IT, phones or uniform

In extreme cases you may need to hold a disciplinary hearing. Normal procedures must be applied promptly and fairly. However, you may need to conduct meetings by telephone or online. You need to demonstrate that you have taken prompt action but also been reasonable and taken account of individual circumstances and offered support in using an online platform where this is unfamiliar. It is important that proper process is followed and that you adhere to your disciplinary procedure so that you are not exposing yourself to risk of a claim of unfair dismissal.

Redundancy procedures have not changed and are still in place so you would be expected to consult within normal timescales and to apply a fair and objective criteria for selection.

Another consideration is handling bereavement. We cannot possibly estimate the extent to which this will be an issue for any individual, business or team but it does need to be acknowledged that this may be a significant issue for many people over coming months. Statutory entitlements and contractual entitlements will apply to bereavement leave. You may be aware that parental bereavement leave has recently been agreed as an employee right. The employee can take this within 56 weeks of the death of their child.

You may wish to think about a strategy for managing employee bereavement and for acknowledging the services of any lost colleagues, especially if this happens when the workforce is dispersed. Messages obviously need to be delivered promptly and with sensitivity to colleagues and families of the deceased. You need to be guided by what your employee needs because every case will be different and everyone will handle things in their own individual ways.

We would also suggest that line managers are vigilant for signs that an employee is not coping and may need to seek help.

Support may be offered by various organisations such as Cruse.org.uk or through your own Employee Assist Programme or through an employee’s own GP.

How am I going to know what is going on with all of my employees?

Have a communication plan. Ensure all employees are involved and include those that were already on maternity or long terms sickness. Use media that everyone is comfortable with. Take a look at the Sagegreen HR COVID-19 HR Help section on our website where you will find more in depth information about keeping in touch with your team and keeping them engaged and motivated, and if we can be of any help, please get in touch!

 

 

Do you need HR advice?

Speak to our HR team today on 01606 333 677 or