Coronavirus lockdown: What should I do if my business is forced to close?

Covid-19 | Covid-19 Advice | Reports
Laura Kearsley

With the situation changing rapidly, a UK lockdown could be imposed by the government to help contain the spread of coronavirus – and many employers are thinking about their contingency plans if they are forced to close as a result.

Law firm Nelsons has seen an increase in the number of queries it has received from employers with regards to what measures they should be putting in place following the Covid-19 outbreak.

Laura Kearsley, partner and solicitor at Nelsons, provides answers to some of the most frequently asked questions the employment law team has been receiving.

What guidance should we be giving to our employees?

The government has said people should work from home where possible. Therefore, if some or all your staff can work from home, you should insist they do. We also recommend you update your home working policy – or implement one if you haven’t got one – to make sure employees know what is expected of them.

If you have staff working from home, you need to think about procedures for keeping in touch and how to use technology to communicate with them. You will also need to make sure they have the equipment they need for this.

If some or all the work you do can’t be done from home and your workplace is still in use, we would recommend putting posters up around the workplace (for example, in kitchen and toilet areas) about the virus, its symptoms and good hygiene to increase staff awareness. There are a number of posters available to download from the gov.uk and World Health Organisation websites.

You should check whether you have any staff in the ’at-risk’ categories – those over 70, pregnant women and those with certain serious health conditions – that have been advised to self-isolate for the immediate future. Many of these people will have already begun self-isolating. If people in these groups can work from home then they should, if they are well.

Other groups that may need to self-isolate for 14 days are those returning from high-risk destinations, and those experiencing symptoms or with someone in their household experiencing symptoms. If you have anyone in these groups that is not self-isolating, you should insist they do.

Should we restrict our employees’ work travel?

Yes. Only essential travel should be permitted at this time.

What about employees with childcare responsibilities now that childcare and schools are to close?

Employees are entitled to unpaid emergency leave for dependants, which would include dealing with childcare issues. Strictly speaking, this is time off to make alternative arrangements, not time off to actually care for the child/children. Anything else depends on what you, as the employer, want to agree.

An option here is to allow people to use their paid holiday entitlement, take unpaid leave or to flex their hours of work, if possible, so they can continue working around childcare commitments. We would encourage employers to begin discussing this issue with their employees now to agree ways of working to trial over the coming weeks.

Where employees are unable to work at all because of a lack of childcare and if you cannot agree a period of unpaid leave, then they may have to consider resigning to bring their employment to an end. If they do so, they will not be entitled to a redundancy or termination payment other than accrued untaken holiday.

Technically, they should give you contractual notice of their resignation, but they may be unable to do so because of the situation. If they cannot work their notice, then you are not obliged to pay them for it. It will be a matter of discretion whether you offer any other payments.

What if we have to close down our business due to a UK lockdown?

This will mostly affect those businesses and industries where homeworking is not possible (as everyone who can work for home should be doing so already).

At the moment, only employers with ‘lay-off’ or ‘short-time’ working provisions in their employment contracts have the right to lay people off or reduce hours for a temporary period. If you have these clauses, you may want to take advice on how to use them.

For employers without these powers, you should seek to agree measures with your workforce, which could include reducing hours, reducing pay, implementing unpaid leave, using annual leave entitlements and/or changing working patterns. Legally, consultation is usually required before such measures can be introduced, but employees may be more understanding in these circumstances and will want their employer’s business to survive.

What if I need to let people go?

As explained, there are options to consider to reduce staff overheads before dismissals are necessary. However, if it becomes necessary, some principles to consider are:

  • Any casual employees or those on genuine zero hours contracts are not guaranteed any work or pay and employers may stop offering them any hours.
  • Employees with less than two years’ service are not entitled to redundancy payments so they can be dismissed with just their notice pay.
  • Those with more than two years’ service are entitled to statutory redundancy payments, as well as their notice, if they are dismissed on grounds of redundancy.
  • Employers also need to follow a fair procedure before implementing any redundancies.
  • Where large numbers of employees are involved, there will be collective consultation requirements to consider too.
  • Employers contemplating these actions should get legal advice on the processes and risks involved.

What if I think my business is going to fail?

If you are concerned about this, we recommend you take professional advice as soon as possible. There may be options open to you that, if taken sooner rather than later, can save your business. Business recovery specialists or insolvency practitioners will be able to help with this. You should also talk to your bank and any other lenders as soon as possible.

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  1. What is the position regarding redundancies if the business has to downsize after restrictions on allowing the public in to shop result in massive losses of perishables in our case hundreds of thousands of pounds worth of plants. Surely the government can’t expect a business placed into financial meltdown because of their restrictions to be responsible for redundancy payments. How unfair is that?

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