Advice by Andrew Willis, Head of Legal at Croner
Coronavirus lockdown measures are starting to lift, however not every business in the UK can reopen its doors yet.
As such, you may find you’re still considering how to keep employees on your workforce without having to make redundancies.
That includes during a crisis such as the coronavirus pandemic. Short-time working is one such opportunity to consider.
What is short-time working in the UK?
It’s where you agree with an employee for them to have a reduction in working hours.
You can lay-off staff or use this approach during the coronavirus pandemic to avoid making employees redundant.
How does short-time work?
The employment law for short-time working is clear. You have the right to ask an employee to take it, but they don’t have to agree to your request.
But if you have an outlining in their contract of employment then they don’t have to agree to the changes you’re planning.
The process follows a structure of confirming with your employees your reduction in wages and working hours.
You must do these as part of your legal requirements to staff. They have the right to know what your plans are as they develop.
There are common reasons for short-time working. Such as:
- Your business has less work available.
- You need to reduce the weekly pay of staff.
- To avoid the need for redundancies.
However, you may also want to take this approach to help manage the effects of the coronavirus pandemic. It can help you to avoid the need for redundancies.
There are short time working rules in the UK—you should follow current employment laws regarding this approach.
You can make this change permanent—although the employee still needs to agree to that. However, if the hours do become permanent then you must create a separate agreement.
And you’ll have to send a letter of confirmation to the employee about the amend, which you have to send within a month of the update.
However, this may only prove a temporary requirement—such as during the present coronavirus pandemic.
If that’s the case, it’s still good business practice to confirm the amend you agree in writing.
The difference between short-time working and lay-off
Lay-off and short-time working may appear similar (if not the same), but there’s an important difference. This is as follows:
- Lay-off: Employees receive no work or pay for a set period. However, they remain a part of your workforce.
- Short-time working: Staff receive less work and pay. This is for a certain amount of time. You’ll need to agree this with each employee. And for them to be on short-time working, their weekly remuneration needs to be less than half a week of pay.
Either way, both options should come as a last resort for you as an employer. But it may help you to avoid redundancies during the current pandemic.
Short-time working due to coronavirus
If you don’t want to keep employees in their roles, you may want to turn to this option.
As such, you can look to create a short-time working policy for coronavirus. Unless you have the clause in the employee’s contract, you can create a new document that explains what your process is.
The policy should look to explain the following main points:
- How you’ll address a reduction in hours/pay with employees.
- How much pay they’ll receive.
- The amount of reductions you expect.
- How you’ll approach employees for agreements on the reductions.
- The manner in which you’ll confirm the agreement (in writing).
- An explanation this is temporary during the coronavirus pandemic.
If you already have a clause in your employees’ contracts, you can still create a policy for short-time employment during this period.
That’s if you want to make adjustments to your existing rules.
How to use short-time working for COVID-19
One of the biggest threats facing businesses during the pandemic is with having to make employees redundant.
This can prove very costly for your business as you lose talented staff.
But you can take steps to limit this possibility, such as through laying-off employees. Or using short-time working.
Simply put, if you want to avoid dismissing employees (or simply have less work to complete), you can use this approach to reduce an employee’s presence in your business.
This can help to alleviate the financial burden on you.
Which, in the long-term, can help to ensure your employees return to work with your business.
The UK government’s Job Retention Scheme is another option. You can furlough staff, but from June 10th 2020 this a flexible option.
You’ll need to follow the UK government’s updates on this as they happen.
How to place staff on short-time work
If you have a clause in your employees’ contracts then you can simply act on your right to do so.
However, it’s still good business practice to keep your affected employees updated at all times with your plan.
If you don’t have the clause, you’ll need to hold discussions with your employees about the need to place them on short-time work.
You can explain this is your business’ effort to avoid redundancies. If they agree to your plans, then it’s a case of:
- Confirming the reduction of hours/pay with respective employees in writing.
- Calculating the pay you owe full and part-time staff.
- Providing updates to staff about when they’ll return to work.
Short-time working and notice periods
This area is dependent on your employment contracts and what each employee’s position in your business is.
Their notice period will depend on factors such as:
- If they’re full or part-time.
- Their length of service with your business.
- What you agreed with them in their employment contract.
Holiday entitlement during short-time working
Your employees “accrue” their annual leave as normal during any period away from your business.
If they wish to request holiday days from you, then you can (as per normal) agree to a request as and when they make it.
Short-time working and statutory guarantee pay (SGP)
You’ll need to pay your employees if they agree to the reduction in hours (and/or pay).
That’s unless you agree with staff not to—or their contract explains they can receive no (or a reduction in) pay. But staff must always receive pay for the hours they do work.
Otherwise, there are guaranteed payments for short-time working. That’s SGP—the minimum you have to pay staff as a business. The payments are:
- Full-time staff: £30 daily for five days during three-months. The maximum is £150.
- Part-time staff: You’ll need to calculate this based on the number of hours they work each week.
Remember, you can also offer better SGP as part of your policies. That’s up to you as an employer—you’re under no legal obligation to do so.
Staff can make a claim for redundancy payments—that’s if a time period of lay-off or short-time pay is over four weeks (consecutively).
Or six or more weeks over a 13-week working period.