We have posted this briefing template to try to help the numerous businesses who are struggling to reduce staffing costs because of COVID-19. While we hope the briefing is useful it is no substitute for professional legal or HR advice. Please call myHRdept for tailored help on 01628 820515. Please note that while we will try to respond to all requests to help with this topic or to make redundancies, non retained clients will be charged in advance for assistance. Our general advice is to try and agree an action plan with employees, all of whom will understand the challenges employers face, albeit many of whom will still have mortgages and bills to pay.
This briefing template is written in the context of a business facing reducing turnover and having spare capacity and not wanting to make redundancies. The paper supposes that the employment contract DOES have lay off clauses which allow the company to reduce hours and pay. NB1 Layoff of more than 4 weeks continuously or 6 weeks discontinuously in any 13 week period will entitle employees to declare themselves redundant. NB2 THIS PAPER DOES NOT CONSTITUTE LEGAL ADVICE which should be sought for the particular circumstances – we are merely trying to answer in general terms the popularly asked question ‘what are our options for reducing payroll costs?’ NB3 If employment contracts don’t have lay off clauses that explicitly state that employees can be laid off without pay, then employers will need to agree unpaid layoffs with employees and all agreements should be captured in writing.
In all cases please CONSULT YOUR EMPLOYEES. This doesn’t mean changes have to be agreed, but it does mean doing your best to explain the reality of why these measures are being proposed. Most people will understand that businesses are under threat and will want to support their employer in staying afloat, even if it means some sacrifice for them.
Other hours/cost reductions not specifically covered by this paper:
- Ask new starts to defer start dates
- Withdraw offers for non critical new starts (check contract notice terms with myHRdept first)
- Reduce agency
- Redeploy to other duties
- Early retirement
- Overtime ban
- Pay freeze
- Stop non contractual bonus
IMPORTANT – Staff information and consultation notice. [DATE]
Coronavirus – measures we’ve taken, we’re intending to take and are looking to possibly take to protect our business and our long term employment prospects.
UK businesses face unprecedented challenges and we are no exception. COVID-19 is already and is expected to continue to [DECRIPTION OF IMPACT ON BUSINESS – INCLUDE HARD STATS WHERE POSSIBLE TO ILLUSTRATE THE PROBLEM CLEARLY FOR EMPLOYEES].
The outbreak is expected to peak in [May – June], and we are expecting a continuation or even a worsening of our finances over this period. Our most important economic priority at this time is to protect our business for the long term benefit of all of our employees.
[As a senior management team we have already [taken a 20% pay cut] in order to try and reduce the burden of costs to the business.]
Please carefully read this briefing as it contains details of our plans to protect our organisation and these plans will impact on all employees.
The measures we are proposing to take and we are asking for your co-operation with are as follows:
Drafting note: Include as many of the following as apply:
1. [PAID HOLIDAYS: We are requiring all staff to take a minimum of [2 weeks] holiday over the period from now until the end of July. Please book your holidays via the normal mechanisms by [DEADLINE DATE.] We will nominate holiday to be taken in the case of any employee failing to comply with this request.] DRAFTING NOTE: unless agreed by the employee, give double the notice to the holiday required e.g. 2 weeks notice for 1 week holiday.
2. [UNPAID HOLIDAY/SABBATICAL: If any staff wish to take longer unpaid holiday, please address your request to your manager. In some cases we may be able to provide up to [3 months] leave of absence.] DRAFTING NOTE: A sabbatical agreement will be required.
2. [UNPAID HOLIDAY/SABBATICAL: Staff are requested to take a minimum of [1 week] unpaid holiday by [DATE.] If you wish to take longer unpaid holiday, please address your request to your manager. In some cases we may be able to provide up to [3 months] leave of absence.] DRAFTING NOTE: A sabbatical agreement will be required. Unpaid holiday needs the agreement of employees – an unpaid holiday request form may help get around this hurdle.
3. [TEMPORARY LAY OFF: Staff employment contracts state that we may temporarily lay staff off without pay under certain circumstances. We are proposing a lay off period of [3 weeks] commencing [DATE.] and 2 weeks commencing [DATE.] We recognise that in some circumstances this may cause severe financial difficulties. Staff with particular concerns should raise these with [MANAGER] by [DATE] who will be able to advise on a case by case basis. Staff will be entitled to Statutory Guarantee Pay under these circumstances.] DRAFTING NOTE: An FAQ sheet may help with common questions.
4. [SHORT TIME WORKING: Staff employment contracts state that we may reduce the working week and commensurately reduce pay under certain circumstances. We are proposing that from [DATE] until at least [DATE] the business reduces its standard full time working week to [4 days.] In the case of part time workers we ask that they will undertake a similar 20% reduction. We request that all employees speak with [MANAGER] by [DATE] to determine their shortened working pattern and to discuss the individual implications of this.] DRAFTING NOTE: A temporary variation of terms letter will be necessary for each employee (myHRdept can provide.)
5. [REDUCTION IN PAY OR BENEFIT: Staff in the following positions, [DESCRIPTIONS] are requested to take a temporary cut in pay of [%age] from [DATE] until [DATE.] [MANAGER] will discuss the implications of this and will ask employees to sign a confirmation of a temporary variation of terms. DRAFTING NOTE: High risk and needs to be agreed with employees via a temporary variation of terms agreement. Imposition is possible (v risky) provided consultation has taken place with employees. Reductions in pay CANNOT reduce the rate of pay below UK minimum wage/national living wage in any single pay period.
6. [FLEXIBLE WORKING: Staff who feel able to undertake shorter working hours perhaps with different start/finish times to suit their external commitments should please notify [MANAGER] as soon as possible. Revised working patterns may be possible on a temporary basis during the outbreak period or on an ongoing basis in some cases.] DRAFTING NOTE: will need variation terms letters including notice to revert to normal working pattern
The proposed changes will last no longer than is necessary and all changes to terms will be reversed (unless otherwise agreed with employees) at the point when business conditions return to a more normal footing – this is expected to be in the summer.
These are tough measures and we are aware of the sacrifices our staff will be making – we will try our best to support particular cases of hardship and we hope that everyone will appreciate that these actions are at heart intended to protect the future employment of all of our staff as far as is possible.
Further information about the proposed changes is available from [MANAGER.]