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COVID-19 - Employment Law Update 3: Job Retention Scheme - Treasury Direction


The Working Time (Coronavirus) (Amendment) Regulations 2020

The Government announced on 27 March 2020 that employees who are not able to take their annual leave due to COVID-19 will now be able to carry up to four weeks annual leave (not 5.6 weeks) over the next two years.  This will ensure employees do not lose their annual leave entitlement whilst allowing employers the flexibility to ensure the impact of COVID-19 is reduced.

Currently most employees are entitled to 28 days’ paid annual leave inclusive of bank holidays each year.  However many employers do not allow employees to carry over any annual leave into the next year.

This announcement will protect essential sectors such as the food industry in maintaining a consistent level of workforce during the Coronavirus pandemic.

Lay-off and Short time working

Although the Government has announced the Coronavirus Job Retention Scheme there are other options available to employers to assist in the financial pressures of maintaining a work force.  These options may be of particular importance for those employees who are not eligible for Furlough Leave, due to, for example, commencing employment after 28 February 2020.

Employers can lay someone off or place them on short time working where there is an express contractual right. Alternatively, there may be an agreement covering lay-offs or short time working between the organisation and the union, or a national agreement for the industry which the employer follows. Such an agreement has contractual force if it is in the individual employee's contract of employment.

The right to lay-offs or short time working may also be implied if it can be shown that it has been established over a long period by custom and practice.

Both employer and employee may agree to alter the terms of the contract so that the lay-off or short time working is by mutual agreement. However, this will not necessarily mean that the employee has agreed to vary the contract of employment to allow future lay-offs or short time working without pay.

Trying to enforce lay-offs or short-time working without the correct contractual clause will open employers up to tribunal claims

Employees can be laid off without pay where there is a specific term in their contract allowing the employer to do so. When an employee is laid off, they might be entitled to a statutory guarantee payment from the employer, limited to a maximum of five days in any period of three months.

Employees with one month’s service will be eligible to receive statutory guarantee pay (SGP) to compensate for the reduction in available work. Individuals will be entitled to SGP for every workless day – this is a day in which they would typically be required to work but their employer has not provided them with any work.  However employees must reasonably make sure they are available for work, not refuse any reasonable alternative work (including work not in their contract) and have not been laid off because of industrial action.

To calculate SGP, an employer must multiply the regular hours that the employee would have worked on the ‘workless day’ by the ‘guaranteed hourly rate’. The most an employee can receive each day is capped at £29 and the payment of SGP is limited to a maximum of five days within any rolling three-month period.

Employees can claim redundancy pay if they have been laid-off or placed on short time working for four weeks in a row, or a total of six weeks in any 13-week period and are earning less than half their usual weeks’ pay. To receive redundancy pay, employees must resign from their position and provide their employer with written notice of their intent to claim. Employers can counter this and avoid costly redundancy fees if they can guarantee the employee 13 consecutive weeks of work within four weeks of receiving this notice.

Staff may be reluctant to accept lay-offs or short time working; employers may have to explain that the arrangement is more favourable than the alternative of being made redundant. This would be especially pertinent for employees with less than two years’ continuous service, who would not be entitled to claim redundancy pay in this situation.

Disclaimer – The above facts are accurate as of 10:00 on 2 April 2020.

For advice on this, or any other employment matter, contact the employment team on 01905 723 561 or email: Guy.salter@smesolicitors.co.uk or Sonia.ali@smesolicitors.co.uk.

Added: 16 Apr 2020 09:08


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