Introduction
The COVID-19 outbreak has brought about widespread disruption and change for Companies, making them revisit how to operate in the present climate.
We have received a number of questions from Guernsey businesses on how best to respond to and tackle various aspects of the ‘new normal’ including aspects relating to the employment relationship. One overarching theme is maintaining financial viability during this time.
With the confirmation of a phased exit strategy by the States of Guernsey and the school closures remaining in place for a further 5 weeks, businesses will need to plan for the longer term.
As such we have put together the below free advice to help Guernsey employers navigate through this challenging time. The below will be of relevance for our Guernsey and Jersey clients. It is an evolving document and will be updated on an ongoing basis to keep up with the ever changing position and as relevant information comes to light.
Frequently Asked Questions
Q. What assistance is available for my business and employees?
A. There are a variety of options available to small to medium businesses.
The Co-Sharing Payroll Scheme – The States of Guernsey will assist employers in those sectors most affected by the current climate, to pay their employees a figure equivalent to 80% of the current minimum wage which is presently set at £8.50. This is on the condition that the employer covers the extra 20% shortfall to meet the minimum wage threshold. The level of support will be calculated based on the number of hours normally worked for each permanent employee. This assistance is available for 13 weeks, until late June, when the support provided will be revisited. Employers will have to have been trading for at least six months; since 1 September 2019.
The Small Business Grant – The States of Guernsey have committed to providing a £3000 grant to support small businesses with 10 employees or less. This grant can be utilised in any way the business deems suitable and is intended to last three months.
To be eligible for the above initiatives your business will need to fall into one of the priority industry sectors identified by the States of Guernsey for this support and have been trading for a least six months – before 1 September 2019.
Government Backed Loan Scheme – The scheme will enable trading businesses to obtain support in the form of a loan from one of the clearing banks which will be backed by the States of Guernsey up to 80% of the loan. The scheme is operated by the clearing banks – Barclays, HSBC, Lloyds and RBSI/NatWest. The aim of the scheme is to enable additional liquidity support for Bailiwick businesses.
These measures are in addition to businesses being able to make staggered payment or claim deferral of employer’s social insurance contributions for quarters 1 and 2 of this year.
Further details are available here. Should you wish to apply for these new measures, the first step is to email [email protected] with the exception of the Loan Scheme. Businesses are requested to contact the named banks directly. Please note evidence of your total turnover for 2019 and the losses incurred during this period may be required upon application of any of the above measures.
Q. Can I ask employees to take some of their annual leave allowance during this time?
A. Without an express provision within the employment contract which allows the employer to enforce annual leave, the key is to request and gain the employees consent on use of annual leave and its duration. It is important to discuss through all the options with the employee and in many cases an employee, after considering the alternatives such as unpaid leave, may choose to take annual leave. It is good practice for the equivalent amount of notice to be provided for the amount of leave you wish the employee to take, but this may be waived given the exceptional circumstances employers find themselves in.
Q. Can I ask employees to give up their booked annual leave should this coincide when business and life returns to normal?
A. Unless the contract provides for this situation, employers do not have the legal right to amend an employee’s annual leave once this has been agreed through the company’s recognised procedure. Employers may request the leave is changed but the employee is under no obligation to amend their leave should this be when they need it and have been agreed.
The same rule applies should employees wish to amend agreed annual leave. Employees may come forward and request for leave due to be taken during the lockdown, to be taken at another time later in the year when things get back to normal. Employees with child caring responsibilities may also wish to amend their leave, if the annual leave was originally taken to cover childcare for the School Easter holidays.
Employers may agree to such changes to accommodate employees however caution should be exercised from a resource planning perspective once business and life resumes. There may be much work to do once businesses operations resume and having a lot of people on leave at the same time will not be beneficial. Similarly this may create a bottle neck of untaken leave towards the end of the year and further administrative challenges.
Q. Can I reduce employee hours or salary to protect the financial viability of the business?
A. Businesses who have no financial reserves and are unable to continue operating as it they not classed as essential by the States of Guernsey, may wish to explore reducing employee’s hours or salaries. Even where businesses are classed as essential the conditions in relation of social distancing and maximum numbers of personnel on site at any time may lead employers to consider such measures.
This cannot be done unilaterally without a process being undertaken. The first stage of the process is to consult with employees to discuss the reasoning behind the contractual change, what the alternatives are and how long any changes will last. If employees consent to the change, a letter should be issued which they should sign and return. In such circumstances, confirmation by email may be acceptable to expedite matters but be sure to place a read receipt on the email and a reasonable timeframe to respond. It would be prudent to also place a reasonable deadline for a response in the email, making it clear that a lack of response will be taken as acceptance of the changes. In such circumstances, notice of the email may be verbally made to the employee before it is sent or followed up afterwards.
Where an employee refuses to the change, even for an intermediate period, further discussions should be held with the employee to explain the situation and understand the nature of the objection. Employees can look at their own finances to see if they can accommodate this change, and where possible speak to their loan or mortgage lenders to explore whether a payment holiday can be arranged. Many gyms are permitting members to freeze their membership payments also.
Where employees continue to dispute the change in terms, and as a last resort, employers may consider issuing the employee with notice and offering new terms to the employee in the form of an amended written statement or contract. If the employee refuses to accept the new contract this will be classed as a dismissal on the basis of some other substantial reason.
Caution should be exercised with this course of action as it may expose the employer to an employment claim. The Tribunal may take these unprecedented times into consideration should employers be able to show that they had a valid and justified reason for this course of action, but there is no guarantee that this is the position the Tribunal will adopt.
Q. Are there any other options to protect the financial viability and liquidity of the business and in turn the employer’s options?
A. Other options to consider may be a pay deferral of employee salaries – deferring payments to when the lockdown or impact of the pandemic is over and normal work resumes. This could be paid over monthly instalments or as a one off payment once the company’s finances are in better health. The above consultation and contractual variation process would need to be followed and we would urge employers to confirm approval in writing.
Alternatives could be to lay off employees – which is effectively asking them to stop all work and pay for a period due to lack of work. While common in some industries, employers should exercise caution as this may only be done if the contract of employment has a specific provision in this regard.
Further measures may include, pay and bonus freezes; restricting recruitment plans and withdrawing offers and potentially exploring a redundancy process as a last resort.
Q. An employee has chosen to self-isolate due to exhibiting symptoms although I have no evidence of any symptoms. Can I take disciplinary action or decline to pay contractual sick pay?
A. Employers have a duty of care to employees which is an implied term in every employer -employee relationship whether or not this is expressly stated in the contract or not. In addition the Health and Safety at Work Ordinance states that it is the employer’s duty to look after the health, safety and welfare of all employees while at work. This would apply to all employees who have been provided with remote access and can work from home.
Employers should follow the normal process of obtaining a sick note and where one has not been provided, as we understand to be the case in certain circumstances, or the employee has not been to a doctor but is acting on States of Guernsey advice, request to see sight of the self-isolation form provided to Social Security. Where the employee has visited a doctor but has not received a certificate, it may be reasonable (dependent on the circumstances) to follow this up at a later date and request the employee obtains a letter from their doctor.
Employers taking disciplinary action in this regard, with no reasonable justification or evidence to support the action, could find themselves exposed to a claim of Unfair Dismissal should the disciplinary action result in dismissal or the employee feels that their position is untenable and leaves the company on the basis of constructive unfair dismissal. It is worthy to note that employees may claim unfair dismissal without having served one year’s notice, if the basis of the claim is on the grounds of health and safety as this falls within the automatically unfair reasons to dismiss.
Q. I had made an offer of employment to a new starter prior to the COVID-19 pandemic starting and they are in the process of working their notice. What are my options?
A. This can be complicated, particularly if the offer has been accepted as this represents a contract in law being formed – whether or not the employee has signed and returned the contract of employment.
If the business and its operations are closed due to the lockdown, one option is to defer the start date to a later date to see if they are open to starting then. If this is not accepted, due to financial responsibilities on the part of the new employee, you may need to treat them like any other employee and seek to vary their hours or salary during this period following the processes detailed above.
A further option is to withdraw the offer of employment. However as the new employee accepted the offer they are entitled to receive payment for their notice period, but only from the employees start date. Further advice should be sought if considering this course of action.
Where the business is operating remotely, employers may see this time as an opportunity to complete IT set up and induction processes. Employees can be provided with company policies, the staff handbook and also undertake online training – especially if it is required by regulation. HR staff could speak with the employee remotely to help them settle in and the line manager can also utilise this time to get to know the employee by one to one video calls, establish role requirements, familiarise them with systems and potentially provide them with certain tasks to complete. The employee can also join virtual meetings to develop an understanding of the business and its operations, which can also help with their integration, enabling them to hit the ground running once normal business and life resumes.