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17 April 2020

What is Covid-19 teaching us a business?

What are we learning from our experience so far of providing legal and business consultancy services during the covid-19 outbreak? Oliver Brabbins, Director, considers the challenges faced so far in both running our own business and helping others run theirs.

What I did in the Coronavirus Holidays and what is Covid-19 teaching us a business…? All employers have had to go through a very steep learning curve over the last few weeks coming to terms with the devastating effects of Coronavirus or Covid-19.  These are worrying times for employers and employees alike.

Most of us learnt a new term: furlough leave, which I think last saw serious service sometime in the Crimean War in reference to military leave for cavalrymen.  We all now know that it means a period of lay-off with 80% of pay backed by government grant (the Coronavirus Job Retention Scheme – ‘JRS’).

The grant will be available to all employers, in relation to their employees, employed on or before 28 February 2020, who are laid-off and not required to work for a minimum of 3 weeks.  The intention is that HMRC will make payment directly to employers once they have made an application through the ‘portal’, which sounds more fun and sci-fi than I imagine it is but at the time of writing it is not available to view, at least in this quadrant of the galaxy.

What else have we leant?  The government has engaged us in a kind of elaborate treasury hunt, where vital information on business critical matters, like JRS is sent out piecemeal and in potentially contradictory guidance notes, with just enough information missing to keep you on the look-out for the next instalment.

How are businesses using furlough leave?

Most employers that we have spoken to have placed many (and in some cases all) of their employees on furlough leave.  This is despite not having the contractual right to lay-off on reduced pay. Employers are taking the risk to do so although we are advising them to try to mitigate that risk by seeking signed approval from their employees and to enter binding agreements.

What does the future hold?

The problems I believe employers will face, if they survive the economic turbulence, will be from the need to make redundancies when the government turns off the JRS support but the economy has not returned to normal activity levels.  Employers would be well advised to start to prepare now for such an eventuality.  The main points to watch out for are:

 

  1. Plan meticulously and start doing so now; valuable time should not be wasted waiting for an up-tick in economic prospects before planning for the consultation and selection process necessary to effect fair redundancy dismissals;

 

  1. If it is possible that you will be dismissing 20 or more employees at one establishment in a 90 day period, start to put in place now, the employee representatives necessary, if you don’t recognise a trade union or have a works council.  It would also be prudent to start to collate the information you need to provide to employee representatives.

 

  1. If you are going to need to propose selection criteria, start to work on those now, with expert guidance if necessary.

 

  1. Make an early assessment of what staffing needs you will need on a best estimate of what economic activity will be like as social distancing comes to an end. It may be possible to consult with employees whilst they are furloughed, bearing in mind if more than 20 employees are at risk of redundancy, there will need to be a minimum of 30 days collective consultation before the first of the dismissals takes effect.

 

  1. Form a small tight knit working group of managers and limit to an absolute minimum the email traffic between you. Ensure that it is clear in any documents you produce in connection with the possible redundancies that they are preliminary in nature, proposals and subject to finalisation after consultation with the employees.  Documents prepared for the purposes of taking legal advice should make that clear in the text and are therefore safe from disclosure in any litigation or data subject access request.

Best case scenario, this is putting in place a system that you will not require, in the hope that you can return your staff back to work after furlough leave. It does however, ensure that you are well placed to protect the business if the Government turn off the JRS system before your business and its market returns to financial stability.

Our Business Consultancy and Restructuring Team has expertise in working with businesses on the strategic development, restructure, rescue and recovery/refinancing of their business. If you would like to speak to a member of the team about managing your business through the current Covid-19 crisis, we are offering a free initial Zoom consultation meeting.

Please join our LinkedIn Coronavirus Business Discussion Group to share advice with local businesses.

For more information on employment law through this Covid-19 period, please read our articles on:
Redundancy, lay-off, short-time working and Covid-19

Covid-19: Practical points – Collective consultation and redundancy

Q&A: Employment law and Covid-19

JRS Final Guidance: 6 key takeaways

*The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.

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