Changing worker contract terms: Coronavirus FAQs

The coronavirus outbreak is forcing employers to make difficult decisions and actions in respect of their workforce.

While the Government introduces emergency schemes to avert widescale layoffs and redundancies, employers need to be aware of the employment law implications of making changes to a worker’s contract terms.

We look at some frequently asked questions from employers relating to workforce changes during the coronavirus crisis.

Can we change an employee’s working hours or duties to cover sick workers?

This will depend on the terms of the individual’s employment contract.

Some contracts allow for the employer to make changes to the worker’s duties and working hours. Any changes would remain subject to the implied duty of trust and confidence whereby the employer must not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of trust and confidence between employer and employee. They must also ensure health and safety of the worker is not put at risk and that any other obligations that may apply are also met, such as working time regulations.

Employers may be able to rely on the ability to make slight changes while remaining within the scope of the employees’ implied duty to obey lawful and reasonable instructions.

In practice, employers should consult with employees before making changes to working hours or duties. There may be other considerations for the employee, such as childcare which would hinder their ability to accommodate the request.

Proceeding with the changes in such circumstances may give rise to a claim for indirect discrimination claim.

If there is not a contractual right, employers could still change employees’ hours and duties with their agreement.

If there is not a contractual right, employers could consult with the employee and come to an agreement to change the employees’ hours and duties.

Work has decreased – what are our options for employees with a contractual right to a particular number of hours?

Furloughed workers are those who have been asked to stop working due to a lack of available work, but have not been made redundant. Under the Coronavirus Job Retention Scheme, all employers in the UK will be able to access support to continue paying part of furloughed employees’ salaries.

Under the scheme, the Government will cover 80% of salaries – up to £2,500 per month – with all employers able to apply to HMRC to pay the wages of people who are furloughed. All UK employers are eligible, provided they have notified affected workers that they are being classified as furloughed.

Furloughed workers remain on the employer’s payroll, rather than being laid off.

Implementation details for the scheme are yet to be released.

Furloughing is being supported by the Government to avoid employers having to turn to layoffs, short time working and redundancies wherever possible.

‘Laying-off’ means providing employees with no work and no pay for a period whilst retaining them as employees.

Short-time working means providing employees with less work for a period and with correspondingly less pay.

It is not possible to lay off or apply short time working without the employee’s agreement and without a clear contractual right to do so. Doing so exposes the employer to potential claims for breach of contract, constructive dismissal and unlawful deduction from wages.

Even where an employer has a contractual right to lay off without pay, this is subject to the implied term of trust and confidence.

This means, for example, the employer should consult with employees first and give reasonable notice of any lay off to avoid being in breach of contract.

There is a specific statutory provision which provides a right for employees who have been laid off or kept on short time for four or more consecutive weeks or six weeks in any 13-week period to claim a statutory redundancy payment in certain circumstances, which only applies if the contract of employment permits layoff or short-time working.

The scheme also requires employees to resign to receive their redundancy payment.

Where employees are entitled under their contract to enhanced redundancy pay, however, they might regard claiming a statutory redundancy payment under the layoff/short-time working provisions as a route to their contractual entitlement.

There is also a system of “guarantee pay” for employees who are laid off without pay. They can claim a guarantee payment for the days on which they would normally be required to work, but the maximum is only £29 per day and entitlement is limited to five days in any three-month period.

Without an express contractual right, it would be a breach of contract to send employees home indefinitely (even if you pay them) but employers would almost certainly be able to do so for a limited period provided they pay them in full.

For employees without a contractual right to a particular number of hours, employers could reduce hours e.g. those on zero-hours contracts.

Can we still onboard new joiners?

While not ideal, it may be possible for new joiners to be inducted remotely.

It is possible to conduct right to work checks without meeting an individual face-to-face.

Employers will need to consider the practical issues of the new joiner being set up and accessing the systems required for them to become operational from home, and to be able to communicate with their new colleagues.

What if we no longer want to hire a new joiner?

If circumstances have changed, and the new joiner is no longer needed at the current time, the employer could discuss with the new joiner postponing their start date. If agreed, this should be confirmed in writing.

If the new joiner does not agree to a later start date, perhaps due to their own financial concerns, your options could include withdrawing the job offer or terminating the contract.

If they have accepted the job offer, check the offer letter and contract for the relevant notice period. An employer can terminate the contract before the individual starts their employment if they make a payment in lieu of notice (PILON). Failure to pay notice could result in a breach of contract claim.

If the individual has not yet accepted the offer, it can be withdrawn as there is no binding agreement in place.

Employers should document their reasons for taking any action relating to a postponed start date.

What if we need to make redundancies?

To avoid facing tribunal claims, you will need to ensure you follow a fair and lawful process when making roles redundant.

This includes ensuring fair selection, consultation and giving the relevant notice and payment.

For example, if the redundancies are to affect more than 20 people at one establishment or site, collective consultation obligations apply.

Can we use the special circumstance defence to a failure to consult about collective redundancies?

The defence of failure to collectively consult due to “special circumstances may apply where the employer can show it was not “reasonably practicable” for the employer to comply with the requirements, but case law indicates this would apply only in the most extreme circumstances.

The availability of emergency government funds and schemes to help employers stay off redundancies and lay offs may then place this defence out of reach. Likewise, while workers may not be able to physically attend consultations, employers should make full use of appropriate technologies to ensure andy consultations processes are not hindered by government-enforced home working.

Employers are advised to take specific advice on their circumstances as there is no definition of what constitutes “special circumstances”, or specific guidance on when it applies. An imminent insolvency situation on its own, for example, is not sufficient.

Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.