Last week’s Budget saw the introduction of a number of measures to support businesses and individuals during the coronavirus crisis. But there are a number of actions employers can consider taking themselves that could protect them financially but also support the financial and mental wellbeing of staff. Rachel Collins explains.
The Budget announced a £12 billion package of temporary and targeted measures designed to assist public services, individuals and businesses in their response to the disruption caused by coronavirus.
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It covered a broad range of issues and included some key, and perhaps vital, support for small to medium sized employers.
The government had recently announced a temporary ‘first day of sickness’ entitlement to statutory sick pay (SSP) for coronavirus sufferers or those who have to self-isolate.
However, the chancellor bolstered those measures, extending the right to receive SSP to individuals unable to work because they have been advised to self-isolate and to those caring for people in the same household who are displaying symptoms of Covid-19.
In recognition of the additional costs and potential disruption to cash flow that this emergency legislation will have on businesses, he also announced financial relief for small and medium sized employers. Specifically, those with less than 250 employees (as at 28 February 2020) will be able to reclaim up to two weeks’ SSP paid to eligible employees who have been absent due to coronavirus.
The announcement is welcome relief for small and medium businesses – at a time when employers are being told to expect anywhere up to 20% of the workforce to be unable to work at any given time.
The potential ramifications for small businesses are clearly huge, where a liquidity crisis can quickly spell disaster, and so it is hoped that the additional injection of £2 billion for up to 2 million businesses will ease the strain by bridging cash flow problems and protecting jobs to ensure businesses are in a position to bounce back quickly when the economy recovers.
What can we learn from the Budget?
In this Budget, the Government reacted quickly to the Covid-19 pandemic in an attempt to stem its potential adverse economic effects (as well as announcing a broader package of funding aimed at stimulating wider growth).
What can employers learn from the Government’s proactive approach? Put simply, they should follow suit, and look to put precautionary measures in place as soon as possible.
Employers should act responsively, and decisively to economic pressures and ensure that all contingency planning, policies and procedures are carefully considered in the event that it is necessary to invoke them at short notice.
Employers should, as a matter of priority, review and, if necessary, update their sickness policies and ensure flexible and remote working policies are sufficiently robust to deal with any future measures relating to coronavirus.
There are many measures that have been recently utilised across Europe that could come into effect in the UK in the coming days and weeks.
Practical steps could include setting up a coronavirus response team to monitor the latest guidance and regularly meet to consider the businesses response in a cohesive manner. In addition, employers may wish to implement and communicate an infectious disease contingency plan, which provides clear guidance for employees in the event that it is necessary to urgently close the workplace.
Stress-testing these contingency plans over the coming days and weeks to ensure that servers are able to cope would also be advisable.
Build contingency strategies
This week, the Government has taken clear steps in an attempt to support the economy and to mitigate the effect of the market volatility we have seen play out in direct response to the coronavirus pandemic. The market reaction is somewhat reminiscent of the financial crash of 2008.
Employers would therefore be wise to cast their mind back to 2008 and consider what strategies they could also adopt now in the event that the market does not recover quickly.
In 2008, many employers had a headwind on the crash itself and so had time to prepare for effectively trimming their workforce where necessary.
However, in a coronavirus climate, employers have not had that luxury – for some, it could be about contracting in a matter of days rather than weeks. Nonetheless, businesses should assess any headwinds they may have now and explore the options available in the event that it is required to contract its workforce at short notice.
In particular, exploring the use of voluntary sabbaticals and career breaks may be a wise move, as they could assist in relieving the strain in some areas of the business in the short term, as well as providing employees with the comfort that they have a right to return to their role.
Employers could also consider exercising their right to require employees to take paid holiday at a specified time. Although employees would be entitled to receive pay in this situation and so it would not assist in reducing payroll cost, it would ensure that employees are available and able to support income generation when work levels increase.
For those employers who have the contractual ability to “lay-off” employees, thought should be given to whether this right should be invoked in the coming weeks.
They should however be mindful that the use of lay-off is generally only appropriate where the downturn in work is expected to last for four weeks or less, given the ability of employees to claim redundancy payments from the business if the lay-off period lasts for a longer period.
Reducing working hours
Where a downturn in work may be a longer lasting concern, an alternative response could be to commence a collective consultation process around a ‘working hours scheme’, where employees agree to reduce their working hours (and corresponding pay and benefits) in the short term, as an alternative to a redundancy process.
Such a scheme can then be revoked when the business recovers. If a working hours scheme may be required, employers should be aware that collective consultation for a period of 30 days will be necessary where more than 20 employees would potentially be dismissed, and so any such consultation process should be commenced before business reaches a critical point.
Employers will of course also need to be sensitive to the mental health and anxiety of its workforce and carefully communicate its response to coronavirus.
Successfully weathering this pandemic and the inevitable employment challenges it presents will, in the long run, facilitate talent retention and ensure the workforce are motivated to assist the business in its recovery.