Businesses had to close down work for two days in March due to the impact of flooding caused by the severe weather. Additionally, they are worried they will have to close again in light of the coronavirus outbreak, so do they have to pay the staff?
Given the amount of rain the UK has received over the last month, there is little surprise that this has caused an issue for businesses. Having to suspend business activities is never ideal but it is something businesses may have to consider in light of the continued bad weather and the coronavirus outbreak. To compound things, businesses could have to pay staff their contractual hours regardless of a temporary closure.
Whether they are entitled to this pay will ultimately be determined by their contract of employment and all affected businesses should review these carefully. In the absence of any lay-off clause, they will have no choice but to issue staff with full pay for any time they are contractually obliged to work. Likewise, staff who worked part of their arranged shift before being sent home should be paid for the full amount. Failing to pay staff in this situation could lead to claims for unlawful deductions and breach of contract.
Alternatively, if your contract has a lay-off clause in place, which provides for reduced pay, then they will be able to exercise this and avoid paying staff for any time they are working due to the unexpected closure. An employee can be laid off in this situation if there is no available work for them, allowing your client to save money in the process.
However, just because they are on lay-off doesn’t mean they aren’t entitled to any money at all, as employees with at least one month’s service will be entitled to statutory guarantee pay in this situation. Statutory guarantee pay is calculated by multiplying the number of hours the employee would have worked on the day in question by their guaranteed hourly rate. Having said this, the amount is capped at a maximum of £29 per day and the payment is limited to 5 days within any rolling three-month period.
In summary, the existence of a lay-off clause is key in determining whether a business has to pay staff in this situation. If a business is interested in introducing a lay-off clause then they should consult with staff to agree a change to their terms and conditions in the event that the business has to close temporarily in the future. [1]
[1] Reproduced from Croner Taxwise