Covid-19: What steps can SMEs take to survive?

Covid-19 has become a global emergency with horrifying speed. What was first highlighted in worldwide news cycles at the end of December as an outbreak of a novel coronavirus in the Chinese city of Wuhan has quickly and aggressively reached the doorstep of Irish people and businesses.

In the space of a few days, Ireland has witnessed the unprecedented closure of educational institutions, childcare facilities, pubs and restaurants. Mass gatherings have been restricted and businesses have scaled back, leading to thousands of job losses.

As the spread of Covid-19 continues, SMEs and businesses in Ireland are being forced to take immediate and drastic steps to deal with the impact of the coronavirus on the workforce and the downturn in economic activity. First and foremost, employers must ensure that steps are taken to protect the health and safety of employees, but it is crucial they also be aware of what actions can be taken to protect their business and jobs during this difficult period.

Health and safety issues

Employers have a statutory obligation under the Safety, Health & Welfare at Work Act 2005 (as amended) to ensure the health and safety of employees at work as far as reasonably practicable. As Covid-19 exposure is a major public health risk, the Health and Safety Authority has indicated that an assessment of the risk of the coronavirus in the workplace should be carried out and appropriate steps taken to minimise the risk of infection.

For detailed information on health and safety requirements in the workplace, employers should adhere to governmental advice and guidance from the World Health Organisation. The Covid-19 situation is rapidly evolving and changing on a daily basis, so employers should continue to keep abreast of all updated advice from official authorities and sources.

Employee pay and leave entitlements

The Covid-19 crisis has introduced a number of difficulties for employers in Ireland.

The first issue that has arisen is the requirement to pay an employee exhibiting symptoms of the coronavirus and those who contract the disease. Employers should, in the first instance, examine their contracts of employment and sick pay policies, which will dictate whether employees have a contractual right entitlement to sick pay. The law in Ireland does not require an employer to pay an employee on sick leave in the absence of a contractual requirement.

Under normal circumstances where an employer does not pay sick leave, an employee may be entitled to an illness benefit payment from the Department of Employment Affairs and Social Protection, subject to certain qualifying criteria. However, the Covid-19 crisis has brought about an emergency amendment to the rules governing illness benefit and supplementary welfare allowance, which provides that if an employee is diagnosed with coronavirus, or alternatively is required to self-isolate, the following will apply:

* The employee will not be required to wait six days to apply for illness benefit;

* The illness benefit payment is increased from €203 to €305 for a two-week period of self-isolation or alternatively for the duration of the infection;

* The usual PRSI requirements thresholds for illness benefit and means test for supplementary welfare allowance will be waived in the event of a medical directions to self-isolate or a diagnosis of coronavirus.

The situation differs in a case of an employee travelling back from an infected area who is directed by an employer to self-isolate. Whilst there is no automatic right to be paid in this instance, the facts underlying the employee’s reason for travel will be of relevance.

For example, if the employee travelled to the infected area on the employer’s instruction, it is arguable that the employee should be paid during a subsequent period of self-isolation. If the travel was undertaken for personal reasons, an employer has no obligation to pay an employee during a period of self-isolation.

When an office is closed but the employees are capable of working from home, the employer is required to pay them. However, if employees cannot work from home, the employer does not have an obligation to pay them, which may ultimately give rise to a lay-off situation. It is open to the employer to consider alternatives, such as the employee taking accrued annual leave in these circumstances.

Other scenarios include situations where an employee is required to be absent from work to assist a family member who has contracted Covid-19. It may be an option for an employee to take force majeure leave in this instance.

A major issue that has arisen in light of school closures is the right of employees to pay in circumstances where they cannot attend work in order to care for their children. In this instance, if parent employees are unable to carry out their duties, consideration can be given to taking annual leave, parental leave or unpaid leave, with the agreement of the employer.

Temporarily reducing the workforce

The impact of Covid-19 has led to decreased commercial activity resulting in temporary job losses. If job losses are anticipated by an employer, regard should be paid to the Redundancy Payments Acts 1967-2014, which makes provision to temporarily lay off employees or to put them on short-time working hours on notice.

It should be noted that employees cannot be placed on lay-off/short time without an express contractual right or implied right, under custom and practice, to do so. The absence of such a provision could lead to a claim for breach of contract if an employee is laid off or placed on short-time without agreement. It is always advisable to agree lay-offs/short-time with employees in those circumstances. Notwithstanding this, it is likely that a court would imply a right to lay off given the gravity of the current global circumstances.

Short-time working

Short-time working arises when an employee’s hours of work reduce to less than 50 per cent of the normal weekly working hours or weekly pay.

It is open to employees who have been placed on short-time working from five days to three days or fewer to make an application to the Department of Employment Affairs and Social Protection for short-time work support which is a form of jobseeker’s benefit. This can be paid for a maximum period of 234 days. In order to qualify for this payment, the employee must:

* Be temporarily working a standard reduced weekly work pattern;

* Be working three days or fewer a week having previously worked full-time;

* Be under 66;

* Be capable and available for full-time work;

* Have the requisite PRSI contributions.

Lay-offs

Lay-offs arise when the employer is temporarily unable to provide work for employees.

In response to the rapid development of Covid-19 and the sudden forced closure of Irish businesses, the government has introduced a pandemic unemployment payment which is now available to employees and the self-employed. This emergency measure will provide a payment of €203 per week to any employed or self-employed person who has lost work due to the pandemic. The payment will be available for six weeks. It is a requirement for individuals seeking the payment to apply for normal jobseeker’s payments during the six-week period.

It is possible to apply for the payment online with a Public Services Card or through the post. The Department of Employment Affairs and Social Protection has requested that applications for the payment be made online and by post and not to attend at local offices so that social distancing rules can be properly observed.

As for employers, the government have urged them to continue paying staff throughout this period and a temporary refund scheme for employers, at a rate of €203 per employee per week, has been established.

Short-time/lay-off notification

An employer must reasonably believe that the short-time working or lay-off is not permanent, which must be communicated to the employees. An employer is required to give notice of short-time and lay-off to employees. However, the legislation does not provide for a minimum period of notice. It is likely that exceptional circumstances, such as the current Covid-19 crisis, will justify a short period.

Short-time/layoff selection

It is also important that careful consideration should be given to selecting employees for short time and lay-off. Fair procedures require that objective selection criteria be applied and care must be taken not to discriminate against employees on any of the nine grounds contained in the Employment Equality Acts 1998-2015.

Redundancy

Employers should note that employees with the qualifying criteria can serve a notice on an employer claiming redundancy if they have been laid off/on short-time for four or more consecutive weeks or for six weeks (not more than three consecutive) in a 13-week period. However, an employer can serve a counter-notice against the redundancy if it can give the employee 13 weeks work without lay off/short time within four weeks of the employee’s notice.

We are in unprecedented and uncertain times. Employers and employees should continue to carefully observe health and safety advice from official sources for the duration of the Covid-19 pandemic. They should also continue to work together in an effort to preserve employment and businesses in the long term.

Richard Lee is a partner at BHSM Solicitors. This article is for general information purposes. Legal advice must be obtained for individual circumstances