When disaster strikes – The effect on employees
By Marie van der Zyl
The implications for employees as the result of disaster in the workplace
In the current climate, businesses are being told to stay alert to potential terrorist threats, which would most likely target their premises. However, the threat from terrorism is only one of a great number of ways in which business premises can be struck by disaster. The more common causes of destruction are fire and flooding which can have severe knock-on effects to employees.
A recent example of this occurred during late April when shoppers, residents and workers in central London’s busiest shopping district were all affected by a fire on Oxford Street. One hundred and fifty fire fighters tackled a blaze above the New Look fashion store, close to Oxford Circus. Thankfully, there were no reports of any injuries, however, nearby buildings had to be evacuated and an area between Oxford Circus and Tottenham Court Road was closed off with initial fears that the building above New Look would collapse.
One can recount many occasions where workplaces, such as warehouses and factories have been razed to the ground or flooded to the point where it is impossible for workers to perform their duties. Whilst businesses count the cost of these disasters in terms of profit margins, what were the consequences of this ‘force majeure’ on employee’s rights?
In the event that employees cannot attend work for a very short period of time, or the organisation has capacity to move staff to other local workplaces, the effect on employees will be reduced. However, in the event of a factory or warehouse disaster, the effect on staff may be more permanent.
In these circumstances the answer is found in regulations regarding lay-offs and redundancy. Thankfully HR managers and employment lawyers rarely have to deal with the issue of lay-offs and workplace disasters.
A lay-off is considered temporary, either where employees are not provided with work by their employer or there is another occurrence (e.g. a fire) which affects the normal working of an organisation. There is a general right for employers to tell employees not to turn up for work; however, there is no general right for employees not to be paid as a result of work not being available and therefore employees would generally receive full pay.
There are three circumstances in which an employer can lay-off employees without, or with reduced, pay (although see 'statutory guaranteed pay' below):
- Where there is an express contractual right agreed between the employer and the employee (whether direct, through a trade union or by way of national agreement).
- Where there is an implied right for the employer to lay-off (i.e. where there is sufficient contemporaneous evidence to show that is has been established over a long period of time through custom and practice).
- Where both parties have agreed to alter the employee’s contractual terms to include a right to lay-off in the particular circumstance. This may be agreed by an employee to avoid redundancy. Such an agreement would not however presuppose the employer having the right in the future to lay-off the employer without pay.
Statutory guarantee payments
If the employer has the right to lay-off employees, they will not be entitled to their usual pay. They will however, be entitled to a statutory guarantee payment (“SGP”) from their employer.
Employees are only entitled to an SGP if they meet all of the following conditions:
- They are not provided with any work for one complete working day during which they would normally be required to work
- They have been employed continuously for at least one month
- They are reasonably available for work
- They are not refusing reasonable alternative work
- They have not been laid off because of industrial action.
SGPs are made for a maximum of five days in any rolling period of three months, unless an employee is contracted to work less than five days in a week (in which case the entitlement cannot exceed the number days the employee is required to work each week).
The amount of an SGP is calculated by multiplying the number of normal working hours for the day in question by the guaranteed hourly rate (one week’s pay divided by the number of normal working hours in a week), subject to an upper daily limit of £19.60. If an employee has already received payment under a contractual agreement, this will be offset against the employer’s liability under the SGP. On days when the SGP is not payable, an employee may be entitled to claim state benefits.
Where an employee does not receive an SGP to which they consider they are entitled their recourse is to the employment tribunal and the usual three-month limitation period applies.
In the event of a severe disaster, which results in the complete destruction of the work place, the only option available to an employer may be redundancy. In these circumstances the usual redundancy considerations should apply (i.e. considering whether there is suitable alternative employment elsewhere within the organisation).
Alternatively, if an employee is laid off for four consecutive weeks - or for any six weeks in a 13-week period - the employee can give notice to the employer that they intend to claim a redundancy payment. The employer can either accept this notice or issue a counter-notice resisting the application, if work will be available in the near future. An employee can however challenge any counter-notice in the tribunal.
This article was first published on Consult Gee HR during June 2007. www.consultgee.co.uk
This document reflects the law and practice as at June 2007. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.