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

Introduction

COVID-19. A global emergency. What was first highlighted in worldwide news cycles as an outbreak of a novel coronavirus in Wuhan, China in December 2019, has quickly and aggressively reached the doorstep of Irish people and businesses.

In the space of days, Ireland has witnessed the unprecedented closure of educational institutions, childcare facilities, pubs, restaurants, restrictions on mass gatherings and major scaling back of businesses leading to thousands of job losses across various sectors.

As the spread of COVID-19 continues, SMEs and businesses in Ireland are being forced to take immediate (and unfortunately 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 & 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 Irish Health and Safety Authority has indicated that an assessment of the risk of COVID-19 in the workplace should be carried out and appropriate steps taken to minimise the risk of infection. For detailed information in relation to 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 advices from official authorities and sources.

Employment Issues

The COVID-19 crisis had introduced a number of difficulties now facing employers in Ireland.

Employee pay and leave entitlements

The first issue that has arisen for employers is the requirement to pay an employee exhibiting symptoms of the coronavirus and those who contract the disease. Employers should, in the first instance, have regard to their own contracts of employment and sick pay policies, which will dictate whether employees have a contractual right entitlement to receive 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 now 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 an enhanced payment of €305 for a two-week period of self-isolation or alternatively for the duration of the period of infection; and
• 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 and 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 at the election of the employee for personal reasons i.e. a holiday, an employer has no obligation to pay an employee during a subsequent period of self-isolation.

As regards an employer whose office is closed, but the employees are capable of working from home, the employer is required to pay the employees. However, if employees cannot work from home then the employer does not have an obligation to pay employees, 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 that arise 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, absent an express contractual right or implied right (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 the foregoing, it is likely that a Court would imply a right to lay off given the gravity of the current global circumstances.

Short-Time

Short-Time working arises when an employee’s hours of work reduce to less than 50% of the normal weekly working hours/weekly pay.

It is open to employees who have been placed on short-time working from five days to three days or less 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 3 days or less per week having previously worked full-time;
• Be under 66 years of age;
• Be capable and available for full-time work; and
• Have the requisite PRSI contributions.

Lay-Off

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

In response to the rapid development of the COVID-19 crisis and the sudden forced closure of Irish businesses, the government has introduced a Pandemic Unemployment Payment which is now available to employees and self-employed persons. 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 coronavirus pandemic. The payment will be available for a period of 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 Service Card or, in the absence of same, through the post. The Department of Employment Affairs and Social Protection has requested that applications for the payment is made online and by post and not to attend at local offices, in order that social distancing rules can be properly observed.

As regards employers, the Government has 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 notified 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 of notice.

Short-Time / Lay-Off 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 should 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 requisite 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 thirteen week period. However, an employer can serve a counter notice against the redundancy if it can give the employee thirteen weeks work without lay off/short time within four weeks of the employee’s notice.

Conclusion

We are in unprecedented and uncertain times. Employers and employees should continue to carefully observe health and safety advices 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.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Richard Lee, Partner, Employment & Benefits, BHSM on 01 440 8300 / rlee@bhsm.ie.

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

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