COVID-19 (better known as Coronavirus) has been declared a pandemic by the World Health Organisation. The situation is developing on an almost hourly basis. Unfortunately, many football clubs may have to consider means of downsizing their workforce to get through the crisis. This note briefly looks at some of the options available to a club in respect of employees who are not players.
Reduction in hours and/or pay
Wherever possible agree any changes with employees. During the current crisis many employees may be open to reducing hours and/or pay if the alternative is losing their job or lay-off, on no pay or, potentially, the club falling into administration and perhaps ultimately liquidation. If agreement is reached with the employee this should be properly documented to ensure it is enforceable if ever challenged at a later date.If it is not possible to agree changes with an employee the club should look towards the contract of employment. Clubs should consider whether there is any provision within the contract that would allow the club to make changes? For example, is there a short-time working clause that allows hours to be cut?If the two above options are not available the club could consider a unilateral change to the employee's contract but this is risky as the club would then be in breach of contract. Clubs should not take this step without first obtaining legal advice.
Coronavirus Job Retention Scheme
On 20th March 2020 the Chancellor of the Exchequer announced the Coronavirus Job Retention Scheme (the Scheme). The Scheme will allow all UK businesses, large or small, to apply to HMRC for a grant to cover most of the wages of employees who would otherwise have been laid-off or made redundant as a result of the Coronavirus. The Scheme will be in place for at least three months and be backdated to cover wage costs from 1st March 2020 but the Government has said it will extend this if necessary. Under the Scheme employers will be able to apply for re-imbursement of 80% of an affected employees wage costs, up to a cap of £2,500 per month, per employee. Freeth's have produced a Q&A regarding Government backed business support which can be found here. The Scheme is an alternative to lay-off or redundancy.
Lay-off
Lay-off has a technical meaning in employment law and means sending the employee home without work or pay (except for a limited entitlement to statutory guarantee pay).In order to lay-off there should be a contractual right to do so. If there is no lay-off provision in the contract of employment the club should obtain legal advice before doing anything else. If the club has the right to lay-off this helps it retain its workforce and reduce its wage costs. However, the downside for the club is that lay-off (and short-time working, see above) can trigger the right to a redundancy payment at a later date. If an employee is on lay-off or short time working for four consecutive weeks, or six weeks in any 13 week period, they may be able to claim a statutory redundancy payment. It is important that any club obtains legal advice before proceeding with a lay-off.
Redundancy
If a club determines that it now requires fewer employees it could consider redundancy. The downside of redundancy is that the employee will be dismissed, which means the club may lose talent. It also exposes itself to the risk of unfair dismissal (and other) claims. Most redundancies will also take time and during the current crisis the club may need to act very quickly to protect its business. However, it is an option if a club needs to reduce headcount as a result of the current crisis.
Regulations
Clubs will need to consider the impact employee changes will have on their financial liquidity but also on compliance with league and/or competition rules. For example, making a number of employees redundant may impact upon your financial fair play position. Clubs should obtain confirmation that any steps they intend to take will be compliant with football regulations.Freeths' Sports team are able to assist you in managing your workforce, and can help you answer the questions you will no doubt be asking in the wake of Coronavirus.
If you would like to talk through the consequences for your business, please email us and one of our team will get in touch.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.