With retail, hospitality and leisure employers facing profound and unprecedented challenges this autumn, what assistance is available and what measures might they consider taking?
The retail, hospitality and leisure sectors have been some of the hardest hit by the Covid-19 pandemic. The new three-tier restrictions announced earlier this week have caused yet further concern for the industry, especially combined with the furlough scheme drawing to a close at the end of this month.
Curfews and restrictions on which types of establishments can open, the numbers of people who can meet in groups and the mixing of households are all severely impacting retail, hospitality and leisure businesses. The Centre for Retail Research estimates that 125,000 jobs have been lost in the first eight months of 2020 in the retail sector alone, with a further 575,000 likely to be lost when the furlough scheme comes to an end. As the industry approaches the festive season, normally its busiest time, what issues should businesses be focused on?
Further government help is on hand
Despite the closure of the furlough scheme, small to medium-size businesses that can demonstrate they have been adversely affected by the pandemic will be able to take advantage of the government’s new Job Support Scheme (JSS) from 1 November 2020. Essentially, this will enable businesses whose employees are working at least a third of their working hours to share the wage support for the unworked hours with the government. Our FAQs on the JSS set out the details we know so far about how it works.
For businesses obliged to close entirely due to local restrictions, the Chancellor has announced an extension to the JSS. Under this, businesses required to close will receive two-thirds of their employees’ wages, subject to a cap.
While both aspects of the JSS provide some support, many believe it does not go far enough. Clothing retailers in particular are suffering massively from lack of footfall and the reduction in consumer spending on work and occasion wear and luxury clothing. Almost inevitably, they will need to consider other strategies to help their businesses survive the pandemic.
Measures to consider outside the Job Support Scheme
- Extend furlough by contractual agreement. This would not attract any government funding so may be unaffordable for most retailers, but some employees may agree to contractual furlough on less pay.
- Reducing hours/pay. As we approach the festive season, businesses may want to reduce costs without making redundancies (which themselves involve significant expenditure). They could consider cutting both hours and pay, lowering pay without reducing hours (subject to the minimum wage), or offering unpaid or part-paid career breaks. When changing employees’ terms and conditions, businesses should take legal advice as this may trigger collective consultation requirements and involve the risk of unfair dismissal claims unless done by consent.
- Reduce use of casuals, agency workers and seasonal workers. This may help avoid redundancies of permanent staff in the short to medium term.
- Discontinue/withdraw benefits. Employee benefits, including bonuses, could be discontinued. If these are contractual, however, legal advice should be sought as this may give rise to collective consultation obligations and/or lead to claims for breach of contract and unlawful deduction from wages.
- Retrain and redeploy staff into higher-growth areas. The “death of the high street” was a phrase coined long before the Covid-19 pandemic – it had already been under intense pressure due to decreasing footfall and increasing online sales. The pandemic has now exacerbated the situation, forcing businesses to invest in a stronger internet presence. Retailers need to counteract losses suffered in their physical stores by diversifying, responding to changes in consumer behaviour and identifying services that sales staff can offer virtually. Businesses should consider, for example, whether it is possible to retrain store staff to work in digital and online sales roles, where their consumer and product knowledge may be highly valuable.
- Make redundancies. In most cases it is inevitable that some headcount reductions will be necessary. Where 20 or more staff are affected, businesses should take legal advice to ensure they comply with their legal obligations to consult collectively with employee representatives.
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