Employment rights during a Company shutdown or downturn in work

It was not a good week for KFC when their new logistics supplier DHL failed to supply hundreds of KFC outlets with chicken due to operational issues. As a result, a significant number of KFC stores were closed or offered a substantially reduced menu to its customers.

One of the questions which arose from the KFC crisis was the employment law implications for KFC’s members of staff,

KFC, like many businesses in the food and drink sector, employs members of staff and workers under a range of different employment models, such as permanent, fixed-term and zero-hour contracts.

Furthermore, only 20% of KFC branches are owned and operated by KFC, with the remaining 80% operating as franchises. Therefore each business may have treated the situation differently compared to other KFC branches, depending on the downturn in work or a temporary shutdown was implemented. 

What options do employers have during a downturn in work?

One option is to see whether a lay-off and short-time working clause in contained within a Contract of Employment, which would permit an employer to provide no work or pay, or a reduction in working hours and pay on a temporary basis. However this is not permitted if it is not contained within the contract.

Alternatively, an employer could require their employees and workers to take annual leave, although notice must be provided beforehand. Therefore individuals with the statutory minimum of 5.6 weeks’ holiday entitlement are entitled to notice which is at least twice the period they are required to take, i.e. 2 weeks’ notice for a 1 week holiday.

The position for individuals on zero-hour contracts is less favourable, as a business is permitted to remove the offer to engage workers, and therefore these individuals would lose out on the opportunity to earn any income during the period of disruption.

Some members of staff could be lucky in that their positions are unaffected by the disruption or could be redeployed onto other tasks or parts of the business that are unaffected by the downturn.

For more information about employment rights during a shutdown or downturn in work, contact Sally Morris on 01905 610410 or email sally.morris@mfgsolicitors.com.