Volcanic eruptions over pay?

By: Annabel Kaye

Date: 28 April 2010

So many people have been caught out and found themselves stranded as airlines are grounded. Who gets paid? Who doesn’t? What happens when staff can’t get to work through no fault of their own?

Who is entitled to be paid and for what?

The UK has a remarkably flexible labour market, and the answer depends on what type of contract you have got with your staff. There is no general right for employees who don’t turn up for work to be paid, and if they are stranded and can’t get to work, you may not be obliged to pay them. Many employers do pay more than they are required to, but it is important to know when you are choosing to pay more, and when you have to pay.

Hourly paid workers

People who are paid by the hour are not automatically entitled to be paid for their absence.

Employees can ask you to allow them to take the day(s) as paid leave. You are not obliged to authorise paid leave retrospectively, but if you do so, make sure the holiday records are kept properly up to date. You cannot decide retrospectively to make this a day’s leave without the employee’s consent.

Salaried staff

There is an historic tradition in the UK (fading fast) that distinguishes between staff on annual or monthly salaries, and those on an hourly rate – the old “white collar-blue collar” divide. Traditionally salaried staff are not paid by the hour, do not receive overtime when they work more hours, nor receive a deduction when they work less.

These staff are viewed as being paid for service, rather than for the particular work performed. This group of individuals is generally entitled to pay unless the contract provides otherwise. You should check your contracts carefully. This applies even if no work is actually performed or where the employee is prevented from working due to factors beyond their control, as long as the employee remains ready and willing to serve the employer. Ready and willing would normally mean making an effort to get to work where it is safe to do so. Local staff who could have made it in would not be automatically entitled to pay if they did not turn up.

Many organisations no longer feel comfortable about having a two-tier contract system, and increasingly have one single-status contract that applies to all. So it’s possible your hourly paid staff may be in the same contractual position as salaried staff. A lot depends on what your contracts say.

Annual hours and flexi-hours contracts

Check the terms of your contracts – it may be that time not worked does not count for payment, and missed work will have to be performed at another time.

How long can this go on for?

No-one knows how long the delays will last. In employment law, this situation is known as “temporary frustration of contract” – when through no fault of employer or employee the contract cannot be performed.

During this period the contract is ‘on ice’ with no work being performed and no money being paid (unless the contract is set up in a particular way – see above).

Employers with time-sensitive work to be performed may find themselves needing to get in other staff or contractors to do the work. Call us if you are not sure if you need to pay your existing staff as well.

Are people going to be dismissed for absence?

Most employers are not going to dismiss people for a problem that is not their fault. However, some employers may feel they have no alternative but to “accept the frustration” of contract if this goes on too long. “Accepting the frustration” means that the employer accepts that the contract has come to an end.

The law of “frustration” says that if the underlying basis of the contract no longer exists, the contract comes to an end. This is not technically a dismissal, though it has a similar effect. Staff with less than a year’s service will find there is not a lot they can do about this, unless their dismissal is related to some form of unlawful discrimination.

Employers will think long and hard before doing this, but for some organisations with deadlines there may be little choice but to find replacements.

Those who were wise enough to set up contracts that did not commit them to pay when no work is done will not have to consider accepting frustration at this point, but those with different contracts may, if this goes on, find themselves with little choice.

If you don’t know if you have to pay people who are stranded – send your contracts to us for a quick free review. – email to [email protected] or fax them to us.

Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060 Website : www.irenicon.co.uk. You can follow Annabel on twitter – http://twitter.com/AnnabelKaye

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