Following the outbreak of the infectious respiratory virus, Coronavirus, many airlines have reduced the number of mainland China flights that they are operating, including Cathay Pacific Airways.
Due to the virus, Cathay Pacific, Hong Kong’s flagship airline, have been forced to cut 90% of their flights to the mainland area of the country, which makes up around a fifth of all its flights.
Cathay Pacific unpaid leave request
As a result of the reduction in mainland China flights, the airline has asked its 27,000 employees to take three weeks unpaid leave. The request was made by Cathay Pacific CEO, Augustus Tang, who released an internal video statement in which he outlined a voluntary ‘special leave scheme’ where workers were encouraged to take three weeks of unpaid leave between 1st March and 30th June.
Whilst not forcing the employees to take leave, the company has asked its workers to “share in our current challenges” by abiding with the unpaid leave request to ease their wage costs.
In a separate statement issued by Cathay Pacific, the airline said:
“In view of the Novel Coronavirus outbreak and also significant drop in market demand, we just announced massive capacity cuts yesterday.
“Preserving cash is the key to protecting our business. We have already been taking multiple measures to achieve this.
“Today, we are appealing to all employees to participate in the special leave scheme, which will take effect from 1 March and last until 30 June. All employees will have the option to take three weeks of unpaid leave in this period.”
The news has unsurprisingly not been welcomed by the airline’s employees who will be concerned by their employers request and the overall financial stability of the company.
The airline has already been facing issues of late due to the anti-Government protests in Hong Kong which has effected passenger demand and has caused them to cancel hundreds of flights. Hong Kong is an integral part of the airline’s business.
Comment
This report highlights that there can be factors beyond an employer’s control that have a significant impact on trading conditions and raises the question of how far an employer can go in sharing that burden with employees.
Under UK employment law provisions, employers can dismiss employees on grounds of redundancy where a workplace closes or there is less work of a particular kind to do. An employer might not wish to take such drastic action however, if the reduction in work is temporary and they wish to retain staff for when things pick up.
If there is flexibility in the employment contracts of staff concerned, the employer may legitimately be able to reduce hours (and therefore pay) for the period of downtime.
Also, employers have the right to require employees to take their holiday provided they are given adequate notice and an employer could exercise this right. Holiday would of course be paid but this would reduce the employee’s remaining holiday entitlement.
Employers can also include provisions regarding “lay-off” in employment contracts. Most commonly seen in manufacturing, lay off provisions allow an employer to provide no work to an employee. This will usually either be for an express period or otherwise, an implied reasonable period. If an employer attempts to temporarily lay off staff without the contractual right to do so, they will risk constructive dismissal claims from the employees concerned. In some circumstances, employees who are laid off can claim guarantee payments and/or choosing to terminate their employment and claim a redundancy payment instead.
How Nelsons can help
Laura Kearsley is a Partner in our expert Employment Law team.
For further information on employment contracts and maintaining a responsive workforce or to comment on this article, please contact Laura or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.