KFC Chicken Crisis – Do Employers Have To Pay Wages If Their Business Has To Close?

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KFC suffered an extraordinary embarrassment at the end of February when it had to shut down almost half of its 900 UK outlets because it could not get chicken into its stores.

The saga began when the company, of which 80% of its stores are run on a franchise basis, switched its delivery contract from Bidvest to DHL.

Operational issues at DHL left a backlog of chicken at the delivery groups sole UK warehouse in Warwickshire.  Following the failure, questions were asked as to why KFC tried to implement the change to a new supplier with a single, new, and untested distribution centre without better contingency plans in place.

Speaking to the Guardian, technology analyst Chris Green said DHL and its software partner, Quick Service Logistics, appeared to have failed to properly match up data from KFC’s ordering process to its new system.

He said: “If you were one of KFC’s 750 franchisees you could order your replacement chicken and other supplies and usually within about 24 hours a lorry from Bidvest would appear outside your store with what you needed. The stores were used to that kind of just-in-time ordering, and that’s what’s caught them out[1]”.

Unfortunately, many innocent parties from both Bidvest and KFC suffered detriment because of the fiasco.

When Bidvest lost the KFC contract, it had to make 255 staff redundant.  It was reported by Sky news that those workers have now been offered their jobs back[2].

Franchisors operating KFC outlets may also have wondered if they were required to pay their staff, given they were unable to open for several days in some areas.

Whether or not you have to pay staff if you are unable to open your business primarily comes down to what is stated in your employment contract.

The clauses of an employment contract

There is no legal requirement for an employee to be provided with an employment contract.  However, within two months of commencing employment, an employee must be presented with a written statement of particulars.  This should set out the key details of an employee’s terms and conditions, such as the hours and place of work, general duties, and entitlement to holiday pay and sick pay.

An employment contract provides greater detail regarding the employer/employee relationship.  It usually contains the following clauses:

  • the job and role title
  • the place of work
  • pay, benefits, and expenses allowances
  • details about performance reviews and pay increases
  • the pension scheme
  • hours of work
  • holiday, sick pay and maternity/paternity leave entitlements
  • health and safety
  • termination of employment
  • deductions from salary
  • the grievance procedure
  • disciplinary and dismissal procedures

Although it is possible to download an employment contract template online, obtaining advice from an experienced employment law solicitor can provide you with a competitive advantage.  This is because a solicitor, especially one who has drafted several employment contracts in the past, will ask the right questions about your business and alert you to clauses that you should include to protect your unique commercial interests.  And such an interest may include providing a clause that states your organisation does not have to pay employees if you are unable to open your business in specific circumstances.

Snow days

The recent inclement weather experienced across the country, caused by a combination of the “Beast from the East” and Storm Emma, saw not only large numbers of businesses close, but many people being unable to get into work because of transport disruption.

Many employers naturally question if they have to pay an employee, who is rostered on to work, in circumstances where either the business cannot open, or the worker cannot get to the premises.

Nowadays it is possible for many employees to perform their duties from home.  However, in industries such as manufacturing, hospitality, construction and agriculture, a staff member must be physically present to perform their tasks.

If travel disruption is expected, employers can ask their employees to take annual leave.  However, they must provide correct notice, which is currently double the length of time the annual leave is required to be taken.  For example, if you know your workers will not be able to get to work for two days, they must be given four days’ notice that they will be required to take annual leave.  However, you can stipulate a different period of notice in your employment contract.

If an employee cannot come into work because of travel disruption caused by bad weather or strikes, there is no legal obligation for their employer to pay them.  However, if employer-provided transport is cancelled because of bad weather or travel disruption, and a worker was otherwise ready, willing and available to work, the employee should be paid for any working time they have missed.

In cases where an employee is willing and able to work and is rostered on duty, if the employer has to close the business or cannot open, unless there is a contrary clause in the employment contract, the employee is entitled to be paid for their shift.

Some contracts may allow employers to ‘lay off’ staff without pay in such circumstances.  However, it must be completely clear how the circumstances apply, and anyone with employee status will usually have a right to a statutory guarantee payment[3].

Final words

Incidents such as the KFC chicken ‘crisis’ and the recent snow highlight the importance of having a detailed employment contract, especially if you are a franchisee and may not have complete control over matters such as supply or if you must open a store in adverse weather conditions.  Decisions or mistakes made by head office can hit franchise owner/operators hard.  Having clear, concise terms in your employment law contracts can prevent an already costly situation completely strangling cashflow and severely hitting profits.

Bennett Griffin are award-winning Solicitors based in West Sussex. From our office in central Worthing our experienced and specialist Solicitors offer a comprehensive service and will work with you in an honest, considered, and practical manner. Our employment law department can advise and assist you on all employment matters.  Please contact us on 01903 229 999 or by email at info@bennett-griffin.co.uk for more information.

The information contained in this article is for general guidance only and is not intended to be legal advice. Professional advice should always be taken on the application of the law in any particular situation.

[1] https://www.theguardian.com/business/2018/feb/20/kfc-was-warned-about-switching-uk-delivery-contractor-union-says

[2] https://news.sky.com/story/kfc-goes-back-to-old-supplier-after-restaurant-delivery-crisis-11281283

[3] http://www.acas.org.uk/index.aspx?articleid=2797