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COVID-19: Employment Q&A

23.03.2020 Employment

Laura Livingstone

Laura Livingstone Partner, Head of Employment

As of 11 March, 2020, Coronavirus (COVID-19) has been declared a pandemic by the World Health Organisation. It is clear that employers will face further practical and financial challenges. Where necessary legal advice should be sought due to the continually changing advice. Employers should keep track of the guidance for employers, sources of note include; Public Health England and BEIS: COVID-19: guidance for employees, employers and businesses, Acas: Coronavirus: advice for employers and employees and Public Health England: COVID-19: guidance on social distancing and for vulnerable people.

Common questions asked by employers

Given the continually changing advice, an employer can be left feeling uncertain, especially given the unprecedented nature of evolving events. However, it is important that an employer thinks practically and retains perspective regarding their short and long-term business needs. Employees are unsurprisingly worried about the coronavirus and may be amenable to practical measures that the employer may require in this difficult time.

Can we use the Coronavirus Job Retention Scheme?

Almost certainly yes. The scheme is expressly stated to benefit employees “who would otherwise have been laid off”. In employment law terms, a lay off is a temporary suspension of all work. The scheme describes recipients of this benefit as ‘furloughed workers’. Furlough is a word, hitherto largely fallen into disuse in the UK, but still commonly used in the United States, that means leave of absence

Details are still being worked out at the time of writing, but under the outlines of the scheme, HMRC will reimburse 80% of furloughed workers (employees who would otherwise have been laid off) wage costs, up to a cap of £2,500 per month, which it appears will mean them up to £2,500 of each furloughed worker’s wages.

In summary employers will need to:

  • Identify and designate certain employees as potential ‘furloughed workers – i.e. workers who would otherwise have been asked to take some form of unpaid leave of absence;
  • Employers will then need to notify those employees of the proposed change in their status to furloughed workers. The Government has specifically said that this scheme is subject to normal employment law rules – changing the status of employees is a matter of negotiation and agreement. In the first instance the best way of achieving this is through consent – emailing employees and ask for their consent as an alterative to lay off, unpaid leave or even redundancy. Employers also need to be mindful of discrimination law if they are choosing within teams.
  • The detail has yet to emerge but employers will have to submit information to HMRC about the furloughed employees and what they are paid online through a portal that will be established at the Gov.uk portal. We would imagine this portal will be rolled out in the next few days - this is a complex task.

Furloughed employees will not be able to do work for employers Detail is yet to arrive but we consider it likely that there will be penalties for employers who take advantage of the scheme and do not lay off/furlough employees by asking them to continue to perform work.

What other government support is available? 

Government guidance also provides details of support available to businesses including, an employer should be aware of potential support systems including:

  • statutory sick pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance

Can we force an Employee to take Annual Leave?

Under the Working Time Regulations, an employer can compel workers to take the leave to which they are entitled on particular days. While it is not ideal, an employer could use its powers to compel workers who are not on sick leave to use their holidays during the shutdown period. The employer would, however, be required to give notice of at least twice the length of the period of leave that the workers are being ordered to take. There are no explicit requirements about the form that this notice must take. While this will not reduce the wage bill, it will ensure that employees are available for when it is required to get the business up and running again.

Can we decline those cancelling Annual Leave in order to WFH (e.g. due to travelling restrictions?

The Working Time Regulations do not specifically deal with this issue and do not explicitly give an employee the right to unilaterally withdraw a request for leave. However, even if they could, the employer could then give notice for the worker to take leave on the days in question provided that sufficient notice were provided.

What measures could I take to lower my wage bill in the short term?

Several measures an employer can consider to lower their wage bill include:

Unpaid Leave:

Employees' consent is required unless the employment contract (or collective agreement) contains a clause allowing the employer to place employees on unpaid leave. An employer may seek volunteers for unpaid leave.

Lay-off:

Laying off employees means that the employer provides employees with no work (and no pay) for a period while retaining them as employees. An employer must have a contractual right to lay off, and the contract should make clear that employees will not receive their normal salary during the lay-off period. If the contract does not give the employer the right to lay off, then any proposal to lay off will need to be the subject of consultation with employees, and will require employees' agreement.

Short time working:

Short-time working is a reduction in the hours that employees are required to work and (normally) a corresponding reduction in pay.

Employers must have a contractual right to put employees on short time, or seek express agreement to do so.

Other options:

After consultation and agreement with employees, an employer may agree with the employees a change the terms and conditions so that employees work reduced hours (at reduced pay) for a period.

An employer may consider if there are workers and contractors whose contracts can be terminated without the risk of an unfair dismissal or redundancy payment claim.

There are lay off provisions in the contract – what should I be aware of?

If there is a contractual right to lay off then there is no statutory procedure to follow to exercise this right. However, consider contractual provisions or any relevant policy setting out procedure, which should be followed. In the absence of any procedural or notice provision best practice is to write to employees and inform them of your decision to lay-off, the reasons for it, the length of the layoff and the payment arrangements

While there are no rules as such as to who the employer selects for lay-off, where an employer only needs to lay off some staff, it may be necessary to go through a selection process to determine which employees are to be laid off. Any selection should be reasonable and based on similar criteria to those used in a redundancy exercise. The criteria should be as objective as possible to avoid disputes and grievances. It is also advisable to try to agree the criteria with the employees when consulting with them about a lay-off.

When seeking agreement to lay an employee off, it is advisable to explain the financial implications for the employee and to record the agreement and any payment terms in writing, as the statutory maximum payments, known as guarantee payments, are very low.

An employee refuses to attend work due to fears about coronavirus, what action can I take?

Employers have a general duty to take reasonable measures to protect the health and safety of their employees. It is recommended that employers provide cleaning facilities, promote good hygiene and social distancing in the workplace, and keep up the date with the daily coronavirus advice issued by the Government.

As it stands, the public health advice is such that the employer can reasonably ask an employee to attend work. Therefore, it is possible that the employee could be investigated for misconduct in terms of their refusal to follow a reasonable management instruction, and their unauthorised absence. If an employee is not willing to attend work this would amount to an unauthorised absence and it is likely the employee will not be entitled to pay.

An employer may offer flexible working, or allow the employee to take holiday or unpaid leave. An employer will need to consider extra precautions for employees deemed vulnerable under recent government guidance and consider potential discrimination issues.

However, arguably, an employee who follows the recent government guidance to avoid social mixing and use less public transport and thus is self-isolating to avoid infection may be entitled to SSP or contractual sick pay.

Can I defer a bonus?

Whether a bonus payment can be deferred will depend on the precise terms of the bonus scheme and whether it is discretionary or contractual. You will need to refer to the contract, any relevant bonus schemes or policies and also consider any implied terms in this regard.

If the bonus is a contractual one, then the terms will dictate whether it can be deferred or not regardless of the reasons for this.

If, however, the bonus is (truly) discretionary then clearly the employer may have more scope to defer the bonus. An employer’s discretion will be subject to limits and the implied term of trust and confidence. Given the unprecedented and challenging nature of the coronavirus, an employer may flexibility. In any event, best practice would be to seek an employee’s consent to deferring a bonus – especially if there is an expectation of a bonus.

I am unsure for how long my staff who have symptoms should be self isolating?

The most up to date guidance can be found at COVID-19: guidance for households with possible coronavirus infection. If an employee is the first in the household to have symptoms of coronavirus, then they must stay at home for 7 days, but all other household members who remain well must stay at home and not leave the house for 14 days. The 14-day period starts from the day when the first person in the house became ill. If anyone else in the household who starts displaying symptoms, they need to stay at home for 7 days from when the symptoms appeared.

We have several members of staff who fall into the category of vulnerable people. Should they be sent home immediately and if so what should we pay them?

As of 16 March 2020, the government has “strongly” advised that individuals aged over 70, pregnant women and individuals with an underlying health condition should work from home and avoiding public transport.

Vulnerable individuals may fall within the scope of a protected characteristic: age, pregnancy or maternity, or disability. Employers should be aware that, where those employees cannot carry out their role from home, requiring them to remain at home on SSP could be discriminatory.

Employees self-isolating on government advice may be entitled to SSP or contractual sick pay if applicable. An employer may opt to offer a vulnerable individual full pay, so they are not motivated put themselves at risk by attending the workplace. However, an employer should consider suspending a pregnant employee (who cannot work from home) on full pay in accordance with the Management of Health and Safety at Work Regulations.

Although the government's guidance is not a legal requirement, if breached it may be used in evidence to show a breach of health and safety rules or the emplyer’s duty of care, somethat like the Highway Code or the Acas Codes. While it is the employer and employee's decision as to whether the employee comes into work, allowing the employee to come into work may amount to a breach of the employer’s duty of care. Conversely, to pay the employee anything other than full pay to remain at home with no means of working from home may, if not handled carefully, beconstitute discrimination under the Equality Act.

Article authors:

Laura Livingstone