Coronavirus: The Business Impact

For employers, the outbreak of the Covid-19 coronavirus raises points relating to employment law, health and safety and data protection. Below, we address some common questions that employers are likely to have.

The Coronavirus Job Retention Scheme

The government announced on 20 March 2020 that under its Coronavirus Job Retention Scheme, it will meet 80% of the “salary” of furloughed (i.e. laid-off) employees, initially for up to 3 months, back dated to 1 April – click here for more details.

When can an employer expect an employee to self-isolate and what does it involve?

The current advice of the government is that people should self-isolate for 7 days if they have either:

  • a high temperature or
  • a new continuous cough

Further, anybody who lives with somebody who is displaying the above symptoms should stay at home for 14 days from when that person first became symptomatic. After 14 days, anyone in the home who does not have symptoms can return to their normal routine. But, if anyone else in the home gets symptoms, they should stay at home for 7 days from the day their symptoms start.

Any person who suffers symptoms can return to their normal routine after 7 days if they feel better and no longer have a high temperature. If they still have a cough after 7 days, but their temperature is normal, they do not need to continue staying at home. A cough can last for several weeks after the infection has gone.

Should any other member of a household develop coronavirus symptoms within the 14 day household-isolation period, the isolation period for the household does not need to be extended, but the person with the new symptoms has to stay at home for 7 days (as per the above). At the end of the 14 day period, any family member who has not become unwell can leave household isolation.

The government is advising those who are at increased risk of severe illness from coronavirus to be particularly stringent in following social distancing measures, including that they should work at home “wherever possible”. For further details in this regard and relating to social distancing for everyone else, click here.

(The previous advice relating to travellers to the UK from certain destinations self-isolating for 14 days even if they are not displaying any symptoms was withdrawn on 12 March.)

Can an employer take steps to prevent an employee who has refused to self-isolate from attending work?

It is an employer's duty to protect the health, safety and welfare of their employees and other people who might be affected by their business. Employers must do whatever is reasonably practicable to achieve this. If an employer knowingly allows any individual to attend work within 7 days of displaying a high temperature or new continuous cough, it may be in breach of that duty.

Suspension may be an option, but employers should consider whether they have a right to suspend in these circumstances. In the absence of an express contractual right to suspend, legal advice should be sought.

Must employees who self-isolate be paid?

Obviously, employees who are actually unfit to work will be entitled to sick pay in accordance with the terms of their contract or otherwise, if they qualify, to statutory sick pay (“SSP”).

Employees who are fit to do so and who can practicably work from home can be required to (if newly introduced, or expanded, subject to the employer ensuring that the health and safety implications have been considered and that the necessary infrastructure is in place – see below) and, of course, will be entitled to be paid accordingly.

The Chancellor stated in his budget announcement on 11 March 2020 that employees who cannot work because they have self-isolated in accordance with government guidance, and who otherwise qualify for it, are to be entitled to SSP – notwithstanding that they might not actually be unfit to work. This is also the position stated in subsequently published government guidance and Acas guidance – including, expressly, that this extends to employees who are self-isolating because a member of their household has displayed symptoms of the virus (see above). However, the legislation relating to SSP as amended with effect from 13 March states that a person is deemed incapable of work (and so, if they otherwise qualify, are entitled to SSP) where they are isolating themselves in accordance with guidance published by Public Health England, NHS National Services Scotland or Public Health Wales effective on 12 March. Therefore, whilst this will cover employees who are self-isolating for 7 days because they have displayed symptoms, pending any further amendment to the legislation, it will not cover employees who are not displaying symptoms themselves, but who are self-isolating because a member of their household has displayed symptoms. This is because the guidance on household isolation did not come into effect until 16 March.

Employers might wish to bear in mind, however, including because the wording of the Chancellor’s announcement and subsequent published guidance, that many employees might have an expectation that they will receive at least SSP if they self-isolate in accordance with government guidance from time to time and, accordingly, that failing to pay at least the equivalent of SSP in such circumstances (to employees who would be entitled to SSP if they were unfit to work) might result in grievances or otherwise disputes.

The Chancellor also stated in his budget announcement that entitlement to SSP is to arise from the first day of absence, rather than only after 3 waiting days. However, this was not implemented immediately, and the necessary legislative amendments are still awaited. The government has now announced that when the legislation is passed, it will apply retrospectively from 13 March.

Another measure announced in the budget was that businesses with fewer than 250 employees will be able to reclaim from the State SSP paid to any employee for up to 14 days in connection with coronavirus. Legislation necessary to give effect to this has yet to be implemented, but more details have been published: click here for details.

Whether employees who self-isolate and cannot work from home but who are not actually unfit to work are entitled to contractual sick pay will depend on the wording of their contracts. For example, if a contract stipulates that sick pay (over and above SSP) will be paid if an employee is “incapacitated due to sickness”, the employee will not be entitled to payment; whereas if a contract states that sick pay will be paid if the employee is absent “for health reasons”, it would be arguable that the employee will be so entitled.

It is a feature of certain published guidance, including by Acas, that it is good practice for employers to continue to pay employees who self-isolate in full, regardless of whether there is a contractual obligation to do so, including in order to encourage compliance with government guidance to self-isolate. However, in the absence of a contractual obligation, whether to pay in full is a commercial decision for the employer; and the cost of paying employees who are absent might impact on businesses severely – notwithstanding the limited scope for smaller employers to reclaim some SSP.

Accordingly, some employers might prefer to not pay some or all employees who self-isolate any more than they have to.

Employers might want to treat each employee’s case on its merits and otherwise keep their approach under review. For example, some employers might be prepared to exercise discretion to pay employees who aren’t working due to recommended self-isolation after displaying symptoms (but who remain fit to work), or perhaps who are in “family isolation”, in full for the time being (or at least to pay those in family isolation the equivalent of SSP), but alter their approach at a later date in the light of the ongoing financial position of the business, and/or in the event of individuals self-isolating on a second (or further subsequent) occasion.

Where an employee who is fit to work takes it upon themselves to self-isolate and not work other than in accordance with the government guidance, certainly if there are no considerations regarding unlawful discrimination (see below), they may be subject to a disciplinary action for misconduct in terms of their refusal to follow a reasonable management instruction and their unauthorised absence; and if the absence is unauthorised they will not be entitled to any pay – whether in the form of SSP or otherwise.

Home working

If there is already an established requirement to work from home where appropriate or where instructed to do so, then there is unlikely to be an issue in applying that obligation in an effort to contain the spread of Covid-19.

If not, imposing home working might be argued to constitute a variation of the contract requiring employee consent, and if faced with such an argument legal advice should be sought. However, where an employee is faced with either being on SSP or nil pay as an alternative, it is logical that they will usually be willing to consent to working from home as a way of preserving pay.

Where home working is being newly introduced, or expanded, the employer should ensure that the health and safety implications have been considered and that the necessary infrastructure is in place.

Employers are responsible for an employee's welfare, health and safety, "so far as is reasonably practicable". They must conduct a suitable and sufficient risk assessment of all the work activities carried out by their employees, including homeworkers, to identify hazards and assess the degree of risk. Employers will need to consider these obligations in the context of any employees who work from home to decide what measures they need to put in place. For HSE guidance in this regard click here. If you would like a referral to a health and safety adviser, please contact us.

What if an employee refuses to attend work because they are in a high risk group?

As stated above, Public Health England particularly recommend social distancing measures for older people and vulnerable adults in the UK: click here for details.

The Acas guidance encourages employers to be sympathetic to any genuine concerns staff may have and try to resolve them to protect the health and safety of the employee. For example, if possible, the employer might offer flexible working, or allow the employee to take holiday or unpaid leave – or alternatively, the contract might be suspended for a period (see below).

It might constitute an unlawful failure to make reasonable adjustments for an employer to require vulnerable adults with disabilities to continue attending work, or unlawful disability discrimination to dismiss such employees who refuse to attend because they wish to self-isolate. Similarly, such omissions or acts in respect of older employees might constitute unlawful age discrimination.

One possible solution is to agree with such employees that their contracts will be temporarily suspended for the duration of the period of isolation. They will not receive any remuneration during the period of suspension and, unlike in respect of a period of simple unpaid leave, they will not continue to accrue annual leave entitlement (which should be attractive to employers) – but as and when they return to work, their continuity of employment will not have been broken (albeit that the period away from work would not count towards length of service). Legal advice should be sought in respect of individual cases.

What if an employee is otherwise afraid to attend work?

As stated above, the Acas guidance encourages employers to be sympathetic to any genuine concerns staff may have and try to resolve them to protect the health and safety of the employee, for example, by offering flexible working were possible, or allowing the employee to take holiday or unpaid leave – or, alternatively employment contract might be suspended for a period (see above). There will no doubt be counter-balancing considerations in this context, however, such as the impact on the morale of other employees who soldier on and attend work without raising any issues despite the concerns that many people will have about the virus – although suspension of contracts might be considered unlikely to be viewed as a contentious option by colleagues.

An employee with severe anxiety may find their condition is exacerbated by travelling or being in public places due to the increased risk of contracting Covid-19. If their anxiety prevents them from attending work in these circumstances, it is possible that they may be regarded as on sick leave and therefore entitled to SSP or contractual sick pay.

Where an employee suffers from severe anxiety, this could amount to a disability under the Equality Act, so it would be prudent to obtain legal advice in respect of individual cases, particularly if there are reasonable adjustments that could be made but the employer is considering not making them.

Can employees be required to use their holiday entitlement?

Employees who are unfit to work can elect to exercise holiday entitlement if they wish, but they cannot be lawfully required to take holiday – at least to the extent this forms part of their statutory minimum holiday entitlement.

Otherwise, employers can require employees – including those who are self-isolating but not unfit to work – to take holiday if their contracts of employment include an express power in this regard. However, whilst we retain this power for employers in contracts that we prepare as a matter of course, we rarely see it in other contracts.

If there is no such contractual power, the Working Time Regulations 1998 allow employers to direct employees who are not unfit to work to take holiday that is part of their statutory 5.6 week entitlement – but subject to a requirement that notice is given of at least twice the duration of the holiday to be taken.

What if a workplace temporarily shuts down or there is otherwise a need to lay-off, or reduce the working hours, of at least some staff?

Of course, population distancing strategies have extended to the closure of schools and premises in the leisure and entertainment sector; and an increasing number of other businesses, including in the retail sector and automotive manufacturing, have closed their doors due to the impact of staff absences, supply-chain issues and/or fall in customer demand.

In many circumstances, where there is work to be done that can practicably be done from home, home-working will present at least a partial solution in the event of work place closure.

Employers might require employees to take holiday to mitigate the impact of suspended or reduced operations (see above re requiring employees to use holiday entitlement) – but this can only go so far, including due to such considerations as the extent of already exhausted or otherwise pre-booked holiday.

The government announced on 20 March 2020 that under its Coronavirus Job Retention Scheme, it will meet 80% of the “salary” of furloughed (i.e. laid-off) employees, initially for up to 3 months, back dated to 1 April – click here for more details.

However, an employer can only lawfully insist on an employee working no, or reduced, hours and reduce their remuneration accordingly if the contract of employment provides for this. Further, it appears that the Coronavirus Job Retention Scheme will provide no support for businesses or employees to whom short-time working arrangements are applied (although further details of the scheme are awaited).

Lay-off and short-time working provisions are more common for blue collar workers than white collar. However, we recommend that employers include such provisions in contracts for all employees in order to help protect their business in the event of any material disruption, whether of the type described above or, say, fire, flood, IT failure (consequent upon a viral attack or otherwise), fuel shortage (such as affected many businesses during blockades of refineries some years ago) or, for rural businesses or their customers or supply chains, diseases affecting livestock or crops.

For employers who don’t currently have lay-off or short-time working provisions, it is usually possible to impose them on employees where there is an economic imperative, but advice should be sought before doing so with a view to avoiding liability for breach of contract, unfair dismissal or, where 20 or more employees are affected at one establishment, breaches of collective consultation rules. It should be noted, however, that where the obligation to consult collectively applies, notice of implementation of lay-off or short-time working usually cannot lawfully be imposed within 45 days of the commencement of consultation if 100 or more employees are to be affected at one establishment, or 30 days if fewer are to be affected, and the State must be notified of the proposal on form HR1. Of course, due to the level of pay funded by the Job Retention Scheme, many employees who are not subject to contractual lay-off provisions will consent to being laid off – but any such arrangements should still be implemented with care, and consideration should be given to the approach to be taken in respect of such employees who are asked to agree to being furloughed but refuse.

Employers who withdraw work from an employee for any day are obliged to pay a limited amount of statutory guarantee pay (“SGP”) to employees with more than one month’s service. Although the payments afforded by the Coronavirus Job Retention Scheme will usually very much exceed SGP, bear in mind that it appears that employees who are on short-time working will not be subject that scheme, and so rules relating to SGP will remain relevant.

SGP is £29 per day (increasing to £30 from 6 April 2020) for up to 5 days in any 3 month period. The period of entitlement reduces pro-rata for employees who normally work fewer than 5 days a week. It should further be noted that qualifying employees can issue a notice to take statutory redundancy pay if they are paid less than half pay for 4 consecutive weeks, or for 6 weeks out of any 13 – subject to the employer’s ability to issue a counter-notice in certain circumstances.

What if redundancies need to be made?

Hopefully, the Coronavirus Job Retention Scheme will have its intended impact in minimising job losses. This includes that as the Scheme will be back dated to 1 March 2020, it presents an opportunity for employers who have already issued notices of dismissal, but which have not yet expired, to offer to withdraw them; or perhaps for employers to offer to re-engage employees whose contracts have already been terminated. In that event, we would encourage that advice be sought, including regarding the terms that are to apply to the employment going forward, not least in relation to lay-off and short-time working, the effect of any termination on continuity of service, and the potential for those not to be offered continuing employment to argue unfairness.

To the extent that redundancies are to be made, where it is proposed that 20 or more employees are to be dismissed, or have their contract changed fundamentally, at one establishment within a 90 day period, other than in exceptional circumstances, there will be an obligation to consult collectively on numerous specific issues. Further, the issuing of notices of dismissal will be precluded within 45 days of the commencement of consultation if 100 or more employees are to be affected at the establishment, or 30 days if fewer are to be affected; and the State must be notified of the proposals on form HR1.

In any event, a fair procedure must be followed in respect of employees with ordinary unfair dismissal protection. This includes not only employees with 2 years+ service, but also those who are within a week of reaching 2 years’ service at the point notice of dismissal is given. This includes, where applicable, fair selection and, in any event, the reasonable opportunity to consult, consideration in respect of alternative positions, and the opportunity to appeal once the decision has been confirmed.

Employees with 2 years+ service will be entitled to statutory redundancy pay. Contracts of employment might provide for enhanced redundancy pay.

What if an employee needs to stay at home to care for a dependent – whether because they are sick or because educational establishments are closed?

In normal circumstances, it would not be appropriate for an employee to do work otherwise capable of being performed from home while also providing childcare. However, employers may now need to take a pragmatic, more flexible approach to homeworking.

Employees with younger children who require constant attention may not be able to work at all while responsible for looking after them. However, to the extent that childcare cannot be provided by others within an employee’s support network, they may be able to split it with a co-parent so that both parents are able to continue working – at least part-time. With co-operation between employers and employees, it might be possible for affected employees to fulfil some or all of their normal duties by working different patterns of hours to accommodate childcare commitments. Care should be taken to ensure that any changes to normal arrangements are properly thought out, including any impact on pay and benefits, and recorded in writing (which can include exchanges of emails) in order to minimise the possibility of disputes. This should include clarity regarding each party’s ability to revert to previous arrangements.

Employees who cannot practicably work from home may assert their statutory right to time off to care for a dependant. Time off in these circumstances is unpaid, unless there is a contractual right to pay.

The Chancellor did indicate when announcing the budget that the government intended to also extend SSP to employees caring for members of their household exhibiting symptoms of Covid-19, but this is not covered in the amended legislation, which provides that a person is deemed incapable of work where they are isolating themselves “from other people in such a manner as to prevent infection or contamination with coronavirus disease, in accordance with guidance published by Public Health England, NHS National Services Scotland or Public Health Wales and effective on 12th March 2020." As it stands, therefore, carers – like anybody else – will only be covered by the new rule on deemed incapacity if the public health guidance as of 12 March required them to self-isolate (see above).

What can an employer communicate about an employee with coronavirus?

Under data protection law, personal data concerning health is 'special category data', and employers need to ensure that any communication does not include any data about the individual who is absent. For example, while it would be ok to announce that there has been a confirmed coronavirus case at a particular work place, it would not be appropriate to provide any details from which the individual might be identified.

Can employers be liable for discriminatory conduct by their employees?

There are reports of there having been harassment of or other discrimination towards individuals who are from, or perceived to be from, countries which were ahead of the UK regarding the spreading of the virus, particularly China.

Employers will be liable for unlawful harassment or other discrimination by their employees towards other employees, save where they can establish a statutory defence, which requires the taking of all reasonable steps to prevent the conduct. Having in place well-drafted equal opportunities and ant-harassment policies will not only help discourage such conduct, but will also provide a starting point for establishing a statutory defence. This will not be sufficient on its own, however. Further steps will be required, such as training and evidence of inappropriate behaviour being tackled, for an employer to avoid liability.

Employers in the financial services sector must also be aware that any failure to deal with these issues appropriately may have implications for the fitness and propriety of the senior managers who are responsible for these areas of the business.

What action might employers take at this point?

The action an employer might take will depend, to some extent, upon the nature of the workplace, the roles carried out and the demographic of the workforce, but some of the issues that employers should consider from an employment law perspective include:

  • The approach to sick pay in the various scenarios identified above. The employer should consider its contractual sick pay policy, and the practical implications on withholding pay or reducing pay to SSP. The employer will wish to balance the costs of paying full pay where they are not legally obliged to do so with the indirect costs (in terms of spreading the virus and increasing sickness absence) where employees attend work following potential exposure to the virus, or even when exhibiting symptoms of it, in order to continue receiving pay.
  • Whether the infrastructure is in place to allow the number of employees to work from home that will potentially be required. Can the IT system accommodate that many employees working remotely? Do employees have the hardware and software necessary to work from home? Will additional guidance need to be issued to reduce demand on the IT systems if many people will be working remotely simultaneously?
  • Compliance with government, Public Health England and Public Health Wales guidance on hygiene in the workplace, and other preventative measures. Consider appointing a coronavirus taskforce who are responsible for keeping track of developments, updating internal guidance and communicating with workers.
  • Clear communication with workers on the employer's policy on homeworking, work travel and precautionary isolation.
  • Ensure that employees have provided up to date personal details.
  • Take necessary measures in light of the closure of schools and nurseries. Identify business critical roles and how they can be maintained. Determine what pay employees will receive if they work part-time to fit around childcare, and the extent to which flexibly can be applied to allow as many employees as possible to continue working, or otherwise the statutory right to time off to care for dependants, annual leave or parental leave are to be exercised.
  • Provide clear information to managers on how to deal with an employee who attends work displaying symptoms, or who has potentially been exposed to the virus.
  • Identify any high-risk employees and consider whether there are any potential discrimination implications which mean a more cautious approach is required.
  • Critically consider whether any in-person meetings, travel or events are necessary. Consider whether meetings can be carried out through virtual meetings.
  • Identify the minimum safe level of workers required to continue operating, and how that can be maintained in the worst-case scenario; and how you would make changes to employees’ working hours and remuneration to effect this.. Consider the employment law consequences. Are lay-off / short-time working provisions in place? If not, think about obtaining advice on their introduction. Consider the government’s Coronavirus Job Retention Scheme.

For the government’s latest published information, including a further link to up to date guidance from Public Health England, click here. To access Public Health Wales’ website click here.

Whilst we hope that the above is of assistance, please note that it does not constitute our formal legal advice. For formal advice on any of the issues referred to above, please contact us on 0800 294 5927 or click here to place an on-line enquiry.

For advice on any of the employment-related issues referred to above, please contact us.

John Merry
Head of Employment