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Coronavirus: the business impact

For employers, the Covid-19 outbreak 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 ("CJRS")

The Chancellor announced on 20 March 2020 that under the CJRS, also known as the furlough scheme, it would meet 80% of the “salary” of furloughed (i.e. laid-off) employees, up to a cap of £2,500, back dated to 1 March 2020.

The scheme was initially to be in place until 31 May 2020, but it has been extended three times – most recently until 30 September 2021.

For claim periods ending on or before 30 April 2021, the scheme is open to employees who were employed on 30 October 2020, as long as they were subject to a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

For claim periods starting on or after 1 May 2021, the scheme is open to employees who were employed on 2 March 2021, as long as they were subject to an RTI submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.

From 1 August 2020, employers had to pay employer's national insurance contributions (NICs) and, where applicable, auto-enrolment pension contributions on furlough pay. Prior to that, the government met the employer’s NICs and the equivalent of the minimum employer’s auto-enrolment pension contributions.

From 1 - 30 September 2020, the government only reimbursed 70% of pay, with employers being required to top up to 80% (or more, depending on what the arrangement is with respective employees).

From 1 – 31 October 2020, the government only reimbursed 60% of pay, with employers continuing to have to top up to 80% (or more).

From 1 November 2020, the level of support available mirrors that available in August 2020, with the government paying 80% of pay for hours not worked up to a maximum of £2,500.

From 1 - 31 July 2021, the government will only reimburse 70% (capped at £2,187.50) of furlough pay, and employers will be required to contribute 10% (capped at £312.50) (or more, depending on what the arrangement is with respective employees).

From 1 August - 30 September 2021, the government will only reimburse 60% (capped at £1,875.00) of furlough pay, and employers will be required to contribute 20% (capped at £625.00) (or more, depending on what the arrangement is with respective employees).

The government has been regularly publishing updated guidance on the scheme. The latest guidance for employers is here and that for employees is here. On 15 April 2021, HM Treasury published its seventh Direction in relation to the scheme. Treasury Directions form the legal framework and therefore take precedence over published guidance. All Treasury Directions in relation to the CJRS can be accessed here.

On 8 July 2020, the Chancellor announced that businesses would receive a Job Retention Bonus of £1,000 for each furloughed worker back in work who remains in employment until at least 31 January 2021. However, this was not implemented, due to the extension of the CJRS beyond that date. 

Similarly, the implementation of Job Support Scheme ("JSS"), that was to replace the CJRS in late 2020, did not proceed. For details as to what the JSS was to entail, click here.

Apprentices

The government has published guidance for apprentices, employers, training providers, end-point assessment organisations and external quality assurance providers in the context of the virus outbreak, including in relation to incentive payments that apply in England, for which click here.

On 11 November 2020, the Welsh Government announced a set of new employer incentives to encourage the recruitment of apprentices during the economic crisis triggered by the Covid-19 pandemic, for details of which click here.

When can an employer expect an employee to self-isolate?

The current public heath advice in England is here and that which applies in Wales is here.

With effect from 28 September 2020, it is a criminal offence in England for a worker to not inform their employer (or, in the case of an agency worker, their agent or their principal) that they are required to self-isolate in certain circumstances, as explained here.

Should an employer take steps to prevent an employee who should be self-isolating from attending work?

With effect from 28 September 2020, it is a criminal offence in England for an employer to knowingly permit an employee to work, other than from home, in certain circumstances, as explained here.

In addition, 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 during a period when they should be self-isolating in accordance with the above-mentioned public health guidelines, it may be in breach of that duty.

Where allowing the employee to work will not be a criminal offence, suspension may still 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”); and those who are self-isolating but are working from home are entitled to be paid as normal.

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.

Please click here for the position regarding SSP.

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

When measures were first introduced to combat the spread of the virus, the public health guidance in England and Wales was that employees should work from home unless they are unable to do so and their work place is open. This was modified in England between 1 August and 22 September 2020, so that where an employee's duties were capable of being performed from home but the workplace was COVID secure, home working was merely be an option for the employer. The position in England on this point is therefore, once again, the same as in Wales: employees should work from home unless they are unable to do so.

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.

Can employees who are not self-isolating in accordance with public health guidance be required to attend work?

See above re home working. Otherwise, the basic position is that employees can be required to attend work as long as appropriate health and safety measures are in place. For the guidance that applies in England in this regard click here and for that which applies in Wales click here.

Whether to insist that an employee attends work, and to subject them to disciplinary action if they do not, is a matter for advice in individual circumstances.

An employee with severe anxiety may find their condition is exacerbated by travelling or being in public places. 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.

Employers have a particular duty to protect the health and safety of expectant mothers in the workplace. In summary, the law requires employers:

  • To undertake risk assessments

  • To alter working conditions or hours to avoid any significant risk

  • Where that would not avoid the risk, offer suitable alternative work on terms that are not substantially less favourable

  • Where suitable alternative work is not available, or the employee reasonably refuses it, to suspend the employee on full pay.

Accordingly, where the nature of a pregnant employee's role means that they cannot work from home, and there is no suitable alternative work available that they could do from home, if the workplace risks from Covid-19 cannot be sufficiently mitigated, the employee should be suspended on full pay.

In other cases, employers might prefer not to make special arrangements for fear of generally encouraging others to seek the same concessions, or otherwise causing employees who are attending work when required to become disgruntled. However, if the employee is to be accommodated, they might be permitted to take holiday or unpaid leave – or, alternatively the employee might be furloughed in accordance with the CJRS or their employment contract might be suspended for a period by agreement. If the contract is suspended the employee will not receive any remuneration during the period of suspension and, unlike in respect of a period of furlough or simple unpaid leave, they will not continue to accrue annual leave entitlement – 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).

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 worker does not take annual leave in the relevant leave year because of the impact of the virus outbreak?

The government has passed emergency legislation relaxing the restriction on carrying over the 4 weeks' leave derived from the Working Time Directive to permit it to be carried over for up to 2 years where it was not reasonably practicable to take it in the leave year "as a result of the effects of the coronavirus (including on the worker, the employer or the wider economy or society)".

Whilst only the 4 weeks’ leave under the directive can be carried forward under the new regulations, the 1.6 weeks' additional leave provided under the Working Time Regulations may already be carried forward into the next leave year in accordance with a relevant agreement (usually the contract of employment).

The government has published guidance on workers' entitlement to holiday and holiday pay during the Covid-19 pandemic. This includes guidance on the new regulations. It gives examples of when it might be considered not reasonably practicable to take holiday during the leave year. It suggests that for furloughed workers, carry-over would rarely be justified if they were able to take holiday during the furlough period (although it might be justified if the employer could not afford to top up their pay).

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?

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.

Lay-off or short-time working should be considered. In this event, the CJRS might be utilised (see above). 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.

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 CJRS, 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 CJRS 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 £30 per day 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?

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 effecting of dismissals 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. Such employees can be furloughed under the CJRS, but it might cause employment relations issues to prioritise them over others for such leave.

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.

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