Further to our previous updates on how employers should respond to the coronavirus (COVID-19) emergency, this LawFlash discusses the measures UK Chancellor Rishi Sunak announced on 20 March regarding the new Coronavirus Job Retention Scheme, the new ability for workers to take emergency volunteer leave, and the conduct of Employment Tribunal proceedings during the pandemic. It also examines further key issues pertinent to UK-based businesses in light of the virus’s continued and developing impact.
Please note that the current position is changing so rapidly that by the time of reading, there may have been further developments.
On Friday 20 March, UK Chancellor Rishi Sunak announced an unprecedented economic intervention to support UK workers.
Among other announcements, Mr. Sunak provided details of the new Coronavirus Job Retention Scheme. Under this scheme, all employers (including charities and nonprofits) who do not have sufficient work for their employees can “furlough” some or all of their employees, such that they remain employed, but are not actively working. In those circumstances, employers can obtain through HMRC a grant of at least 80% of the salary of each such retained worker, up to a maximum payment of £2,500 a month (slightly above the median monthly wage in the United Kingdom). The scheme will apply to all workers on a business’s Pay As You Earn (PAYE) tax system.
The scheme will cover the costs of wages backdated to 1 March 2020 and will remain open for at least three months. The government aims for the first grants to be paid within weeks. The goal is to encourage employers who would otherwise have dismissed employees by reason of redundancy instead to retain them, pending the end of the COVID-19 lockdown period.
Support will also be provided to the self-employed. The government plans to suspend the minimum income floor so that self-employed persons can access Universal Credit in full at a rate equivalent to Statutory Sick Pay for employees. Self-assessment income tax payments will also be deferred until January 2021.
Detailed guidance on the new scheme is expected to be published shortly.
The Emergency Coronavirus Bill (the Bill) was published on 19 March 2020. The Bill is going to introduce a new form of unpaid statutory leave called “emergency volunteer leave” (EVL). It is designed to enable employees to volunteer (if they wish to do so) in essential health and social care services, such as the NHS. Schedule 6 of the Bill contains information concerning EVL and Section 8 of the Bill sets out how volunteers will be compensated.
Key points to note are as follows:
Employees wishing to take up this entitlement will be able to take blocks of two, three, or four weeks’ consecutive leave. In order to take this leave, however, a set process must be followed (referenced below). It appears that the designers of the legislation have taken a lot of their inspiration from family leave entitlements, particularly in terms of preserving terms and conditions of employment during volunteering, and in terms of employment protections.
It is anticipated that employers will be expected, wherever possible, to compensate employees who volunteer under the EVL scheme at their full rate of pay, at least for a proportion of the leave taken. Employers in the life sciences, medical, and caring sectors are likely to face particular demand as skilled employees are called upon to support public services during the crisis.
Recent guidance published on 18 March 2020 from the Tribunals Judiciary encourages Tribunals and parties to use electronic communication methods to conduct hearings of all kinds in circumstances where doing so is compatible with the overriding objective and other requirements of the Employment Tribunals Rules of Procedure (the Rules). Tribunals must consider this guidance but it is not binding on them. The guidance took effect from 18 March 2020.
Key points for employers to note are as follows:
In guidance issued on 19 March 2020, the president of the Scottish Employment Tribunal stated that, from Monday 23 March 2020, all in-person hearings will be converted to case management hearings by telephone or other electronic means. This applies to tribunals in England and Wales in addition to Scotland. It also applies to hearings that are already in progress. Further, if a case is set down for more than one day, parties should proceed on the basis that the remainder of the days fixed have been cancelled.
Further guidance issued by the president of the Employment Appeal Tribunal (EAT) on 20 March 2020 states that all full hearings at the EAT between 23 March and 9 April 2020 will be converted to an Appointment for Directions and be heard by telephone unless directed otherwise by the president or another judge of the EAT. All parties should ensure that the EAT has their telephone contact details, if not already provided. Parties may also be asked about their ability to participate in hearings via Skype.
The government announced on 18 March 2020 that schools in the United Kingdom will shut down from Friday 20 March 2020. Employers should bear in mind the impact this will have on their staff, many of whom will have to balance substantial caring responsibilities with work.
Employers do not have an obligation to grant employees paid time off in this context. If an employer chooses to do so, it should take care not to exercise its discretion in a discriminatory fashion.
Generally, employers can refuse homeworking requests from staff who wish to take care of their children. As the pandemic continues to spread, however, it may be sensible for employers to be as flexible and pragmatic as possible and allow their staff to work from home where this is possible. This is particularly the case given that the people whom staff may ordinarily rely on to take care of their children may now be “at-risk” individuals (e.g., grandparents).
Further, employees (not workers or the self-employed) have the right to a “reasonable” amount of unpaid time off work to take “necessary” action to deal with particular situations affecting their dependents. One such situation is to deal with the unexpected disruption, termination, or breakdown of arrangements for the care of a dependent. In this context, a couple of days is typically the maximum amount of time that a tribunal would consider reasonable. It may be the case, however, that the tribunal’s concept of “reasonable” would be relaxed given such extreme circumstances.
One other option for employers is to encourage staff to take other types of leave (e.g., parental or annual leave).
Unfortunately, in some cases, employers will have to implement redundancies in order to achieve the necessary cost savings to avoid going out of business.
By law, employers must adhere to a prescriptive statutory process if they are making 20 or more employees redundant within any 90-day period at a single establishment. However, employers affected by COVID-19 may avoid this process if the “special circumstances” exemption applies. Importantly, this exception does not remove the obligation to consult entirely. It does, however, make the requirement less onerous for employers.
For the exception to apply there must be special circumstances that render it not reasonably practicable for the employer to comply with the collective consultation requirement. If so, the employer need only take such steps towards compliance as are reasonably practicable in the circumstances.
The key question is whether COVID-19 would constitute a special circumstance. It is well established in UK law that insolvency itself is unlikely to constitute a special circumstance. However, case law suggests that a sudden disaster necessitating the closure of a business, as opposed to a gradual run-down of the company, may constitute a special circumstance. This would not apply if the obligation to consult had already arisen prior to the pandemic.
At present, COVID-19 may constitute a sudden disaster (this is unlikely to be the case in a few months’ time when issues caused by COVID-19 are unlikely to be considered sudden enough). Employers who implement redundancies would not therefore have to comply with the statutory consultation process. Employers should bear in mind that they would still need to take such steps towards compliance as are reasonably practicable in the circumstances. Therefore, all reasonable steps to appoint and consult with representatives should be taken. As noted above, the UK government hopes that the Coronavirus Job Retention Scheme will give employers further means to retain employees rather than make them redundant
In order to avoid dismissals, employers may wish to deal with any business downturn due to COVID-19 by laying off employees or putting them on short-term work. UK employers generally do not have an automatic right to lay off staff or impose short-term working and an express clause is usually needed in the relevant employment contract. In certain limited circumstances, employers may argue that such a right is implied where there is a custom of doing so in that particular business and that custom is reasonable, certain, and notorious such that the employee would have known that implied term existed. However, this is a strict test and difficult to rely on in practice.
In most cases, therefore, and where no express clause exists, layoff and short-term working can only be enforced with the consent of the individual employee. The government may consider enacting emergency legislation giving employers the right to lay off staff and/or impose short-term working in the absence of express contractual rights. This may give employers more flexibility and reduce the need for permanent dismissals.
Employers should bear in mind that if they choose to exercise this right, the employee may be entitled to claim a statutory redundancy payment and a statutory guarantee payment. The maximum guarantee payment payable is £145 (£150 from 6 April 2020) per three months.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis’s lawyers: