In recognition of growing concerns regarding the impact of the coronavirus (COVID-19) on the UK economy and the profound social impact of lockdown measures, the government has this week unveiled its strategy for exiting the lockdown alongside detailed sector-specific guidance on how to work safely during the pandemic.
The government’s strategy and guidance has been issued in the context of the UK’s reducing infection rate and progress in satisfying some of the conditions of the government’s five tests for easing measures. The government has also announced an extension to the Coronavirus Job Retention Scheme (CJRS) to mitigate the predicted effects of a “cliff-edge” end to the scheme while suggesting certain forthcoming modifications to the scheme due its cost to the UK taxpayer. The Department for Business, Energy and Industrial Strategy has also published COVID-19 holiday guidance this week that seeks to explain how holiday entitlement and pay operate during the pandemic.
This guide discusses and examines the key aspects of the Government’s strategy, guidance and announcements for UK employers while understanding that further guidance will be issued in due course that may provide additional clarification on the specific requirements for businesses. While some considerations will be specific to certain employers or industries, many COVID-19 issues affect all businesses, including global employers operating across many jurisdictions.
Morgan Lewis has prepared more in-depth guidance for employers on many of these topics on our COVID-19 resource page.
Following the Prime Minister Boris Johnson’s televised address on 10 May 2020 introducing the government’s roadmap for exiting the lockdown, the government published its 51-page COVID-19 recovery strategy on 11 May 2020 (the Recovery Strategy). Broadly, the Recovery Strategy illustrates the government’s shift in emphasis as it aims to balance the need for the UK to return to normal, both socially and economically, while protecting the health of the nation.
As discussed in our earlier LawFlash on reopening workplaces in the United Kingdom, it will be important for UK employers to consider the Recovery Strategy, and other existing and forthcoming COVID-19-related government guidance, when introducing social distancing measures. This will help alleviate any employee concerns about whether an employer has implemented adequate measures to protect their health and mitigate the risk of employees’ bringing successful COVID-19-related claims by helping to ensure that the business meets its statutory health and safety obligations.
The Recovery Strategy contains three phases. The United Kingdom is now in the second phase. The second phase, referred to as “Smarter Controls”, contains three steps. The key points for employers in each step are discussed below:
First-stage adjustments (measures applying from Wednesday 13 May 2020)
Second-stage adjustments (no earlier than 1 June 2020)
Third-stage adjustments (no earlier than 4 July 2020)
The Joint Biosecurity Centre
The Recovery Strategy also announced the creation of the Joint Biosecurity Centre (JBC). The JBC will lead a new biosecurity monitoring system and advise the government on how it should respond to spikes in infections. Of particular note is that the JRC is expected to identify responses to local spikes in infections, including advising Government to close workplaces where infection rates have spiked.
On 11 May 2020, the UK government published sector-specific workplace guidance for those businesses currently open and for shops which may be in a position to reopen on the 1 June 2020. These are: (i) construction and other outdoor work; (ii) factories, plants, and warehouses; (iii) labs and research facilities; (iv) offices and contact centres; (v) other people’s homes; (vi) restaurants offering takeaway or delivery; (vii) shops and branches; and (viii) vehicles. Guidance for other sectors will be published in due course and in advance of those establishments opening.
Each of the guidelines clarify that it contains non-statutory guidance that businesses should take into account when complying with their existing health and safety obligations. The guidelines do not supersede any existing legal obligations. Employers should note that these guidelines are a starting point on which to assess the manner in which they will reopen their workplaces. In order to satisfy their statutory health and safety consultation obligations, we recommend that employers begin to consult with their staff around what measures they intend to introduce while being sensitive to any employee concerns. Employers with recognised trade unions should also be mindful that trade unions representatives have a legal duty to investigate hazards in the workplace and complaints raised by employees, in addition to the right to inspect the workplace. Given the considerable press coverage regarding workers and trade unions raising concerns in this context, employers should equally be wary of the increased risk of whistleblowing claims that may be based on the failure to adopt some of the measures suggested in the guidelines (please see our earlier LawFlash for more detail on this point.)
We have not attempted to cover the full extent of each of the guidelines and have instead summarised some of the key points for employers below:
As alluded to above, the guidelines are very detailed and contain a number of measures for employers to consider. Employers should note that the government has announced an injection of £14 million for the Health and Safety Executive (a 10% increase in its budget) and the risk therefore of increased site inspections. If workplaces are deemed unsafe, the regulator has the power to stop certain activities if they create serious risks and to recommend and bring prosecutions where serious breaches of the law have occurred.
UK Chancellor Rishi Sunak announced on 11 May 2020 that the CJRS will be extended by a further four months until 31 October 2019. The implications for employers will largely depend on future announcements that will clarify the precise terms of the extension. In the meantime, the key points for employers to note are as follows:
Many employers will appreciate the continued financial support and forthcoming flexibility. Certain employers may benefit from avoiding a June “cliff-edge” end to the scheme if they had not yet begun any required collective consultation procedure.
However, the announcement does introduce some uncertainty and added complexity. Employers should begin to assess their existing furlough arrangements with staff and consider whether it will be necessary to agree an extension beyond 31 July 2020. Further, employers who have been topping up their employees’ salaries will need to determine whether they can continue to do so beyond the end of June. As explained in more detail in our earlier LawFlash, before the scheme ends, employers will have to make a decision, depending on their circumstances, as to whether employees can return to their duties or whether a restructuring of the workforce and potential redundancies are required. This will be particularly be the case if employees do not consent to extend their furlough arrangements. Further, the fact that employers will be entitled to bring back furloughed employees part-time may potentially increase the risk of unlawful discrimination claims. For example, if an employer decides that it will only furlough employees if they are able to work for a minimum of 20 hours each week this might have a disparate impact on working mothers (with child caring responsibilities) and lead to a claim for unlawful sex discrimination.
Certain businesses should also consider the reputational risk of continuing to utilise the scheme until October if it is not necessary to sustain their business, given the increasing focus on the financial impact of the CJRS on the UK taxpayer. This issue is likely to come into sharper focus in the media now that different businesses are re-opening at different times.
On 13 May 2020, the government published guidance on workers’ entitlement to holiday and holiday pay. The guidance aims to clarify how holiday entitlement and pay operate during the pandemic and applies to workers who continue to work and those on furlough leave under the CJRS. Employers should note that the guidance has no legal effect and tribunals will not be required to follow it when deciding cases regarding working time and holiday pay.
The guidance reiterates that furloughed workers continue to accrue statutory holiday entitlements, and any additional holiday under their employment contract.
Employers can require workers to take holiday and cancel a workers’ holiday provided they give notice to the worker. The required notice periods are:
This will be increasingly relevant for employers in light of the CJRS extension. The extension may increase the risk that furloughed employees will stockpile holiday entitlement. It will be important for businesses to ensure that either they have enough workforce capacity to accommodate employees deferring their holiday entitlement over the next few years or manage when employees can take holiday.
Furloughed workers can take holiday without ending their furlough leave. However, it will be important for employers to consider whether the worker is under any restrictions (i.e., the need to socially distance or self-isolate) that would prevent the worker from resting, relaxing and enjoying leisure time. The guidance does not provided any more detail as to whether taking holiday in this context would meet the definition of annual leave under European Court of Justice case law.
Irrespective of whether the relevant worker is on furlough leave, the guidance clarifies that holiday pay must be the correct holiday pay in accordance with current legislation (i.e., based on the workers’ usual earnings). In respect of furloughed workers, however, employers should bear in mind that they should not automatically pay a worker on annual leave the rate of pay that they are receiving while on furlough leave unless that worker has expressly agreed to that arrangement. The employer will have to pay the difference between any agreed furlough rate and the employee’s normal remuneration but will still be able to claim up to 80% (or £2,500 per month) under the CJRS.
Can Annual Leave Be Carried Forward?
The government passed emergency legislation on 26 March 2020 that relaxed the restriction on employees carrying over their four weeks’ Basic Leave under the Working Time Regulations. This only applies, however, where it was not reasonably practicable to take it in the leave year as a result of the effects of COVID-19. The new guidance suggests that employers should consider the following factors when assessing whether taking such leave is reasonably practicable:
The guidance notes that furloughed workers are unlikely to need to carry over their statutory annual leave. Most furloughed workers will be able to take leave during the furlough period provided the employer pays the correct rate of holiday pay. However, if the employer is unable to fund the difference between furlough pay and holiday pay, perhaps due to the virus’s impact on the employer’s business, this may render taking such leave not reasonably practicable. In this context, the furloughed worker may be able to carry that leave forward under the new legislation.
Employers should therefore revisit their agreed furlough arrangements, which may currently state that workers cannot take annual leave during furlough leave. It is unlikely that the guidance will require such existing arrangements to be varied. However, in light of the CJRS extension, it may be worth reconsidering this position when entering into any new furlough agreements given that employees may remain on furlough leave for longer than the business originally envisaged.
The government’s strategy, guidance, and announcements discussed above illustrate its aim to balance the need to return life back to as close to normal as possible against the risk of provoking a further spike in the pandemic and the resulting reintroduction of restrictions.
While the core principles and recommendations discussed in this LawFlash are likely to remain the same, we expect further guidance to be issued throughout this process that may add further detail to particular requirements to which UK businesses should adhere and adopt. This guide reflects our current thinking on the key issues arising out of this week’s announcements.
For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our biweekly COVID-19 Legal Issue Compendium.
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 lawyers: