LawFlash

COVID-19 – Important Additional Considerations for UK Employers

March 23, 2020

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.

The Coronavirus Job Retention Scheme

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.

Emergency Volunteer Leave

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:

Period of Leave

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.

Process for EVL

  • Workers need to obtain an “emergency volunteering certificate” issued by an appropriate authority (e.g., the Secretary of State for Health and Social Care, the NHS Commissioning Board, or a county/district council) certifying that the worker has been approved as an emergency volunteer in health or social care and will be acting as an emergency volunteer from the date, and for the period, specified in the certificate
  • A worker seeking to take EVL must, no later than three working days before the first day of the period specified in the certificate, notify their employer in writing of their intention to do so and provide their employer with a copy of the certificate
  • Workers will only be able to take this leave once during a specific 16-week volunteering window from the date that Schedule 6 of the Bill comes into force. Depending on the fallout of COVID-19 though, the government might create further volunteering windows.
  • The right to take EVL does not apply if the worker is employed by an undertaking that has less than 10 staff (there are other exemptions relating to politicians and those in the police force)

The Effect of Taking EVL

  • Employees who take this leave are entitled to remain on their existing terms and conditions of employment during their period of volunteering, with the exception of wages
  • Workers who take EVL also have the right to return to the job in which they were employed before their absence
  • Employees will be protected from detriment and/or dismissal on the grounds of taking this leave

Compensation for Emergency Volunteers

  • The Secretary of State is responsible for making arrangements to compensate volunteers for loss of earnings, and for travelling and subsistence. A worker is only entitled to payments by way of compensation if, as a consequence of acting as an emergency volunteer, he or she has suffered a loss of earnings that he or she would not otherwise have suffered
  • Sums required for the payment of compensation are to be provided by the Secretary of State out of money provided by Parliament
  • The relevant section of the Explanatory Notes to the Bill state only that some loss of earnings and expenses will be compensated

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.

Employment Tribunal Proceedings May Need to Be Conducted Electronically

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:

  • Wherever possible, parties should consider whether it is possible for any matter to be conducted by electronic means
  • The starting point for case management preliminary hearings going forward is that they should take place by telephone or other electronic means unless it would be contrary to the overriding objective in the particular circumstances
  • Substantive issue preliminary hearings or final hearings are not commonly conducted via telephone or electronic means, and the guidance clarifies that it does not intend that such hearings be conducted via telephone or electronic means if that would be contrary to the overriding objective
  • If parties consider than an in-person hearing of any kind could be converted to a telephone hearing or hearing by other electronic means, it should notify the tribunal as soon as that becomes clear to them
  • It is expected that parties may wish to postpone hearings or request extensions of time due to COVID-19-related difficulties. Where this occurs, parties should provide evidence that shows the reason put forward for the postponement or extension is a valid COVID-19-related one. Further, for postponement applications, parties should demonstrate that they have taken efforts to avoid a postponement being necessary

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.

School Closures

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).

Collective Redundancy Consultation and the Special Circumstances Exemption

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

Temporary Layoffs and Short-Term Work

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.

Contacts

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:

London
Matthew Howse
Pulina Whitaker
Louise Skinner
Lee Harding