How UK employers can deal with the special circumstances created by the coronavirus (COVID-19)

21 minute read
18 March 2020

The coronavirus (COVID-19) has been declared a pandemic by the World Health Organization (WHO). As the virus continues to spread extensively, it poses significant challenge to businesses and raises various points of employment law for employers.

We are seeing unprecedented challenges for employers in managing the pandemic. A touchstone of employment law is 'reasonableness' and applying that concept should assist employers in finding a fair balance between the needs of the business and the interests of the workforce. The key to getting this right is to have sound business reasons for decisions and then implementing those decisions in a clear and transparent way.

It is worth remembering that staff will remember. How you approach the pandemic will resonate amongst the workforce, unions and works councils for many years to come.

Here we consider a number of the legal issues which we are aware are arising for employers dealing with the special circumstances created by COVID-19 followed by out some practical steps employers should be considering.

Please note that as the Government advice for employers is being continually updated as the situation develops, specific legal advice should be sought where necessary.

The Legals

1. Reduced hours and/or reduced pay

If an employer anticipates a downturn in business or is forced to close due to COVID-19, in most cases the employer will still be contractually obliged to pay their workforce, unless there is an express contractual right to suspend without pay. If there is not, then employers who stop pay could face claims for breach of contract and unlawful deduction of wages.

Employers may wish to avoid redundancies but genuinely need to reduce pay/hours to keep the business afloat. If in such a positon, the employer will need to vary the contracts of employment to avoid possible later claims for breach of contract and unlawful deduction of wages.

Under normal circumstances, a general variation clause contained in a contract of employment will only assist with variations of a minor nature. It would not allow an employer to make significant changes (but these are unprecedented times so whether a tribunal would take a different view in light of current circumstances is impossible to predict).

Employers are therefore faced with three approaches to securing the necessary variation:

  • Employers could seek express agreement with the workforce. This may be possible for small employers, but will be challenging for large employers. There is a real risk that employers won't achieve 100% agreement and that would then create inequality amongst staff (those who had agreed -v- those who had not). Also the speed at which the COVID-19 pandemic is progressing may make this option difficult from a timing perspective.
  • Employers may choose to impose the pay/hours reduction unilaterally and in breach of contract. This is likely to impact adversely on employee relations and creates the risk of litigation. Employees could resign and claim constructive dismissal (if they have two years' service). This may not be a significant risk if there is market wide uncertainty as employees are unlikely to voluntarily make themselves unemployed. The potentially greater risk is that employees continue to work under protest. Provided they do not accept the breach, the right to claim unlawful deduction of wages is preserved and claims could be brought in the future both by employees who remain in employment and those who leave.
  • Dismissal and re-engagement is also a possibility, but where 20 or more employees are affected, the collective redundancy consultation requirements will need to be complied with to avoid a potential protective award and the time taken to complete that process is unlikely to be available to many employers (see below).

Employers may therefore have to choose the least worse option in light of the extraordinary circumstances they face due to COVID-19. Whichever option is chosen, employers need to clearly communicate to the workforce the need to come together to ensure jobs are preserved in what are challenging times for all.

2. Redundancy

There is a legal obligation to consult with employees in large scale redundancy situations. Large scale for these purposes means 20 or more proposed dismissals over a period of 90 days.

The basic position is that careful redundancy planning and consultation essential in order to address the risk of unfair dismissal or other employment tribunal claims which may result from redundancy situations. To minimise the risk of successful claims it is important that employers to carry out a full and fair procedure in reaching redundancy proposals, selecting employees for redundancy and in effecting those dismissals. Non-compliance could result in the employer facing a potential penalty of a protective award of up to 90 days' uncapped pay per employee if the statutory process is not correctly followed.

When it comes to COVID-19 the position is less clear. These are extraordinary times, with time for planned redundancy exercises a luxury that some employers may simply not have. There is a 'special circumstances' defence available for employers who fail to comply with their collective consultation obligations but it is clear from existing case law that even in insolvency situations there is an extremely high hurdle to be cleared before that defence will succeed. However that is not to say that in these unprecedented circumstances a tribunal might accept in mitigation the need to implement redundancy dismissals without full compliance with the collective consultation obligations in defence of claims for a protective award and reduce any award accordingly.

Dealing with COVID-19 is very much unchartered territory but we expect to see the unprecedented effect of COVID-19 being relied on by employers to explain shorter consultation periods. Whether that will lead to reduced protective awards remains to be seen. As a minimum, employers should consult with the workforce in the time that is available. They will also need to consider other practical challenges including, for example, how to manage the election process and how to conduct consultation meetings where workers are no longer physically in the workplace.

Statutory lay off and short term working

These are relatively rarely used legal provisions which cover situations where there is not enough work for employees to do.

  • Lay-offs: employer asks an employee to stay at home and not attend work or be paid for a temporary period.
  • Short-time working: the employer requires their employee to work less than their regular contractual hours, for example a three-day week.

An employer may lay off some employees during a short-term, temporary downturn in work but must have a contractual right to do so. The contract should make clear that the employee will not receive their normal salary during the lay-off period.

If an employer lays off an employee without an express or implied right to do so, it will be in fundamental breach of contract entitling the employee to resign and claim constructive dismissal.

If an employer exercises an express right to lay off an employee or put the employee on short-time working, the employee will in some circumstances become entitled to claim a statutory redundancy payment. Those circumstances are where the employee:

  • Satisfies the qualifying conditions to bring a claim by having the required length of service (at least two years) and having been laid off or kept on short-time working for the required length of time (at least four or more consecutive weeks, or a total of six weeks (of which no more than three are consecutive) in any period of 13 weeks.
  • Follows the statutory scheme set out in the Employment Rights Act 996. This requires the employee to initiate that process by serving a written notice indicating their intention to claim a redundancy payment. The employer may then serve a counter-notice if it reasonably expects that further work will become available within four weeks.

Alternatively, such an employee may be entitled to be paid a statutory guarantee payment (SGP) by their employer on up to five "workless days" in a three-month period. A "workless day" is a day during any part of which the employee would normally be required to work in accordance with their contract, when the employee is not provided with work by their employer because of either of:

  • There is a reduction in the requirements of the employer's business for work of the kind which the employee is employed to do; or
  • There is any other occurrence which affects the normal working of the business in relation to this type of work.

Guarantee pay is low. It is only £29 per day (£30 from 6 April) making the current max £145.

In the absence of an express clause which deals with how long an employee may be laid off,

a contractual right to lay off employees indefinitely is not subject to any implied reasonableness term. This is because Parliament has provided a scheme for balancing the rights and interests of employers and employees in this situation by allowing them to claim a statutory redundancy payment after the prescribed period has elapsed.

But employers should be aware of possible breach of trust and confidence claims if a very long period is imposed. Employers should also be aware that as the contract of employment remains in place, holiday leave will continue to accrue.

3. Statutory sick pay (SSP)

13 March 2020 changes

Previously, in order to qualify for Statutory sick pay (SSP) an employee had to be absent from work due to incapacity. With effect from 13 March 2020 the emergency Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020 provide that a person is deemed incapable of work where they are:

"isolating himself 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(d) or Public Health Wales(e) and effective on 12th March 2020."

In other words self-isolation following government guidance is deemed to be absence from work due to incapacity for the purposes of SSP so that have some limited income entitlement rather than being treated as on unauthorised absence. Self-isolation does not mean that they cannot work - and if they can and do work they should be paid anyway. Employers will need to continuously view the Government guidance which is being regularly updated to check who is entitled to self-isolate as the pandemic continues. Please note, whether someone is classed as incapacitated will have knock on effects for some other rights which are discussed below.

Forthcoming changes

In the Budget on 11 March 2020, the Government also announced that SSP will be made available from day one (instead of from day four) for those affected by coronavirus when self-isolating. These provisions will become law in the forthcoming COVID-19 Bill. The Budget also announced measures whereby employers with less than 250 employees can claim a refund for COVID-19 related SSP costs (up to two weeks per employee).

4. Working from home

Can an employer direct people to work from home (where that is possible) as a precaution?

Whether it is possible for an employee to work from home will of course depend on the nature of their work. Where it is possible for employees to carry out their work from home, this will be a reasonable instruction by the employer. The employee will continue to receive their normal pay.

Can an employer direct people not to attend work if they suspect they should be self-isolating?

If there is an identified risk that an employee may have been exposed to COVID-19, then it is reasonable, in light of an employer's duty to protect the health and safety of other employees, that the employer would wish to keep that employee away from the workplace until the risk has passed.

If an employer sends an employee home for a reason falling within government self-isolation advice, it is likely that the employer should treat the employee as being on sick leave and pay them SSP or (if applicable) contractual sick pay. Alternatively, if the employee is able to work from home the employer should allow this. The individual will continue to receive their normal pay.

What about non-asymptomatic self-isolators?

Is it reasonable for an employer to instruct an employee who self-isolates for 14 days because they are living in a household with someone with symptoms but are themselves asymptomatic to go on sick leave? On the flip side can an asymptomatic self-isolator insist they be allowed to work from home?

In such a case, the employee is deemed incapable under the Government guidance. Does such an employee need to be treated as on sick leave and so paid in accordance with the employer's sick pay policy/SSP? Probably. Or can they work from home (where this is possible) and receive full pay? Possibly by agreement. The employer and employee should discuss how the situation will be dealt. These are uncertain times.

5. Enforced holiday leave

Can annual leave be used by workers to cover periods of absence? Can employers require this?

The normal rules on taking annual leave under the Working Time Regulations 1998 continue to apply. Workers may wish to take annual leave as an alternative to scenarios where they would otherwise be on SSP or nil pay. Workers are entitled to take statutory annual leave during sickness absence but may not be compelled by the employer to do so.

Workers who are not on sick leave can be instructed to take statutory annual leave by their employer, provided that they are given the required amount of notice. The amount of notice will be as contained in the contract of employment. If silent, the default position is that twice as much notice as the period of holiday leave to be taken must be given.

6. Maternity leave

Absence from work on account of pregnancy related illness will trigger the start of Ordinary Maternity Leave (OML) automatically if the absence is after the beginning of the 4th week before the expected week of childbirth.

Pregnant women have been advised to socially distance themselves. Is this enough to trigger OML? Probably if treated as sickness related absence. What if they are self-isolating due to someone in their household having symptoms? That is unlikely to trigger OML but currently, there is no clear answer or guidance.

7. Discrimination

Following press reports of Chinese people facing abuse over coronavirus, employers need to monitor closely any allegations or emerging patterns of harassment, based on someone's nationality.

There may also be age discrimination issues relating to people perceived as being older in light of the over 70s being identified as a high risk category, and also disability discrimination issues for those with underlying health conditions (including making reasonable adjustments to help those with a disability to change working practices).

If carrying out health checks ensure that any checks are carried out uniformly amongst all staff - and all visitors. Targeting certain groups could potentially lead to allegations of discrimination (for example age claims if you select older staff for the checks). Employers should also remind staff that they will not tolerate victimisation/harassment etc. of people who have been isolated/may have symptoms.

8. Data protection & health screening

Employers will require consent to undergo medical examinations, including taking an employee's temperature. There may a right to do so included in the employment contracts and in data privacy policies/privacy notices but its unlikely employers will be able to rely on these. Best practice would be to have consent at the time of the examinations and checks themselves.

From a practical point of view, employers can't force employees to agree but providing that the employer has a strong enough justification for requesting the check the employer could refuse to allow employees (and others) in unless they agree to be checked. The risk from employees is that they assert that this is a breach of the implied duty of trust and confidence. However in these unprecedented times and the employer's duty to protect the whole of its workforce this is likely to be a limited risk.

Remember health data is special category personal data. Employers need to ensure it is protected (and tell people it will be). This means being careful not to give information that will readily identify someone who is ill/suspected or having the virus.

What employers should practically consider

The full effect of the coronavirus on the UK workforce has yet to be seen. Employers face having to ensure that their staff are protected as far as practicably possible and the wider knock-on effect of precautionary measures such as social distancing and self-isolation.

Steps to protect your workforce:

  1. Health advice
    1. Keep up to date with Government and public health advice - this is fast moving. Share with staff the impact on them at work.
    2. Basic hygiene
      • Making sure your workplace is clean and hygienic.
      • Promoting regular and thorough hand-washing by everyone.
      • Providing all employees with an alcohol-based hand rub.
      • Encouraging people to use and bin tissues.
    3. Keep staff regularly updated on what is being done to reduce risks of exposure and to mitigate the effects of coronavirus in the workplace.
    4. Have a plan for dealing with staffs confirmed as having the virus - remember this will be sensitive personal data for data protection purposes.
  2. Agile working
    1. Consider options with regards to home-working or agile/remote working. Ensure that your IT is fit for purpose and will facilitate home/agile working. Remember your health and safety obligations.
    2. Consider if home working policies need to be updated. If there is a restriction on home working while also child minding, this may need to be revised.
    3. Consider issuing staff with laptops so they can work remotely if necessary.
    4. Limit the amount of face-to-face contact, for example, video conferencing to facilitate remote meetings. For customer-facing organisations, consider introducing or maximising the use of self-service options and online services.
    5. Consider what preparatory steps should be taken at this point in the event of a lockdown.
    6. Check that all staff (including contractors) contact numbers and emergency contact details are up to date.
    7. Keep in touch with staff. Working from home does not suit all and some may live alone, or may have mental health issues which could be aggravated without social contact.
  3. Staff management
    1. Update staff regularly. Communications from you as to what you are doing and what it means for employees will be invaluable. Government press briefings will raise questions for staff, and social media is rife with information of varying levels of quality and accuracy.
    2. Publicise all the help available - employee assistance programmes for example, and think about what else you can do to share tips for working from home, keeping children entertained when schools shut and even how to keep fit and healthy is stuck at home.
    3. Plan for staff shortages particularly where roles cannot be performed from home.
    4. For employees willing to work additional hours, remember your working time obligations.
    5. Ensure that people are treated fairly and vulnerable groups are taken into account. Keeping up to date on the latest advice on those classed as vulnerable groups is essential.
    6. Identify key services and roles that are essential and can't be put on hold, as well as projects or roles that could be temporarily stood down.
    7. Identify those individuals and managers who have transferrable skills, who can fulfil more than one function and could be allocated to more essential roles.
    8. If your operations are severely affected, consider
      1. voluntary special leave policy on a temporary basis whereby individuals can opt to take reduced paid or unpaid leave. Be mindful that there could be some employees who are willing to take additional time off and welcome a break, but others may struggle financially if they lose pay.
      2. offering a shorter working week or other flexible resourcing arrangements.
      In both cases, clearly communicate the business reasons to employees.
    9. Have a clear communication strategy.  This will be key. Ensure employees are aware of measures being taken to manage the situation in your organisation. Understand concerns of the workforce about catching the virus or worries about family or friends.
    10. Promote the resources you have available to support people's health and well-being in relation to both physical and mental health.

Do let us know if you want to discuss any of the issues raised in this alert.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.