Announcing the extension of the furlough scheme will have provided many businesses and employees with some comfort and further financial breathing space during these challenging times. The scheme will remain in place until 31 October 2020, which is perhaps longer than initially anticipated. The scheme’s current format will however change from August with employers being required to share the cost of furloughed staff with the government.
By the end of May more detail about the post-July changes will be published. Although the aim of the changes will be to provide employers with greater flexibility to get furloughed employees back to work on a part-time basis, without the full detail of the changes, the real benefit cannot be assessed. So there will be some nervousness until the employer’s contribution has been published.
Most employers supported by the furlough scheme will sensibly defer any definite decisions about the future shape of the workforce and their return to work plans until further information is available. In the meantime, there are certain key questions that need to be answered.
Can the business return to the way it was in the short and long-term from both a financial and operational perspective and if so, how quickly can this be achieved, if at all?
Even when driven by financial necessity, furloughing employees will have been a difficult decision but in many cases it would have been implemented overnight. Bringing the operation back to life and having sufficient revenue streams to support this move is likely to be a more complex process; a new strategy may be required. Where people are at the core of the operation, workforce planning will be an critical part of developing a new strategy, which may inevitably involve restructuring and redundancies. Changes to contractual terms and conditions of employment may also be necessary. In either case, careful planning will ensure that all legal obligations, including complying with any consultation requirements are satisfied to minimise the risk of claims in the employment tribunal.
How will employees’ expectations be managed?
Until the recent announcement, the focus has been on the furlough scheme ending at the end of June. In contrast to the suggestion furlough is addictive, the majority of those furloughed will have been focusing on returning to work on 1 July, which is probably what individuals believed they were signing up to under their furlough agreements. Financial reasons will be at the heart of the decision for any business to utilise the scheme for as long as possible. In making this decision, employers need to be able to address employees’ current expectations, not only in terms of a continued requirement to remain at home but also the financial impact that it may have on them personally. A clearly communicated rationale and a keeping in touch plan will be essential to retain the engagement of those on long-term furlough, if those employees are key to future business success once the recovery period is underway.
The consequence of long-term furlough means that employees are being asked to agree to a continued variation of their contracts of employment. If furlough is to be extended it will be important to establish if current furlough agreements can be relied upon or whether new agreements will need to be issued to avoid breach of contract and wage claims.
Are there any health considerations that need to be addressed in the return to work plan?
There is still no certainty about the curtailment of the virus and the health risks are still present. Any return to work plan must be supported by a thorough health risk assessment. The assessment needs to start from an employee’s home and include their journey to and from work. It is difficult to control who individuals come into contact with when away from work. Control measures will need to be implemented, including reiterating the importance of following the government’s social distancing measures and good hygiene. Further hard work will be needed once the employee is back at work to manage any health risks, with adequate controls being implemented. Adhering to government and the Health and Safety Executive guidance should be non-negotiable from the perspective of both the business and all employees when it comes to protecting individual well-being. Vigilance and flexibility in relation to control measures will be important to safeguard health, if the level of risk increases. The workplace is likely to feel and may look very different when employees return. It is important that clear guidance and training is provided on how to work safely and protect health.
Mental health should also be a factor that is considered as part of any risk assessment. This factor is multi-faceted. Some employees may need reassurance as they have concerns about their personal safety. Others may struggle to adapt when returning, particularly if the work regime feels unfamiliar. Deferring a return to work or making a request that homeworking is undertaken, may leave individuals feeling left behind and isolated. Employers have a legal duty to tackle work-related mental health issues; risks need to be assessed and controlled.
How will a phased return to work be managed?
Roles and skills will have been identified as necessary to support the initial recovery phase, while less business critical roles are likely to be kept under review as progress is made. Resuming some level of operation will be perceived as a positive step but there are potential legal risks that need to be addressed.
A phased return means that choices will have to be made about who returns, and from August whether this is on a full-time or part-time basis (if home working cannot continue), and who stays at home furloughed. Employment law still applies irrespective. To avoid any legal challenge, employers need to be transparent about the selection criteria adopted to bring people back to work while others remain at home. It is essential that this process is documented, and the audit trail must be capable of demonstrating that selection is fair, based legitimate business reasons and is not discriminatory.
Is business ready to be scrutinised?
The government’s focus is now on a transition period, with employers starting to take back responsibility for the cost of their workforce. In the absence of further detail, it is unclear if employers will be required to justify decisions made to retain employees on furlough until the end of October. Employers may be required to justify their decisions made about keeping employees on furlough throughout the extended period. The furlough scheme is not there to avoid dealing with problem employees. At some point concerns will have to be addressed.
The furlough scheme extension will continue to protect many jobs as the economy recovers. While waiting to learn more about the changes to the scheme from August, from an employment law and people management perspective employers should now start to sketch out the future for its operations and the workforce.
FG Solicitors are experts in all areas of Employment Law and HR, and we can slide your business through the business recover stages. Feel free to call us on 0808 1729 322 for a no obligation discussions.
This publication is for general guidance only. Advice should be taken in relation to a particular set of circumstances.
THE CHANGING FACE OF WORK!
For the last two decades the notion that innovations in industrial and manufacturing processes and a digitised professional services industry, would lead to a shorter working week and increased leisure time has been a common feature of work analysis in the United Kingdom.
The idea that we may all be required to work less or, at the very least, differently has now been brought back into sharp focus by the current COVID-19 pandemic. On 31 January, the UK saw the first reported case of viral infection and it can scarcely be believed that by 20 March, all restaurants, pubs, clubs, and indoor sport and leisure facilities were ordered to close.
On 23 March these measures were tightened further, with wide-ranging restrictions made on freedom of movement, enforceable in law. At the time of writing, it is inconceivable that there will be any relaxation of the current lockdown in the near future.
What does all of this mean for the world of work?
The arrival of COVID-19 took away control of the working environment and created an acute balancing act between economic survival and employee health & safety. The government’s introduction of the furlough scheme offers short term support for the current suspension of commercial activity but not a solution.
In the meantime, employers will be occupied with thoughts of business survival and once this is achieved some very real considerations as to what form the structure and dynamics of the workforce will take in a post COVID-19 era.
Will working from home become the new norm? Will there be a need to have offices and the cost of maintaining them?
If nothing else, COVID-19 has ignited a massive experiment in working life and is allowing businesses to test the various scenarios to see how well they would cope if the current enforced changes became a permanent reality in some form or another. Change of this magnitude will certainly require a cultural and psychological shift on both sides and great preparation will be required if it is to have any chance of success.
For most businesses, having an office is not merely a place to house its workforce, it is also seen as a symbol of success, serving as a magnet to attract custom and to recruit the brightest and the best. Some employers hold the view that true team working requires physical proximity which cannot be achieved through working remotely. It remains to be seen whether the experience and lessons learnt from imposed home working changes that view.
What about businesses with production processes that cannot be performed from home?
Will the push to drive down costs and recover commercial stability result in permanently reduced wages, reduced headcount, and increased outsourcing? These are only a few of the vexed questions employers will need to address during and post lockdown. The exploring and review of all scenarios begins now and employers are well advised to create, maintain and retain the figures and statistical information on which reliance can be based.
It should also be part of the current HR strategy for any employer with employees on furlough leave, to have an established method of global communication with them. COVID-19 has presented businesses with a sea of uncharted water to navigate and this will be the same for employees who are not only pre-occupied with staying safe but will also be concerned with what the future holds. Regular contact has an invaluable role to play in maintaining morale and motivation.
What is the position of the law in all of this?
The government has been keen to point out that the emergency measures introduced to tackle COVID-19 does not displace existing employment law. Even in these challenging times, employers that disregard existing law, do so at their own peril and at a time when they can ill afford to get it wrong.
It has come as no surprise that employers caught with the suddenness of the COVID-19 lockdown and the immediate impact on revenue have put employees into the furlough scheme with a 20 per cent reduction in pay. Employees faced with the prospect of losing jobs have agreed to this reduction with the mind-set that when they eventually emerge from furlough leave, wages will revert to their pre- furlough position. From an employer’s position much will depend on the terms of any agreement put in place to vary the existing contract at the time furlough leave began.
While it may be possible for employers to argue that any change was for a substantial reason justifying the change, maintaining that position in the absence of a proper consultation process may, post-lockdown, result in a demotivated workforce at precisely the time when full engagement is required. This, added to the cost and inconvenience of claims from employees will become a major and unwelcome distraction.
The acid test will be when the 80 per cent of government support is no longer available in the form of furlough leave, as to the level of redundancies that may take place in businesses as a result. At this point, processes will become vital if conflict is to be avoided. The spotlight will largely be on consultation obligations, individual and collective. The accuracy of information held in personnel files will also be of paramount importance in effecting risk-managed change.
It is a safe bet that the road to recovery will be long and challenging for both employers and employees. Returning to an optimised way of working will require enormous effort. Individuals may well be affected by bereavement, the uncertainty over the normal operation of schools will undoubtedly present challenges for employees with children. All factors which will need to be considered and managed when normal service is resumed.
For information and support please do not hesitate to contact Floyd Graham or a member of the Employment Law Team of FG Solicitors on 01604 871143 or visit our website for answers to frequently asked questions relating to COVID-19.
COVID-19, data protection and common concerns
The ICO has indicated that in these challenging times employers should adopt a proportionate approach to data protection giving guidance on the following key areas of concern:
Do data protection laws prevent employees from working at home?
Data protection laws should not prevent homeworking during the pandemic.
Does the current situation negate the need for data security measures when employees are working remotely?
No. Employers should introduce the same security measures as they would usually adopt for all homeworkers.
It is our view that employers implementing widescale homeworking should introduce clear guidelines to manage expectations, control health and safety and protect confidentiality and data.
In the case of data security and confidentiality for homeworking, we would recommend as a starting point that employers:
- Assess the risk of a data breach arising from homeworking. This will assist to identify what measures and controls need to be introduced.
- Ensure employees are aware that data security and confidentiality is their responsibility. Now is the time to direct them to your policies governing IT and communications, data protection and data retention. Consideration should be given as to whether these may need to be updated to reflect homeworking.
- Issue specific guidance relevant to the business regarding data security in the context of homeworking. For example, the mandatory use of encryption and passwords, keeping all papers securely and not allowing household members to use company IT equipment.
Make sure employees know what to do and who to contact if they discover a security or data breach.
Can we tell employees about cases of COVID-19?
Yes. Staff should be kept informed about cases of COVID-19. This is on the basis employers need to satisfy their duty of care regarding health and safety. Individuals must not be named and no more information than is necessary should be provided.
What if we are asked by the public health authorities to share employee health information?
Organisations may share employees’ health information with authorities for public health purposes.
FG Solicitors are experts in all areas of Employment Law and HR, including Data Protection and we can provide guidance around the issues that may arise if you are currently transitioning from office-based working to homeworking. Feel free to call us on 0808 172 9322 for a no obligation discussion.
An unprecedented time – preserving your business
The current crisis in relation to the coronavirus has very quickly taken on a different complexion for many businesses. It is no longer planning for self-isolation and how we control the spread of the virus within the workplace. Many businesses are planning for survival as they are facing the stark reality that trading levels may drop significantly to a level where operating costs will outweigh current and projected revenue streams.
Organisations that have a clear view of their people resources and adopt a flexible strategy to the changing commercial and economic environment are more likely to minimise the disruption to their businesses. This may mean that in some cases difficult decisions must be made which will have a detrimental effect upon the workforce. However sound decisions made now could safeguard businesses for the future, with redundancies be treated as a last resort outcome given the potential costs involved:
- Reducing hours: If only temporary changes are needed to provide some financial breathing space short-time working, part-time or flexible working or overtime bans could provide the help that is needed.
- Temporary stoppages: Faced with the reality of no job in the short-term, employees may be open to consider a sabbatical, taking unpaid leave, taking a period of paid annual leave or being laid-off.
- Reducing payroll costs: A reduction in costs can be achieved in different ways and does not have to always be reliant on a reduction in headcount. Would pay freezes, pay cuts or the withdrawal of bonus entitlements be more appropriate?
- Reducing headcount: Compulsory redundancies are not the only way to reduce headcount. Consideration should be given to voluntary redundancy, recruitment freezes, reducing non-permanent staff, the withdrawal of new job offers or deferring the start date for new joiners, reducing the number of agency staff, considering redeployment or secondment of staff or even early retirement.
Whilst the impulse may be to look for a quick fix which may be seen to be job losses, employers should not be surprised that in difficult times employees will be less resistance to change and may be amenable to different options when the only other alternative is redundancy.
Any strategic fix for your business should involve a robust operational readiness assessment before communications are made to employees, who at this time are looking for clear management direction. Key considerations in ensuring the strategy is fit for purpose would be:
- Establishing whether redundancies are the only option. Any redundancies come with costs and may leave the business faced with a skills shortage later in the year.
- Having certainty that there is sufficient flexibility in the plan to be able to respond quickly to any changing trading conditions (good and bad), if implementing alternatives to redundancies.
- Recognising that any decisions affecting the workforce must consider collective and individual employment rights (statutory and contractual). Advice at the planning stage is important so that legal risks can be managed and accounted for. The legal framework around lay-off, short-time working and statutory guarantee payments can be tricky to navigate, as is the collective consultation obligation, which may be triggered where proposed workplace changes may affect 20 or more employees.
None of us are currently operating in a perfect world and there are some difficult times ahead. FG Solicitors are experts in all areas of Employment Law and HR and we can guide your business through any difficulties you may face like this one. Feel free to call us on 0808 172 9322 for a no obligation discussion.
How to make proactive risk management a reality
Poor management of legal risk when it comes to your workforce could be costly and damage the organisation’s reputation. Uncapped compensation for discrimination claims, and as from 6 April 2020 an increase in the financial limit on unfair dismissal claims (£88,519 or one year’s pay, whichever is the lower), can make an employment tribunal claim an attractive option for a disgruntled employee, particularly if backed by legal expense insurance to cover legal costs. What have they got to lose?
Investing in legal risk training in HR and employment law for managers can minimise the risk of a dispute or prevent one altogether. For this to be a workplace reality, managers should understand:
- the legal framework within which they and the organisation must operate;
- the policies and procedures that must be followed;
- the consequences of their own actions or inactivity; and
- when to escalate the matter to senior management or professional advisers.
Having this understanding means that your managers can handle problems in a compliant and controlled way and legal risks can then be managed more effectively.
If you would like your managers to become more proactive when managing their teams, please follow the link here to find out more about F G Solicitors’ Legal Awareness and HR Training …… “Training is the oxygen of good performance”.