With the coronavirus (COVID-19) crisis increasingly impacting on businesses, employers are moving quickly to take advantage of the Coronavirus Job Retention Scheme (Retention Scheme). Osborne Clarke Employment Law partners, Anna Elliott, Julian Hemming and Paul Killen answer some key questions.
What steps should employers be taking at the moment?
Employers should be giving careful consideration throughout the coming weeks to their staffing requirements. It would be prudent for employers to be actively considering where longer term changes to working arrangements or redundancies in the business may be required and start any discussions in tandem with the furlough period. These discussions should obviously take into consideration the wider workforce and not just those on furlough.
To be furloughed must the employee otherwise be laid off or made redundant?
HMRC's guidance for employees confirms that support under the Retention Scheme is intended for employers where to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy'. The government's business support website reflects the government's message that support under the Retention Scheme is available for 'those that would otherwise have been laid off during this crisis'.
Can a former employee dismissed for COVID-19 reasons be furloughed?
HMRC guidance makes clear that staff who were made redundant or stopped working for their employer on or after 28 February can be rehired, furloughed and a claim made via the Retention Scheme.
Employers who agree to re-hire will need to consider carefully the implications for any notice pay or redundancy payments already made and deal with them in the terms of re-engagement. Both employer and employee will need to understand what the impact of the break in employment is on the employee's continuity of employment (as continuity of employment will affect statutory rights and entitlements going forward).
How can I also make redundancies if my company still needs to?
HMRC's guidance for employees expressly states that 'your employer can still make you redundant while you are on furlough or afterwards'. This indicates that an employer may run a redundancy process in tandem with furlough.
Having said this, there does not appear to be any prohibition on placing an employee who is currently under notice of redundancy on furlough. Indeed, the Retention Scheme has been devised in order to prevent redundancies as a result of COVID-19.
Employers should also be aware that in other European countries which have introduced similar schemes, restrictions have been imposed on employers making redundancies at the end of the furlough period. This is not currently the case in the UK and HMRC's guidance states "[w]hen the government ends the scheme… it may be necessary to consider termination of employment (redundancy)".
Employers who do proceed with redundancies rather than furloughing staff may however face challenge from employees, their representatives and wider public scrutiny. The decision may also face scrutiny from an Employment Tribunal in the event any dismissals are challenged as unfair or a failure to inform and consult collectively is alleged. With this in mind, if employers are in the unfortunate position where they need to make redundancies, they should commence the process in the usual way in line with existing employment law principles.
Can we ask people to take holiday during the furlough period?
ACAS guidance indicates that annual leave may not be taken during the furlough period. However, current guidance does not expressly prohibit employers requiring employees to take compulsory annual leave after the furlough period has finished, although this should only be required in line with the latest government guidance (and then the notice that the employer gives to the employee for annual leave will need to be in accordance with the Working Time Regulations). Employers might want to take this approach to drive down accrued holiday costs and provide a ready and available workforce once the current crisis passes.
Employers should also be aware that new regulations also amend the carry-over provisions under the Working Time Regulations in respect of the four weeks' annual leave provided for under the European Working Time Directive so that where 'in any year leave it was not reasonably practicable for a worker to take some or all of the leave to which the worker was entitled… as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society)', that holiday may be carried over for a period of up to two years. It is likely that this measure has been included to ensure that employees do not accrue large amounts of holiday that they are then unable to take during this year due to the effects of coronavirus.
In addition to the above measures, are there any other actions that employers might want to consider taking to protect their business?
Employers may want to explore the following cost saving measures in order to protect their business:
• Defer new starters and introduce a hiring freeze for non-crucial new hires.
• Urgently recruit staff that have the skills that the business needs to support its immediate needs or those integral to its future success.
• Reduce the use of any contingent workforce – although employers should be aware that such workers (including PAYE, umbrella and PSC workers) are eligible for the Retention Scheme and consider the potential reputational fall out as well as the possible future need for these staff given the changing market conditions.
• Defer or delay bonuses and salary increases.
• Offer employees the option to take voluntary sabbaticals and career breaks (to make this option more attractive, it may be agreed that for contractual purposes, when an employee returns, their period of employment before the career break will be treated as continuous with their subsequent employment).
Please note that this blog post is based upon guidance and legislation issued by the Government as at 6 April 2020.