The key business issue facing most employers is how to deal with their staff and to reduce employment costs rapidly.

This article provides guidance to employers on some of the main legal issues. More detailed advice is available from the Fox Williams employment and immigration law team, who are following the issues closely.

1. How does the Job Retention Scheme work and what is meant by the furloughing of employees?
2. Who are the key workers entitled to send their children to school?
3. Now that the government has ordered a lockdown, who is allowed to leave their home and expected to attend work? Are they the same category of workers who are entitled to school places?
4. Can employees be forced to take annual leave?
5. Are employees who are working from home while caring for children entitled to be paid?
6. Can employers force their employees to come into the workplace if they’re needed to run an essential service?
7. If my employees are abroad can I require them to return to the UK and work?
8. Are employers required to pay employees who are stuck abroad?

The most common questions being asked by employers

1. How does the Job Retention Scheme work and what is meant by the furloughing of employees?

The Job Retention Scheme enables employers who have no work for employees to receive financial support from the government to pay these employees while they are on leave or furloughed and not able to work.

The key features of the scheme announced on Friday 20 March are:

  • all UK employees are potentially eligible.  Partners and self-employed persons are not eligible
  • there is a possibility that workers (the intermediate category between employee and self-employed) may be covered but the position is not clear
  • in order to access the scheme, employers will need to designate affected employees as “furloughed workers” and notify these employees of this change.  Furloughed workers will not be working but will receive some pay from their employers funded by the Government.
  • the government has said that “changing the status of employees remains subject to existing employment law and, depending upon the employment contract, may be subject to negotiation.”   This means that the normal rules of employment law (statutory and case law) continue to apply, with the consequence that employees cannot be forced to take furloughed leave without their agreement.  The alternative is of course redundancy!
  • 80% of “wage costs” will be reimbursed up to a cap of £2,500 per month (£30,000 per annum).
  • employers will be asked to submit information to HMRC about the employees who have been furloughed and their “earnings” through an online portal that will be launched shortly
  • Reimbursement payments will be backdated to 1 March and the first payments are expected to be made by the end of April
  • the scheme is expected to last for three months and may be extended
  • there are no limits to the numbers of employees for whom employers may claim.

Our views on what we know about the scheme so far

Once an employer has decided who they wish to furlough they need to discuss/consult the individuals about this decision, explaining what this means for their pay and benefits and terms of employment and, that if this is not agreed, the alternative is redundancy.  If they don’t agree to be furloughed, then the employer will need to follow the usual redundancy process (adapted for the circumstances) and to make redundancy payments including pay in lieu of notice (at full pay) and a statutory redundancy payment.

As a matter of practice, employees will most likely opt to be furloughed but some might elect for redundancy. Those who agree to be furloughed will need letters altering their employment contracts on a temporary basis.

It’s not clear whether benefits count as reimbursable wage costs.  In so far as people have salaries in excess of the cap the point will be academic, but for those under the cap employers might be able to claim 80% of the costs of pensions, medical expenses insurance, PHI etc.

Since employees whom an employer selects to be furloughed may be worse off financially than those retained in paid active employment, employers need to be careful whom they select to avoid discrimination claims etc.  They will need a business rationale for each one and a fair process.

When asked whether employers could reduce hours and pay of employees and claim 80% of the pay foregone by employees as a result of working part time, a government minister said no; the idea is to reduce the actual number of employees working and interacting in order to limit the spread of the virus in workplaces, not to have everyone share the pain.

All working parents with school age children will now have their children at home in need of schooling and care unless any of them count as “key workers” entitled to school places.  Some of them may wish to be furloughed so they can look after their children.  This is fine on an entirely voluntary basis but if employers force their working parents (especially women) to be furloughed or face redundancy against their will they may face claims for discrimination.  Employers could ask for volunteers from certain groups of employees.

It is open to an employer to top up the wages of furloughed employees.  Again, employers need to think carefully who they do this for considering the potential for discrimination claims.

It is also open to employers to cut deals with individuals for them to work less and to receive less pay, subject to the point about discriminatory treatment.  This would be outside of the furloughing scheme and at the employer’s own initiative.

Employers can also by agreement reduce the pay of individuals working full time as part of their collective effort to keep going and preserve the jobs of everyone working in the organisation.  The same points arise about discrimination as to who they ask to do this.

It’s not clear whether payments can be claimed for the period from 1 March to the date an employer furloughs someone if that particular employee had nothing to do (or not much) beforehand.   Backdating to 1 March will not make any sense unless employers can claim for payments to staff doing nothing or very little beforehand, since no one will have known about furloughing until the Chancellor’s announcement on 20 March.

We think that employees under contract to join an employer who have not yet started work are probably covered in light of the objective of the scheme, but this is not yet clear.

2. Who are the key workers entitled to send their children to school?

The key workers list, published by the government last Friday 20 March, sets out the categories of key workers who can send their children to school to enable them to continue working during the coronavirus pandemic. The government’s list contains workers in health and social care, education and childcare and  key public services alongside a category for those employed in financial services. The far-reaching nature of some of the categories has been the subject of criticism as schools have limited places available for the children of key workers.

By way of example, the FCA has published a fairly extensive suggested list of key workers in the financial services sector which includes senior managers, employees involved in the running of online services and processing, those involved in the operating of trading venues and dealing with consumer queries to name a few. The full list of roles considered by the FCA as being essential service roles can be viewed here. The FCA acknowledges however that firms are “best placed to decide which staff are essential” and employers are therefore encouraged to use their discretion when determining if an employee really is a key worker given the strain on schools.

There is slightly more clarity around the legal profession as “those essential to the running of the justice system” are deemed included in the key workers list and this has been confirmed to include barristers, duty solicitors, judges and all lawyers who are regularly involved in court proceedings. The Law Society also has an outstanding request for further clarity on precisely who is included so we expect further guidance to be available shortly.

3. Now that the government has ordered a lockdown, who is allowed to leave their home and expected to attend work?  Are they the same category of workers who are entitled to school places? 

The official government guidance (as of 23 March) states that the travelling to and from work is permitted “only where this absolutely cannot be done from home”. On 23 March, the government on its Twitter page published a video which suggested that the categories of essential workers were the same as those in the ‘key workers’ list (for school access) announced last week and they were the people who could go to work. However, this has since been deleted and replaced with guidance that individuals may leave their homes to go to work but should work from home if possible. This provides a much broader range of employees who will be entitled to leave home to attend work.   This could be subject to revision.

As all employees are strongly encouraged to work from home if possible, any employers who were previously requiring their employees to come into work will want to carefully reconsider their position. As the only places which are now open are grocery stores, banks, pharmacies, hospitals and medical healthcare centres there should be a limited number of employees who will be needed to attend the workplace in any event.

4. Can employees be forced to take annual leave?

Yes, unless their contracts or a collective agreement mean that these arrangements have been disapplied. Note however that there are specific notice requirements which must be followed by the employer, namely that the notice must be at least twice the length of the annual leave period that the employee is being forced to take. For example, if the employer requires the worker to take four weeks’ leave, it must give at least eight weeks’ notice to the worker, which in the current circumstances may not be possible.

5. Are employees who are working from home while caring for children entitled to be paid?

If employees are able to work from home without their caring responsibilities impacting on their work, then they are entitled to be paid in the usual way.

If employees are unable to work from home, either at all, or because their caring responsibilities mean that it is not feasible, then employers would not usually have an obligation to pay them, unless there is anything to the contrary in their employment contracts. These employees should consider whether to exercise their right to take unpaid dependents leave (a right to a reasonable amount of time off to deal with an emergency involving a dependant) or parental leave

Employers can also allow employees to take the time as annual leave, if the employee wishes to do so to ensure they get paid for their time off. Employers could also consider the ability to place employees on forced annual leave as discussed above.

Employees who deem that they cannot work from home during normal business hours alongside their child caring responsibilities may need to consider approaching their employers to agree part-time working or flexible working arrangements. In either scenario, an employer must deal with the request in a reasonable manner and notify the employee of its decision within a three month decision period. If part-time working arrangements are agreed, employers should bear in mind that part-time workers are entitled to pro rata entitlement to pay, annual leave and other benefits.

6. Can employers force their employees to come into the workplace if they’re needed to run an essential service?

To clarify, by essential service we refer to services such as the national health care service, public safety and national security services, the limited retailers who have been permitted to stay open (e.g. supermarkets, pet food stores etc) and schools which are remaining open to care for children of key workers to name a few.

Given the risk to the health and safety of its employees, employers will need to consider carefully before they force employees to come into the workplace as they could risk an employee bringing a claim if it can be shown that the employer has failed to discharge its duty of care. The employer will need to balance the duty of care they owe towards their employees and to prevent the spread of coronavirus alongside the need to ensure that the essential service can continue running for the wider public.

Provided that employers of essential services take a sensible approach to the coronavirus in line with any government guidance, it’s difficult to see how any potential claim would succeed.  Employers should continue to take reasonable steps to ensure that they monitor the position relating to the health and safety of their employees. If this has been done, it will be difficult for any employee to show that the employer has breached their duty of care which is an essential requirement for any claim.

If an employee refuses to work where, for example, working remotely or from home is not an option and employees are worried about coming into contact with the virus,employers should listen to the employee’s concerns and see if alternative measures (such as limiting the number of number of people in the office at any given time, adjusting work patterns etc.) can be implemented..  If an employee still refuses, employers could consider asking them to work reduced hours, or take annual or unpaid leave.  In some workplaces it may be grounds for disciplinary action, especially if the employees are not in a vulnerable category.

7. If my employees are abroad can I require them to return to the UK and work?

The Foreign Office has already issued a statement advising all citizens to return to the UK as soon as possible.  This means employees should in any event be returning to the UK as a matter of immediacy if they have not already.  The Government has said it will not repatriate British travellers who are abroad unless there are exceptional circumstances.

8. Are employers required to pay employees who are stuck abroad?

The short answer is no.  Employees who are unable to work from abroad are not required to be paid as the employees are not able to carry out their duties.  (Note the situation may be different if these employees are able to successfully work remotely).  If employees are unable to return they may elect to take paid annual leave if they have sufficient entitlement to do so.

Non-attendance may technically entitle an employer to take disciplinary action against the relevant employee, however given the current circumstances, this would probably be regarded as unfair.  A very long period of absence might frustrate the employment contract.

On a practical level, an employer will mostly likely have no choice but to grant requests for unpaid leave where an employee is unable to return.

Contact us

If you have any questions about how COVID-19 is affecting your organisation, you should seek advice. Please contact a member of the team using our website or speak with your usual Fox Williams contact.


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