Hot on the heels of the US Federal Trade Commission’s (“FTC”) proposal for a complete ban on non-competes, the UK Government has announced its intention to limit post termination non-compete clauses to just three months. This comes as part of a wider announcement of proposals which the government says have been made to help boost the economy, in this case by promoting competition and productivity in the workplace.

When will this happen?

It’s unclear at the moment when this restriction will come into force. Any reform to the rules on non-complete clauses will require primary legislation, which the government’s press release states it will be done “when parliamentary time allows”, so when that will be is anyone’s guess.

What’s the impact of this change?

At first glance, this will cause alarm for many employers, particularly those in recruitment or sales where the exposure of former employees joining a competitor or setting up in competition is a real concern. However, there’s long been criticism in the courts for non-compete clauses with judges seeing them as unreasonable restraint of trade, particularly where there are non-dealing and non-solicitation clauses which can arguably offer sufficient protections to a business’ legitimate interests, without there being a total ban on competition.

What we do know is that the government have confirmed that limiting non-compete clauses will not affect restrictions during garden leave or paid notice periods (the proposal relates to post-termination only), or change the position on confidentiality clauses or non-solicitation clauses (which prevent employees from contacting previous customers, clients or suppliers in an attempt to win their business).

However, amongst other things, the government’s press release was silent on:

• non-dealing clauses (which sit somewhere between non-solicitation and non-compete clauses and are generally, therefore, easier to enforce than non-compete clauses); and
• whether the proposals will have retrospective effect (it’s likely that they will so an employee who spends 3 months of garden leave would likely not be restricted after the end of their employment, regardless of whether the restriction is longer).

What should employers do now?

Until the proposal becomes law, there’s no legal requirement to amend any existing restrictions, however employers that currently have restrictions beyond 3 months, or who are considering introducing them, should think carefully about whether these are likely to be enforceable now, and in the future.

Restrictive covenants are a complicated area and for the best chance of them being enforceable, they should be regularly reviewed. This is particularly important because the courts will only consider whether a restriction is enforceable at the time it’s entered into, not at the time the employer seeks to enforce them (by which time the employee/former employee may have a far more senior position, making the restrictions even more important).

For advice and assistance with drafting enforceable restrictive covenants, contact the Employment Team at Sherrards.

Partner in Employment law at Sherrards Mark Fellows, answers some common questions ahead of another heatwave:

Do I have to pay employees who are unable to get into work due to travel difficulties?

Take a look at your employment contracts and Employee Handbook. These might specify whether an employee is entitled to be paid if they are unable to get in due to travel problems. If they are silent, however, then the default position is that the obligation is on the employee to get into work, regardless of any difficulties caused by the weather or otherwise. If they do not attend, they are on unauthorised absence and they are arguably not entitled to be paid.

Be careful, however, if you are going to take this approach. Firstly, there is a potential that the employee can argue that failure to make payment in these circumstances is an unauthorised deduction from wages (assuming this is not covered in the employment contract). The defence to this would be that there was no entitlement to pay as no work was done, but it may be an argument you would prefer to avoid. Secondly, you should assess whether the financial benefit of withholding pay is outweighed by the impact on staff morale and productivity. This is particularly so if the weather and travel conditions are extreme and, even with the best of intentions and efforts, employees are unable to get in.

Above all, you should ensure that your approach is consistent. Ideally, tell staff in advance (in written format, e.g. memo or email) what your approach is going to be or, even better, have an “Extreme Weather Policy”.

Consider whether employees are able to work from home, whether alternative travel arrangements can be made or whether there are other ways around the issues – e.g. travelling outside of peak times to avoid the worst of the heat. Otherwise, clearly explain to employees that either: (a) any time off will be unpaid; (b) time off will be paid but that they are expected to make up the time later; or (c) they can request the time off as paid annual leave or unpaid time off for dependant’s leave (see below). Prior notification is particularly important if you have made payments in the past in such circumstances.

As an aside, be careful if you are trying to insist on employees taking annual holiday retrospectively. Employees will need to agree to this unless the contract specifically allows for you to do this.

 

I have an employee who says they cannot come in because their child’s school has closed due to the heat. What shall I do?

Employees with responsibility for a dependant are entitled to emergency time off in circumstances in which there is an unexpected disruption to childcare. Unless the school closure was announced a reasonable time in advance, such that the employee had sufficient time to arrange alternative childcare, this would probably be an emergency situation and employees are entitled to take time off and not suffer any detriment for doing so.

Strictly speaking, the time off is unpaid (unless the contract of employment says otherwise) but employers may again want to consider the impact on morale that this approach would have. Again, it is important to be consistent in your approach. You should be especially careful where other employees who are unable to make it into the office due to travel are being paid.

 

One of my employees failed to come into work today, blaming the heatwave and travel issues. I think he is using it as an excuse and could have easily come in. Where do I stand?

If you believe that an employee is falsely using the weather conditions as an excuse for absence or lateness, this can be treated as a disciplinary matter. If you consider the matter to be serious enough (e.g. if it is a persistent or blatant case), you should investigate in line with your disciplinary policy and take action as appropriate.

However, in less serious or one-off cases, you may be better placed simply having a quiet word with the employee and letting them know that any further time off will have to be taken as holiday or will be unpaid. Bear in mind that it can often be difficult to prove or disprove an employee’s ability to come into work in these circumstances.

 

Our air conditioning isn’t great. Is there a maximum temperature above which I am obliged to shut the workplace?

In short, no, there is technically no maximum temperature above which people aren’t allowed to work. In offices or similar environments, the temperature should be “reasonable”. You should have thermometers around the workplace so that you can check the temperature – although temperature itself is not the sole issue, since humidity, radiant heat sources and clothing are also factors.

The TUC has lobbied for an upper limit on workplace temperature to be introduced – suggesting that employers be forced to take steps when the temperature inside hits 24˚C. Under the TUC’s proposals, staff could be sent home and employers prosecuted if temperatures reach 30˚C (or 27˚C for those whose work is physically demanding).  However, these proposals are currently not reflective of the law.

If your working environment is getting too hot to be considered “reasonable” then you could be putting your staff’s health and safety at risk. If, having taken steps to try to control those risks, the temperature is becoming dangerous enough to endanger health (e.g. through heatstroke etc) then you would be best advised to shut the workplace.

 

The above provides a general guide to issues that might arise. However, each situation is unique and different considerations may apply in your case. We would therefore recommend that you consult a solicitor, or another suitably qualified person, about your specific circumstances.

To find out more about employers responsibilities during a heatwave, click here to speak Employment Partner Mark Fellows. 

The team issued High Court proceedings with an injunction hearing which was successful.

Barney Laurence and his team were able to secure default judgment avoiding significant expenditure for ongoing legal proceedings for our client which they would have stood little to no prospects of recovering from the former employee.

TOCA Social is the first of its kind interactive football and dining experience which combines immersive gaming and world-class food and drink.

The Sherrards Employment team was lucky enough to experience the game for themselves after a training session with Team TOCA just before the venue opened to the public.

Mark Fellows said: “TOCA Social is an amazing venue and it really was such a pleasure to be able to support the team as they start on this exciting venture – we’ve already booked to go back with several clients in Summer 2022!”

Since 16 August 2021, people who are double-jabbed and are without symptoms or a positive test do not need to self-isolate if they come into contact with someone who has tested positive for coronavirus. This was a major step to help ease the serious supply chain shortages that followed the “pingdemic” during the summer of 2021 which saw up to 700,000 per week self-isolating in England and Wales as contacts of positive cases.

Whilst many people are unable to get the vaccination for medical issues, all adults in the UK have now been offered the vaccine. This means that the people who are unvaccinated are either due to medical reasons, or have chosen not to be.

Ikea has argued that employees who refuse to get the vaccine are causing disproportionate financial losses to businesses. Whilst Ikea’s 10,000 plus workers receive an average of £400 a week salary, the furniture retailer said unvaccinated workers will only receive statutory sick pay of £96.35 a week where they are absent for a Covid-related reason (but full-pay if they test positive, as with vaccinated staff).

Given that Ikea is such a high-profile company, it is almost inevitable that other employers will follow suit and many will be monitoring the fall-out of this new policy. In fact, Next is the latest employer to announce it intends to adopt the same approach.

Some have argued that this policy is potentially discriminatory against employees refusing to be vaccinated on the grounds of religion or belief under the Equality Act 2010. Whilst this argument is generally considered unlikely to be successful, to avoid claims employers will need to consider each circumstance on “a case-by-case basis”, which Ikea has also confirmed it will do. This is necessary as applying similar policies without exemptions could be discriminatory against employees are unable to be vaccinated (e.g. those with disability-related medical reasons or pregnant employees).

As well as considering the implications on staff who are unable to be vaccinated, employers considering varying their sick pay entitlements also need to be careful to ensure that they won’t fall foul of any contractual responsibilities, where sick pay forms part of an employee’s contract of employment. It will be important to check the terms before any such measures are introduced.

Perhaps most significantly, employers will need to consider the public response to any policy change in such a highly divisive area before taking any steps.

Finally, if an employer is considering introducing a similar measure in respect of sick pay, a key issue will be the communication to the staff, setting out the reasons for the change and the exceptions that might apply. It may well be that the approach may give rise to some complaints from those employees who are directly affected.

Any employers considering introducing policies which target unvaccinated staff should act with caution and take legal advice in advance to ensure that savings in sickness payments now don’t turn into much larger costs defending claims from unvaccinated staff down the line.  

Please contact Emma or the team for more information. 

As the rapid rollout of the UK’s COVID-19 vaccine provides hope of returning to normality, preparations are being made for staff to return to the workplace. Unsurprisingly the vaccine has divided opinion, with a survey by HR Locker suggesting that one quarter of UK employers are intending to introduce a ‘No Jab, No Job’ policy of making vaccination of staff a compulsory requirement.

Is that permissible I hear you ask?

Can I compel staff to have the Covid-19 Vaccine?

In short, this is fraught with a myriad of issues.

There is currently no legislation permitting an employer to require staff to undergo mandatory medical treatment, including vaccinations, and to do so could amount to a breach of the employee’s human right to respect for their private life.

In addition, any disciplinary action imposed against an employee for refusing to be vaccinated could give rise to discrimination claims (see below).

There will of course be some sectors where you can see a greater justification for requiring staff to be vaccinated, such as healthcare or care home settings, where non-vaccinated employees could present a threat to patients, residents, other staff and themselves. As Boris Johnson recently pointed out, healthcare professionals are already required to be vaccinated against hepatitis B, so requiring a COVID-19 vaccination for those “entrusted with the care of a patient” is a possibility, although the Government is yet to give formal guidance on this issue.

However, in most sectors, a blanket policy of requiring staff to be vaccinated is unlikely to be justified.

If I want to protect the wellbeing of my staff, why is that potentially discriminatory?

It firstly depends upon whether the employee’s refusal to be vaccinated relates to a protected characteristic. This could arise on several grounds:

• religion/belief, as some religions do not condone vaccinations and there is evidence that pig gelatine can be found in certain vaccines;
• age, the vaccine is being rolled out on a sliding age scale such that some members of staff will not yet be eligible;
• maternity/sex, as current guidance is that pregnant women should not have the vaccine; and
• disability, as the vaccine may not be recommended for individuals with certain medical conditions or allergies.

Secondly, it depends upon whether those with the protection afforded above are treated less favourably or penalised for not being able to comply with a vaccination requirement. That might be refusing to allow the employee to return to the workplace, or even disciplining them for a refusal to have the vaccine.

In respect of some types of discrimination, you can seek to justify a discriminatory policy and whilst in some (limited) cases there might be a justification argument for insisting on the vaccine, this will be a very high threshold to surmount, particularly given the existence of less intrusive measures, such as regular testing, PPE and social distancing.

Can I make vaccination a requirement of hiring new employees?

Again, this is fraught with risk.

There are actually restrictions in place that are designed to prevent an employer from asking applicants about their medical history until such time as an offer of employment has been made, and there are also privacy and data protection obligations that will apply in respect of any such information.

When being considered for a vacant role, applicants have the same protection from discrimination as employed staff, so the above concerns will arise. If an applicant is not offered a role because of their refusal to have the vaccine, and their reason relates to one of the protected characteristics mentioned above, then this is likely to amount to discrimination.

What measures can an employer take?

Aside from some very limited exceptions, a compulsory vaccination requirement is not something we would endorse. Instead, we believe employers will need to careful consider a range of measures that can still be an effective way to ensure a safe working environment, whilst balancing individual circumstances and sensitivities:

• Encourage employees to have the vaccine

You can encourage your employees to have the vaccine. Under the Health and Safety at Work Act 1974, employers are obliged to take steps to reduce workplace risks. Consider the extent to which you encourage employees to be vaccinated, as it is a personal choice for everyone.

• Introduce other COVID safe measures

These could include asking staff to wear masks (subject to exemptions), implement social distancing and/or installing plastic screens as appropriate, setting up hand sanitiser stations, arranging for regular testing of staff, and deep cleaning the office.

• Flexible working

Allow employees to work from home where feasible or consider temporary changes to minimise the risk as far as possible. For instance, employees may request to change their working hours to avoid commuting on public transport during rush hour.

• Vaccine policy

Consider implementing a vaccine policy to handle potential workplace disputes which may arise regarding vaccination, for example, how to manage a vaccinated employee refusing to work alongside a non-vaccinated employee or requiring staff to not ask others about their vaccination status.

There is talk of a 3^rd vaccination to be rolled out later in the year, so this is a situation that is not going away anytime soon. Taking some of the measures above will hopefully enable you to minimise any disputes on this issue and enable the business to get back to the normality that we have all been craving.

To find out more, click here to speak to Mark Fellows or click here for a link to the Governments guidance.

When a snow day arrives, businesses suffer the effects of enforced staff absences. Employers are left counting the cost of the lost days, and forecasters predict more bad weather may be on its way.

Organisations such as the TUC and CIPD urge employers not to play “Scrooge” by trying to force employees to get into work or threatening to dock their pay if they fail to come in. However, the financial burden on an employer can be significant. So, what exactly are employers’ obligations in this situation?

Do I have to pay employees who are unable to get into work due to travel difficulties?

Take a look at your employment contracts and Employee Handbook. These might specify whether an employee is entitled to be paid on “snow days”. If they are silent, however, then the default position is that the obligation is on the employee to get into work, regardless of any travel difficulties caused by the weather or otherwise. If they do not attend, they are on unauthorised absence and they are arguably not entitled to be paid.

Be careful, however, if you are going to take this approach. Firstly, there is a potential that the employee can argue that failure to make payment in these circumstances is an unauthorised deduction from wages (assuming this is not covered in the employment contract). The defence to this would be that there was no entitlement to pay as no work was done, but it may be an argument you would prefer to avoid. Secondly, you should assess whether the financial benefit of withholding pay is outweighed by the impact on staff morale and productivity. This is particularly so if the weather and travel conditions are extreme and, even with the best of intentions, employees are unable to get in.

Above all, you should ensure that your approach is consistent. Ideally, tell staff in advance (in written format, e.g. memo or email) what your approach is going to be or, even better, have a “Bad Weather Policy”. Consider whether employees are able to work from home or whether alternative travel arrangements can be made. Otherwise, clearly explain to employees that either: (a) any time off will be unpaid; (b) time off will be paid but that they are expected to make up the time later; or (c) they can request the time off as paid annual leave or unpaid time off for dependant’s leave (see below). Prior notification is particularly important if you have made payments in the past in such circumstances.

As an aside, be careful if you are trying to insist on employees taking annual holiday retrospectively. Employees will need to agree to this unless the contract specifically allows for you to do this.

I have an employee who is able to get into the office but says s/he cannot come in because his/her child’s school has closed. What shall I do?

Employees with responsibility for a dependant are entitled to emergency time off in circumstances in which there is an unexpected disruption to childcare. Unless the school closure was announced significantly in advance, such that the employee had sufficient time to arrange alternative childcare, this would probably be an emergency situation and employees are entitled to take time off and not suffer any detriment for doing so.

Strictly speaking, the time off is unpaid (unless the contract of employment says otherwise) but employers may again want to consider the impact on morale that this approach would have. Again, it is important to be consistent in your approach. You should be especially careful where other employees who are unable to make it into the office due to travel are being paid.

One of my employees failed to come into work today, blaming the snow. I think he is using it as an excuse and could have easily come in. Where do I stand?

If you believe that an employee is falsely using the weather conditions as an excuse for absence or lateness, this can be treated as a disciplinary matter. If you consider the matter to be serious enough (e.g. if it is a persistent or blatant case), you should investigate in line with your disciplinary policy and take action as appropriate. However, in less serious or one-off cases, you may be better placed simply having a quiet word with the employee and letting them know that any further time off will have to be taken as holiday or will be unpaid. Bear in mind that it can often be difficult to prove or disprove an employee’s ability to come into work in bad conditions.

Am I obliged to allow employees to work from home?

Home working can be a good alternative for employees who are unable to get into the office. Use of remote computer access and such devices as iPhones can mean that employees are able to seamlessly work from home. You do not, however, have to allow employees to work from home if you do not think it is appropriate.

If you do permit home working, be clear on what you expect from employees. A home working policy would be a good idea, which should also cover the health and safety aspects of working from home.

Some employees who have made it into work are resentful of the fact that their colleagues are having a day off, while they have to work. Am I obliged to reward them?

In short, no. They are only doing what they are contractually obliged to do. If their colleagues are not being paid for having time off, or if they are using annual leave, this may address their concerns. However, if you have exercised your discretion to pay employees who do not come in, then those employees who have fought their way into work may feel that they have been treated unfairly.

It is a generous employer who grants those employees time off in lieu or some other financial reward. However, from a morale point of view, their efforts should not go unnoticed and a word of thanks, or an email to those employees who have made it in, can go a long way.

Employers should also consider any weather warnings and travel advice and allow employees to go early if necessary to avoid potentially dangerous travel conditions. Also, you wouldn’t want staff to be stuck in the office overnight!

The above provides a general guide to issues that might arise. However, each situation is unique and different considerations may apply in your case. We would therefore recommend that you consult a solicitor, or other suitably qualified person, about your specific circumstances.

Contact Jo for more information.

Partner Mark Fellows, Head of the Sherrards Employment department explores when you should consider to suspend an employee.

Whilst suspension is a precautionary measure, it is important to note that the question over whether to suspend in the first place is still a vital question to be asked before any steps are taken.

This has been highlighted by a recent tribunal matter where a school had suspended one of its teachers in order to investigate allegations that she had used unreasonable force against two of her pupils. Whilst some may think that the severity of these allegations would warrant the suspension of the teacher, the High Court held that it had not been necessary for the school to suspend the teacher and that they could have considered alternative measures. However, on appeal, the Court of Appeal confirmed that the school had had reasonable and proper cause to suspend the teacher.

Suspension is most commonly used for employee allegations involving gross misconduct. The suspension of an employee can therefore be a useful tool, providing an employer with invaluable breathing space to properly investigate an incident in the workplace.

If used inappropriately however, suspension can result in an employer being faced with a constructive dismissal claim from an aggrieved employee. It can damage employee relations or be seen as casting a shadow over an employee’s competence or character. Accordingly, it should be used with care.

ACAS provides the following guidance in relation to suspending an employee: https://archive.acas.org.uk/suspension

When can you suspend?

The above case confirmed that the appropriate test for an employer is not whether it is “necessary” to suspend an employee but whether an employer has “reasonable and proper cause” to suspend an employee. Requiring suspension to be “necessary” was deemed to be too high a bar and so this case has confirmed the threshold for suspension.

This means that an employer may legitimately be able to suspend an employee who is suspected of stealing. In these circumstances, the employer’s “reasonable and proper cause” may be to ensure that the employee in question is unable to carry out any further misconduct.

An employer may also be able to justify suspension on the basis that there is a risk of the employee interfering with investigations, tampering with evidence or attempting to influence witnesses.

Tips for suspending an employee

If you think the suspension of one of your employees is required, you can mitigate the risk of a constructive dismissal claim by:

1. Making it clear that suspension is not disciplinary action in itself or intended to be a punishment;
2. Reassuring the employee that suspension is not an indicator of guilt or that the outcome of any investigation is predetermined;
3. Confirming that you will be conducting a full and proper investigation and setting a clear timeline for future communications;
4. Notifying the employee of a point of contact (such as a member of HR) during their period of suspension; and
5. Confirming that suspension is a temporary measure.

You should also set clear boundaries and expectations for a suspended employee. For instance, you should make it clear that whilst on suspension they remain an employee of the company, bound by the terms and conditions of their employment and should remain contactable during working hours (apart from during periods of pre-arranged annual leave).

You should also make it clear that they are required to co-operate in your investigations and to attend investigation and/or disciplinary meetings. Depending on the allegations made, you may also wish to make it clear that they should not contact any of their colleagues and/or attend the workplace whilst your investigations are ongoing.

In order to avoid any doubt, we would recommend that a letter is sent to the employee in order to confirm the terms of their suspension.

Potential issues

Problems can arise for an employer if:

1. The suspension is communicated to others in an improper way – employers should be careful how they explain the employee’s absence to others and ensure that they do not imply any wrongdoing or fault on behalf of the employee. Suspension is still viewed by some as carrying a negative stigma and so you may decide to explain an employee’s absence in an alternative way;
2. Suspension is too high a sanction – an employer needs to consider whether the potential disciplinary matter is serious enough to warrant suspension in the first place. Minor misconduct will often not warrant suspension. On the other hand, it may actually damage an employer’s case if they do not suspend in a clearly very serious case;
3. Suspension continues for too long – employers should try to complete their investigation as quickly as possible and should review suspension if and when new evidence comes to light. If, for example, you discover clear CCTV footage which refutes the allegations made, you may consider ending a period of suspension prematurely (whilst continuing with your investigations);
4. Suspension is unpaid – employers should not suspend an employee without pay unless they have the express right to do so in the employee’s contract of employment. Even with the required provision, this is likely to be a high-risk strategy and in practice, there are limited circumstances where you would not pay a suspended employee.

In summary, where the question of whether to suspend arises at the outset of an internal procedure, it is worth remembering that this decision will be material to the fairness of the entire process and that it is important to be able to show reasonable and proper cause in order to suspend an employee.

To find out more, please contact Mark Fellows. 

On Friday 20^th March, the Government announced new measures to support businesses finding themselves in financial difficulty as a result of the impact of the Covid-19 pandemic. Below, Joanne Perry, Partner in the Employment team, summarises the announcement and what it means for you and your business.

Please bear in mind that the Government announcement is lacking in some important detail, we endeavour to provide this to you in the coming days.

There are, therefore, a number of questions that remain unanswered.

The Government’s website for support for employers states:

• Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employee’s salary for those employees that would otherwise have been laid off during this crisis.
• To access the scheme, employers need to designate affected employees as ‘furloughed workers’ and notify their employees of this change. The guidance states that “changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation”.
• Employers must submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.
• HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month.

The Government’s website providing support to employees states:

• If an employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
• To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
• You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
• The Government intend for the Job Retention Scheme to last at least 3 months from 1 March 2020 but will extend if necessary.

Joanne highlights key areas which are worthy of further discussion:

In order to benefit from this scheme, employers would have to notify the employees of the change to them being furloughed workers. Since there will be no contractual right to do this – as it seems to be a completely new concept – employers would, in effect, need the employees’ agreement to the change. On the basis that the alternative is redundancy, then I would assume that most employees would accept the change.“One particular challenge is that the guidance is using terminology unfamiliar in an employment law context – despite saying that “changing the status of employees remains subject to existing employment law”. The guidance also repeatedly refers to employees who would have “otherwise been laid off”. Laying off, in an employment law context, has a very specific legal meaning – which is to provide employees with no work (and no pay) for a period while retaining them as employees. This seems to be exactly what they are now referring to as “furloughed workers”. The Government presumably mean “laid off” in the vernacular sense, which is to be made redundant (i.e. have their employment brought to an end).

So, once the employer has agreed with an affected employee that they will be reclassified as a “furloughed employee”, then the employer can reclaim 80% of the employees’ wage costs up to £,2,500 a month. However, what we are not clear about is:

• What classifies as “wage costs”. The employee guidance talks about “all employment costs”. This might include the cost of benefits, pension, employer’s NI etc.
• Whether the cap of £2,500 refers to the 80% value or the 100% value – likely the 80% value.
• What happens when employers have already reduced employees’ salaries – can they claim the full 80% or only 80% of the reduced salary?
• What happens to employees who have already been made redundant? Can they be reinstated in order to benefit from this scheme?
• Whether there are any minimum service requirements. What happens if an employer has a new employee joining – can they immediately be furloughed?
• How long the wait will be for reimbursement – if there is a significant wait, it doesn’t help with the immediate cash flow issue.
• Whether furloughed employees continue to accrue holiday, what happens when they are on sick leave, and are they still entitled to pension contributions?

Employers need to think very carefully about whether to use this and for whom. One particular issue that jumps to mind is how non-furloughed employees will feel about still working – and probably picking up more of the workload to cover for their furloughed colleagues – and potentially receiving the same pay (80%) as those who are not working.

Employers will also need to consider what their approach will be to topping up the salary costs (or not) – particularly for those employees earning over £30K, for whom the cap will not fully cover their 80% salary.

Some of these questions may be answered in the next few days, but some of them are likely to remain unclear. I aim to update you as soon as the Government provide further guidance.”

As you will appreciate, whilst we have outlined options and some of the legal implications, this note does not constitute legal advice as each situation will be different and commercial considerations will no doubt dictate what you as a business ultimately decide to do.

Sherrards is here to support you should you need specific assistance.

To find out more, please contact Joanne Perry. 

This is a truly exceptional and unprecedented time for all organisations, and you will already be thinking about the measures that you may need to implement in order to safeguard the future of your business. Taking steps now, even as a contingency, could be crucial in getting through this challenging period.

We have outlined below some of the options that exist in a situation of this nature:

GOVERNMENT SUPPORT – announcements are being made daily about various financial measures introduced by the Government, whether it be an opportunity to recover Statutory Sick Pay or grants and loans to help businesses during this critical period (Government link here). Utilise these to the fullest extent and communicate any impact on your business, with your staff.

LAY OFF – not to be confused with redundancies but lay off refers to a situation where an employer provides employees with no work (and no pay) for a period while retaining them as employees. They are effectively on unpaid leave for a temporary period. This is a measure often used when the downturn in work is expected to be short-term. Ideally the right to lay off is set out in the contract of employment and if it isn’t, generally speaking you would need the consent of the employees concerned. There are significant legal implications if you impose this measure without consent. Note also that after 4 weeks, an employee has the right to seek a redundancy payment, with the effect of bringing their employment to an end.

SHORT TIME WORKING – is where you ask an employee to reduce their contractual hours, again for a temporary period of time, with a corresponding reduction in pay. For example, asking somebody to work 3 days a week, instead of 5, and reducing their salary accordingly. The same principle as above applies here in respect of having the contractual right to do so and needing consent in the absence of that.

TEMPORARY SALARY REDUCTIONS – it is open for you to ask employees to consider a temporary reduction of pay to help the business navigate through the next few months. This would clearly need the consent of the employees concerned and would be open to discretion as to the amount of the reduction, and for how long. For example, the top earners could take a pay reduction of 20% and the lower earners, 10%. You also have the option to offer to make up the shortfall at a later point.

COLLECTIVE REDUNDANCIES – if you are proposing to make 20 or more employees in the same establishment redundant, within a 90-day period, it will trigger collective consultation obligations which has additional legal implications. In particular, there is a minimum period of consultation that ordinarily must be observed and a financial penalty if this is not met. Likewise, there will be consultation obligations if you are proposing to change terms of employment. This is a complicated and very technical area and one where legal advice should definitely be sought.

REDUNDANCIES – it is obviously open to a business in these times to consider making employees redundant. The difficulty with a situation like this is that it could be a hasty and premature step if this turns out to be a short-term crisis. The problem is that these truly are unchartered territories for businesses in the UK and indeed, around the world. From a legal perspective, employees with less than 2 years’ service have no entitlement to a statutory redundancy payment and provided their dismissals take effect at least a week before they accrue 2 years’ service and are due to redundancy, they will have no right to claim unfair dismissal. For employees with over 2 years’ service, they have a right to claim unfair dismissal which means that you will generally need to consult and comply with the legal requirements of carrying out a fair redundancy.

SICK PAY – there is currently ambiguity about whether employees who are self-isolating are entitled to paid sick leave. If an employee is unwell, then the situation is relatively straightforward – your normal sick pay rules should apply. If somebody is self-isolating on the basis that they have chosen to do so, but are fit and able to work, then it is arguable that they are not entitled to sick pay. The Government has however indicated that employees who are isolating as a result of adhering to their advice, or advice from a GP / NHS 111, will be eligible for Statutory Sick Pay. For some businesses, Statutory Sick Pay can be recovered for up to 14 days where covid19 related. Further details are pending. This may also be a time to review your occupational sick pay scheme and how that might apply in the context of this situation.

HOLIDAY – as a means by which to mitigate the financial impact this situation will have on your employees, there is the option to ask employees to consider utilising some of their holiday entitlement during periods when they might otherwise be laid off without pay. You would need to consider what accrued entitlement exists and again ideally obtain the agreement of the employees concerned.

OFFERS OF EMPLOYMENT – in addition to a recruitment freeze, you may also want to consider whether to withdraw offers of employment or alternatively defer the start date. This is important in the context of redundancy, as a business is under a duty to consider whether it has any suitable alternative employment. If offers have been made, but not accepted, these can be withdrawn with minimal implications. If offers have been made and accepted, they can still be rescinded albeit with the potential for a damages claim, arguably limited to the period of notice that would have applied once their employment had commenced.

In our experience, a key issue in respect of the above is regularly communicating with your employees and being open about the reason for the measures you are introducing.

As you will appreciate, whilst we have outlined options and some of the legal implications, this note does not constitute legal advice as each situation will be different and commercial considerations will no doubt dictate what you as a business ultimately decide to do.

Sherrards is here to support you should you need specific assistance.

Click here to contact Mark Fellows, to find out more.