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COVID-19: Current issues for employers

17 March 2020

Following the latest government guidance on reducing exposure to the COVID-19 virus, a number of issues arise for employers.

These include issues relating to working from home, reduction in need for staff as a result of reduced demand, the rights of employees during periods in which they are unable to or not required to work and dealing with those whose roles do not permit remote working.

Working from home

Government advice does not, at this point, amount to a mandatory shutdown of workplaces: the guidance is that employees should work from home ‘where possible.’

Clearly, there will be uncertainty in some businesses and potential for disagreement as to which employees can work from home.

Ultimately, this must be the employer’s decision but care should be taken in communicating decisions to staff so as to avoid any suggestion of unlawful discrimination or unreasonable treatment/favouritism in reaching those decisions.

Where some, but not all staff carrying out similar roles are required to come into work, it might be useful to consider allowing employees to rotate attendance at the workplace, so that concerns about travel and  exposure to the virus are seen to be reduced for all relevant staff.

Where employees may have particular concerns about exposure, relating to, for example, their need to protect vulnerable family members with whom they live, then as far as possible employers should take this into account in determining who is required to attend for work.

Paying employees who are unable to work

Unless contracts of employment allow expressly for reduction or cessation of pay during periods of downturn, then as long as the individual remains employed, they will be entitled to their usual pay.

Employers can seek to agree with employees that they take periods of paid or unpaid leave, but imposing pay cuts or failing to pay will amount to a breach of contract unless the contract can be said to be frustrated, as to which see below.

Employees who are off sick should be treated in line with standard company sick pay rules, though employers may also wish to extend this to those self-isolating so as to ensure that staff known to have been exposed to the virus feel able to remain at home in line with public health guidance.

The Government introduced in last week’s budget a right to receive Statutory Sick Pay (SSP) from day one of an illness, rather than day four as in the past. Statutory Sick Pay is administered via the PAYE system and employers who are paying staff who are off sick as a result of the virus or are not ill but are unable to work because they have been advised to self-isolate in line with Government guidance should ensure that their payroll providers are made aware of the absence, so that SSP reclaims can be made promptly.

Terminating employment as a result of lack of demand

It may be necessary, unfortunately, for businesses to reduce their employment overheads as a result of a fall-off in business demand.

Again, in the absence of any contractual rights relating to the right to lay staff off, normal redundancy procedures will apply if unfair dismissal cases are to be avoided and payment should be made for the notice period.

For staff with less than two years’ service, no unfair dismissal claim can arise, though where 20 or more redundancies apply, minimum periods of consultation apply to all, including those with less than two years’ service.

It may be possible in these circumstances, particularly where the financial impact of the current situation on an employer is severe and gives rise to a need for urgent action, to take advantage of a limited exception to the obligation to collectively consult in a redundancy situation.

This is possible in a situation in which there are special circumstances which render it ‘not reasonably practicable’ for the employer to comply with collective consultation obligations.

For freelance workers, contractual notice payments will be the only obligation, but there may be a risk of freelancers asserting employment status, particularly if they have worked continuously for two years or more.

Frustration of contracts

If businesses are required to close due to a downturn in demand, can it be said that the contract is automatically brought to an end because it is no longer possible to perform the contract?

The legal concept of frustration of contracts is well established and recognises that a contract may be brought to an end, without need for notice, by it having become impossible to perform the contract.

The application of frustration to employment contracts is less clear. There are cases which acknowledge that frustration can occur, but it is right to acknowledge a level of reluctance by the Courts to apply the concept to employment contracts.

The effect of frustration is that the contract is ended immediately, without any notice needing to be given by either party, because the contract is frustrated by events which have taken place.

This means that employees would not be entitled to receive payment in lieu of notice, nor have unfair dismissal rights and it is for this reason that there has been a reluctance to apply this doctrine easily to employment contracts.

The courts may take the view that it is open to the employer to give contractual notice if it wishes to bring the relationship to an end. The arguments may, however, be more readily accepted in relation to lengthy fixed term contracts which have become impossible to perform.

A move to a position in which businesses are ordered to close by the Government might also lead to frustration arguments being more likely to succeed.

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