Coronavirus (COVID-19): Employer considerations

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Coronavirus (COVID-19): Employer considerations and options

06/04/2020

The introduction of a new Coronavirus Job Retention Scheme (furlough leave) was announced by the government on 20 March 2020 and further updates and clarification have followed since. Furlough leave has been well publicised and further information on the Coronavirus Job Retention Scheme can be found at www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.

It is important to note that placing an employee on furlough leave will require their agreement. Once implemented, employers should then be considering what impact the current situation will have on their business and other measures that may need to be taken in relation to their employees.

Annual leave

It is likely that annual leave under will continue to accrue during furlough leave. It is currently unclear whether annual leave can be taken during furlough leave and whether employers will obtain reimbursement from HMRC if annual leave is permitted during this time. Annual leave may not be treated as furlough leave and so the employee’s pay may not be recoverable from HMRC. Furlough leave needs to be taken in blocks of three weeks so it arguably cannot be interrupted by annual leave.

The government has passed emergency legislation relaxing the restriction on carrying over annual leave under the Working Time Directive with effect from 26 March 2020. However, rolling over annual leave may have consequences with employees looking to maximise and take annual leave later in the year, or in the subsequent years. Therefore, employers may want to consider planning when they require certain employees to take holiday to best suit the needs of the business once furlough leave has ended. In principle, an employer could require that annual leave be taken at certain times to suit the needs of the business. However, a number of issues must be considered and the employer must comply with its obligations in relation to notice.

Any employers considering changes to the employees’ rights during furlough leave or requiring holiday leave to be taken at the end of furlough leave should take advice before implementation. There may be nuances to consider and consequences that arise out of any such decisions.

Redundancies and consultation process

It is still unclear at this stage when payment for furlough leave will be received by employers from HMRC. This will no doubt cause cash flow concerns for many businesses. Furthermore, notwithstanding furlough leave, many businesses may need to streamline and could find it necessary to make redundancies.

Employers should, therefore, be planning for this scenario now, thinking ahead and taking advice as to how to implement a fair and consultative redundancy process in case this proves necessary. A fair and consultative redundancy process can take weeks to complete.

The fact that an employer has furloughed some employees may also have an impact on the timing of any redundancies and the consultation process. As always, employers should ensure that their decisions as to who to select for redundancy is not based on discriminatory criteria. It may be that the case that the criteria applied when selecting employees to be furloughed is no longer applicable to a redundancy situation.

Where redundancy of an employee is made after furlough leave, it is important to consider the redundancy calculation and whether this is on the basis of furlough pay or normal pay. This will very much depend on the circumstances and advice should be taken.

Employers should be contingency planning now as implementing and following a fair redundancy process can take considerable time.

Upcoming changes

It is important that other changes due to be implemented are not overlooked by employers during these difficult times. Please see our article on changes to written statements of employment which will be in force from 6 April 2020.

For advice on the matters discussed above, please get in touch with your usual contact at Warners for a free initial telephone consultation.

This article is for general information only and does not constitute legal advice to be relied on. Please note that the law may have changed since this article was published.

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