What does the end of the Coronavirus Job Retention Scheme mean for employers?

The Coronavirus Job Retention Scheme (the Scheme) is winding down in advance of its complete closure on 31 October 2020.   This short article will discuss some of the practical and legal challenges that employers face in bringing workers back to work and how these can be met.

Health and Safety in the Workplace

Employers will need to ensure that the working environment to which workers are asked to return is reasonably safe.  In order to determine what changes will be required, employers should carry out a COVID-19 RISK assessment in line with the HSE guidance.  It is good practice to consult with your workers and trade unions and to share the results of the risk assessment with your workforce on your website.  Employers will therefore need to ensure that their risk assessment takes into account not only those who have been specifically identified as high risk (the clinically vulnerable and clinically extremely vulnerable) but also those who are high risk for other reasons, especially those with protected characteristics under the Equality Act 2010.

The type of measures that are required will vary according to the risk profile of individual workers and the type of workplace, but necessary measures may include some combination of social distancing (ensuring that workers are able and reminded to maintain a safe distance in the office), infection control (cleaning, handwashing, and hygiene procedures), and other measures to manage the transmission risk (allowing people to work from home, staggering arrival and departure times, reducing the number of people each person has contact with, keeping the ‘risky’ activity time as short as possible, and considering whether the activity is essential for the business to operate).   The Government’s guide to the practical actions for businesses to take can be found here.  Further useful advice has been provided from the World Health Organisation (WHO) (here), and ACAS (here).

Absence and pay

Self-isolation

There are a range of circumstances whereby an employee may be required by public health guidance or an employer to self-isolate.   If there is an identified risk that an employee has been, or may have been, exposed to COVID-19, then an employer may be entitled, or even required, to keep that employee away from the workplace and other employees until the risk has passed.    Employers should consider whether they have an express or implied contractual right to mandate home working in such a situation.  Assuming that there are reasonable and non-discriminatory grounds for concern about the transmission of COVID-19, and the matter is handled appropriately, proportionately, and sensitively, it is unlikely that an employer would be acting unlawfully by requiring an employee not to attend the office for a reasonable period.   Whether an employee will be entitled to pay where they are sent home from work will depend on the precise circumstances of the decision, and most contracts will not provide for this kind of a scenario.  Employers may be able to reduce the cost and inconvenience of self-isolation if the workplace or role allows for remote working.  

Refusals to attend work

What steps can an employer take if an employee refuses to attend work due to fears about COVID-19? A practical solution may be for the employee to work from home.  If this is not possible, the employer will need to consider the current public health advice, the specific reason that the employee is concerned about attending work, and whether it would be discriminatory to refuse home working, take disciplinary action, or withhold pay in light of the employee’s refusal. 

If the reason the employee self-isolates is because of a disability that places them into a high-risk category such as an auto-immune disease or a respiratory condition, disability discrimination issues may arise. The fact that the employee or worker does not fall within the prescribed list of clinically vulnerable and clinically extremely vulnerable people does not mean that they are not disabled and that they do not have protection from disability discrimination in this context. There may be people suffering from other illnesses which amount to a disability in terms of the EA 2010 and who are more likely to suffer serious illness if they contract COVID-19, so employees should be considered on a case by case basis.

If there is no discrimination aspect, and the public health advice is such that the employee could reasonably be asked to attend work then it is possible that the employee could be investigated for misconduct in terms of their refusal to follow a reasonable management instruction, and their unauthorised absence. If the absence is unauthorised then the employee would likely not be entitled to pay as they are not willing to attend work.

However, the context of the refusal to attend work would need to be closely examined before disciplinary action were taken. Certain dismissals related to the raising of health and safety concerns amount to automatically unfair dismissals which do not require qualifying service and action short of dismissal on these grounds could amount to a detriment which is unlawful under section 44 of the Employment Rights Act 1996.

Dismissals and Redundancy

Employers may face the risk of legal challenge if they seek to make furloughed employees redundant. Some of the novel issues that employment tribunals may need to grapple with are as follows.

What if an employer began consultations for redundancies prior to the introduction of the Coronavirus Job Retention Scheme (“CJRS”) and seeks to make furloughed employees redundant as the scheme winds down?

Collective and individual consultations for redundancies must be undertaken fairly (in line with the guidance in Polkey v AE Dayton Services 1988 ICR 42, R v British Coal Corporation and Secretary of State for Trade and Industry ex parte Price 1994 IRLR 72 and Rowell v Hubbard Group Services Ltd 1995 IRLR 195). Collective consultations must also comply with s. 188 Trade Union and Labour Relations (Consolidation) Act 1992.

If consultation is begun prior to the CJRS and redundancies are effected as the scheme is winding down, a tribunal may find the consultation process to have been unfair. This will depend on the factual application of the test in Vauxhall Motors Ltd v TGWU 2006 IRLR 674, EAT. There, VM Ltd began s. 188 consultations in January 2003, giving notification of its intentions to the Secretary of State on the standard HR1 form on 24 January 2003. VM Ltd then engaged in further consultation with its employees’ representatives, applying to extend the original HR1 by 6 months and subsequently lodging a new HR1 respectively in March and September 2004. VM Ltd’s employees’ trade union lodged a complaint to the tribunal, contending that VM Ltd had breached its obligation under s. 188. The issue that arose in relation to that complaint was whether VM Ltd’s s. 188 compliance had been spent.

The EAT determined that s. 188 does not have an unlimited shelflife. In some circumstances, s. 188 compliance will be spent and consultation must be started anew. The following scenarios illustrate the different factual positions that may obtain:

1. Consultation is spent

A company in grave financial difficulties serves a s.188(4) letter on a union and consultation begins, but redundancies are prevented because the company receives a large order. Consultation ends at that point. If a year later the order is fulfilled with nothing to replace it, and the employer needs to consider redundancies again, the original s.188 notice is spent and a fresh round of consultation is required.

2. Consultation deemed to continue

A company begins consultation. There is then ongoing dialogue between the company and employee representatives / trade unions about the status, extension and transfer of the temporary employees between the date of the original HR1 notification and the eventual dismissals. In this case consultation is deemed to continue and s. 188 notice is not spent.

The EAT considered that VM Ltd fell into the latter category. There had therefore been compliance with s. 188 despite the significant lapse of time between the original HR1 and eventual dismissals.

How is the test likely to apply in the context of the winding down of the CJRS?

Tribunals will need to grapple with this question, and the answer will largely depend on the circumstances of the case. However, it is likely that the inception of the CJRS will be treated as the “large order” in scenario 1 above. It is an intervening event that prevents redundancies. Where an employer has served a s.188 notice prior to the introduction of the CJRS, but thereafter discontinues the redundancy process by placing employees on furlough, it is likely that it will be required to start consultation anew when the CJRS winds down. The position may be different, however, if the employer continued to consult over the proposed redundancy of furloughed employees throughout the life of the CJRS, and effects redundancies once the CJRS winds down.

What if an employer seeks to change the terms and conditions of employment of furloughed employees when bringing them back to work following the winding down of the CJRS?

Employers are not entitled to change the terms and conditions of employment of an employee without agreement or an express contractual provision allowing them to do so. Unilateral variation of contractual terms, such as a reduction in working hours or a change or role, can amount to constructive dismissal and/or breach of contract.

In Packman t/a Packman Lucas Associates v Fauchon 2012 ICR 1362, the EAT held that an employee who refused to agree to reduced hours in the face of a drop in the need for employees to do book-keeping work had been dismissed by reason of redundancy. It held that the test requires a “holistic” view to be taken, linked to two variables, the employee and the work. In Hardy v Tourism South East 2005 IRLR 242, the EAT held that redeployment may amount to redundancy. The following propositions of law can be deduced from the EAT’s rulings in Packman and Hardy:

Redundancy: A variation of the terms of employment can amount to a dismissal by reason of redundancy if the employer’s business needs fewer employees to do the same amount of work or where the number of employees required stays the same but the amount of available work is reduced.

Dismissal: An employer proposes to “dismiss” an employee if, on an objective consideration, by redeploying an employee it is proposing to withdraw the existing contract from the employee, or to depart so substantially from it that it amounts to a withdrawal of the whole contract. Where an employee’s contract is subject to a mobility clause, the employer is entitled to redeploy the employee within the terms of that contract. Redeployment on the basis of a mobility clause will not be by reason of redundancy.

How do Packman and Hardy apply in the context of the winding down of the CJRS? In appropriate factual circumstances, employers seeking to vary the terms and conditions of employment or to redeploy furloughed employees returning to work following the winding down of the CJRS may be required to engage in appropriate redundancy procedures, including fair and meaningful consultation. Cases will turn on their facts. However, employers should be aware that unilateral variations of contractual terms or redeployment following the winding down of the CJRS may be held to amount to unlawful constructive dismissals. In all circumstances, it is advised that employers seek to renegotiate the terms and conditions of employment with their employee’s consent.

Conclusion

There are no easy answers when it comes to bringing workers back into the office following a challenging pandemic for employers and employees alike.  But careful planning in advance should enable employers to avoid the biggest pitfalls.

Frederick Powell and Margherita Cornaglia are members of the Doughty Street Chambers Employment Team.