HR briefing - June 2020

Covid-19

Coronavirus Job Retention Scheme

The Government has established an unprecedented scheme to partially fund the salaries of employees affected by the Covid-19 outbreak. The Coronavirus Job Retention Scheme offers 80% of salary up to a £2,500 per month cap and is open to all employers for an initial period of three months. Full details of the scheme are set out in our Covid-19 employment FAQs. The scheme is extremely complex, and clients should feel free to ask the team about any particular queries.

The Government announced in May that the scheme would be extended until the end of October 2020, but with a number of significant changes. Please read our separate article on the extension and those changes.

Exiting lockdown

As the focus is now turning towards how the lockdown will be lifted, clients are turning their minds to how to manage their workforce in this period and the potential longer term impacts of the pandemic such as redundancy and insolvency. Some of the key health and safety issues arising from the return to work are discussed in our separate article, and any clients who would like a recording of our recent webinar on redundancy are welcome to contact our Marketing department.

Macfarlanes’ Covid-19 hub has a wealth of notes addressing key client concerns, from employment to insurance. 

Immigration update

Covid-19 has had a major impact on the UK immigration system and most visa application centres, both in the UK and globally, have been closed for some months. While they are beginning to re-open, a significant backlog means that it will be some time before applications are being processed within pre-lockdown timeframes.

During the Covid-19 crisis, the Home Office has announced a number of concessions to assist migrants and employers who are unable to file applications, to travel or to meet sponsor licence compliance obligations.

Notably, those in the UK with visas which are due to expire between 24 January and 31 July 2020, can have their visas extended to 31 July 2020 without the need for a full application.

Instead, visa holders must notify the Home Office via a short form, available here.

Other major concessions include:

• the ability to file immigration applications in the UK where applicants would normally need to leave and apply from their home country;
• a temporary relaxation of right to work checks to allow for checks to be undertaken remotely;
• a temporary relaxation of the restriction on the amount of unpaid leave a Tier 2 migrant may take;
• Tier 2 migrants being permitted to commence work for a new sponsor before their visas are issued so long as they are working for their new sponsor in the role described on their Certificate of Sponsorship; and
• an indication that excess absences from the UK relating to Covid-19 may be waived where they impact on future applications.

Detailed information on all these changes and more are available here.

In the courts

Restrictive covenants

Businesses often want to recruit new candidates who are subject to some form of post-termination restriction in their existing employment contracts. Non-compete, non-solicitation and non-poaching covenants are all potentially enforceable, provided they protect a legitimate business interest. Since the recruiting business typically has much deeper pockets than the individual target employees, the ex-employer will often seek to involve the recruiting business in any enforcement litigation. Most commonly, that is by way of an allegation that the recruiting business knew of the target employees’ restrictions, and induced a breach of them. In an interesting case in this area of law, the Court of Appeal has held that there was no liability for inducing a breach on the particular facts of the case, in large part because the company had obtained legal advice that the covenants were not enforceable. Even though the court actually upheld the covenants, the recruiting business was entitled to act on the advice it had received. Clients wishing to recruit candidates or teams subject to post-termination restrictions should therefore seek specialist advice at an early stage to put themselves in the best possible position.

TUPE

Many readers will be familiar with the restrictions that apply wherever a transaction (typically an asset sale or change of service provider) is subject to the TUPE regulations. One of the key rules is that changes to terms and conditions are void if the transfer is the reason for them, even if both employer and employee agree. For the first time, the Employment Appeal Tribunal has considered whether this rule operates where a change is beneficial to the transferring employees – older cases have involved detrimental changes, such as the imposition of new restrictive covenants. The headline is that beneficial changes are caught by the rule, and so are void. Context is important, however: in this case senior executives of the transferor, who were aggrieved at the loss of a contract to a competitor, awarded themselves very substantial pay rises and bonuses, which they asserted were binding on the transferee. They could, therefore, easily be portrayed as trying to ‘game’ the system, which is rarely a good idea in litigation. Clients contemplating transactions where TUPE is likely to apply should seek early advice on their specific situations.

Vicarious liability

The Supreme Court has given judgment in the appeals in two important cases on vicarious liability. In the first, Morrisons was held liable for a deliberate mass data breach committed by a malignant employee. In the second, Barclays was found liable for numerous acts of sexual harassment committed by a doctor undertaking pre-employment checks, but as a self-employed contractor. In both cases, the Court concluded it was not appropriate to impose vicarious liability. In the Barclays case, the fact the doctor was not an employee was a critical factor. In the Morrisons case, the court focussed on the nature of the wrongful conduct, which was not sufficiently closely connected with the employee’s normal duties. Both decisions will be welcomed by employers, although since cases in this area are extremely fact-sensitive, advice should always be sought.

New legislation 

We reminded readers in January about the main employment law changes coming into effect in April 2020. As a quick summary, the following are now in force.

• Holiday pay calculations for irregular patterns of work have been amended. They must now be calculated by reference to average pay over the 52 weeks immediately before the holiday, rather than the previous 12-week period.
• Employee termination payments are now subject to national insurance contributions (NICs) beyond the first £30,000, aligning them with the position under income tax (previously they had been exempt from NICs), making them more expensive for employers.
• Basic statements of terms and conditions must now be provided to workers as well as employees. The content of the statements themselves has also been updated.

In the news

Gender pay

The Government Equalities Office has suspended gender pay gap reporting requirements for the 2019/2020 reporting year due to the Covid-19 outbreak. Employers can still publish information voluntarily if they wish.

Discrimination awards

Readers will know that injury to feelings awards can be made in discrimination and whistleblowing claims. The level of award is judged according to the severity of the harm, by reference to three bands: the so-called “Vento bands”. The bands have been revised, and are now as follows.

Lower   £900 to £9,000

Middle  £9,000 to £27,000

Top      £27,000 to £45,000

Reform of Employment Tribunals

The Law Commission has produced a detailed report looking at potential reforms of the Employment Tribunal system. Some of its significant proposals are:

• extending the time limit for Tribunal claims from three months to six months;
• changing the test for the admissibility of late claims;
• allowing contractual disputes to be litigated during employment rather than only after termination;
• raising the maximum award in contractual disputes from £25,000 to £100,000; and
• making the division of awards fairer where there is more than one respondent (e.g. the employee’s manager and their employer).

Whether the Government chooses to act on any of the proposals remains to be seen.