2nd April 2020

Three Things Employers Should be Doing Now

It appears that after the frantic flurry of activity getting to grips with how the Government’s advice to stay at home and stay away from others would impact on their workplaces, many employers are now beginning to settle into a new norm. For some that means the HR workload, for the time being at least, is a little lighter than usual as all or the majority of their workforce are on furlough leave. Those in that boat may want to enjoy the (short) reprieve or they might want to think about what the coronavirus epidemic has highlighted as potential action points in their workplace and take steps now to tackle them.

1. Be ready to welcome back your furlough workers

Whether you intend for your furlough workers to be on furlough leave for only the minimum of 3 weeks or for a longer period of time, at some point they will return to work. Furlough workers are entitled to return to work on the same terms and conditions of employment on which they had before they left and have continued to accrue holidays throughout their period of leave.

Some employers may feel, unfortunately, that the long-term effect on their business will be inevitable closure or a reduction in their workforce regardless of the financial help the Coronavirus Job Retention Scheme has provided and may not be welcoming furlough workers back after all.

What can you do?

  • Consider whether you can have everyone to return to work on the same date or would it help to have a staggered return of workers.
  • Prepare a letter to send to furlough workers when you are ready for them to return to work. Think about how much notice you intend to give them of their return date and include this in the letter. Also consider including information about their holiday accrual and whether you are requiring them to carry holiday over the next 2 holiday years  (click here for more details).
  • If there are to be potential redundancies check the numbers involved (20 or more proposed redundancy dismissals requires collective consultation) and select employees using objective criteria such as a scores matrix based on skills, productivity, previous appraisals etc.

2. Update your contracts of employment and staff handbook

Recent events may have prevented you from getting to, or finishing, the task of updating contracts and handbooks with the employment changes that come into effect from 6 April 2020:

  • The way we calculate holiday pay for workers without fixed hours or fixed rates of pay is changing. All workers are entitled to 5.6 weeks’ paid holiday per year. The amount of pay that a worker is paid for the holiday they take depends on the number of hours they work and how they are paid for those hours, but the principle is that the pay received while on holiday should reflect what would have been earned if at work. Currently, an employer looks back at a worker’s previous 12 weeks (the holiday pay reference period) to calculate what that worker should be paid for a week’s leave. The holiday pay reference period is being increased to 52 weeks. If a worker has been employed for less than 52 weeks, the employer should use however many complete weeks the worker has been employed for.
  • The Parental Bereavement Leave and Pay Act 2018 will entitle parents who suffer the loss of a child to 2 weeks’ statutory leave. Parents employed for 6 months or more will also be able to claim statutory pay. Click here for more details.
  • All workers are entitled to a written statement of employment particulars. Currently, it must be provided within the first 2 months of employment. This will change to being entitled to receive a written statement on or before their first day of employment. The written statement must also contain the following additional information which is not currently required:
    • The hours and days of the week the work is require to work, whether they may be varied and how.
    • Entitlements to paid leave.
    • Any other benefits not covered elsewhere in the written statement.
    • Details of any probationary period,
    • Details of any training provided by the employer

What can you do?

It’s always a good idea to periodically check your contracts of employment and staff handbook to ensure it continues to be fit for purpose but it might be a good idea to review the following:

  • The holiday clause in the contract and the holiday policy in the staff handbook to ensure the correct calculations are referred to.
  • The compassionate or bereavement policy to include details of the new right to parental bereavement leave and pay.
  • Written statements and contracts of employment contain the new additional information and any policies in the staff handbook have been updated too.
  • Any training clause in the employment contract, or training agreement you ask a worker to sign, allows you to clawback the cost of any training provided in the event a worker’s employment is terminated. Specialist advice is recommended for this type of clause.
  1. Check you’re happy that you’re engaging with self-employed individuals and not employing workers

As part of the response to the Coronavirus, the Government announced that IR35 tax reforms would be pushed back to 6 April 2021. The effect is to give businesses more time to ensure they are fully compliant.

However, worker status will nevertheless be in the spot light this year thanks to the Court of Appeal (CA) decision back in 2018. The CA upheld, by a majority, the decisions of both the Employment Tribunal (ET) and Employment Appeal Tribunal (EAT) that two Uber drivers who brought test cases against the company were workers (and not self-employed) and were therefore entitled to holiday pay and to be paid at least the National Minimum Wage when working. The CA outcome is due to be considered by the Supreme Court (SC) this year. If the SC upholds the CA’s decision it will be of importance to not only the gig economy, but any business that engages with contractors and freelancers.

What did the Court of Appeal decide?

The CA reiterated that each case is fact specific but, in this instance, it found that the ET and EAT were entitled to find that the drivers:

  • were incorporated into Uber’s business and subject to its control;
  • were not working in business in their own account; and
  • could be working for Uber as a worker when in the territory in which they were authorised to work, with the app switched on and able and willing to accept trips.

The CA attached particular importance to the written contract and whether it in fact reflected the practical reality of the parties’ relationship. If the written contract does not reflect reality, the contract can be disregarded when deciding worker status. The CA found “a high degree of fiction in the wording” of Uber’s contract.

What can you do?

If your business relied on contractors or freelancers prior to the coronavirus lockdown, the chances are you have, for the time being, stopped engaging them. If your business did not rely on them, you may be considering doing so in the future until business picks up and you feel confident employing staff.

Take the time now to think not just about the contract but about what is actually happening (or will happen) in practice by asking yourself the following questions:

  • How much freedom and flexibility does he/she have (or will have) over, for example: working hours; overall movement; and level of personal responsibility in carrying out the work. The less control the business exercises over the individual, the more likely he/she is self-employed.
  • Can (or will) the individual turn work down and is the business even obliged (or will be obliged) to provide any work? The less interdependent the parties are (i.e. no mutuality of obligation), the more likely he/she is self-employed.
  • Can (or will) the individual substitute him/herself with another person (even if they rarely do)? A worker (or employee) cannot substitute themselves the relationship is with that worker (or employee) in particular.

There are other factors to consider too including the provision of tools required to do the work, the right to work for others, and whether the individual is treated like a worker (or employee).

This will help ensure you have the type of relationship you want with these individuals and not one that has been determined by an ET.

Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
Employment Law
Blackadders LLP
@EmpLawyerDonna

www.blackadders.co.uk

 

 

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