Shilpen Savani participates in the IR Global Disputes Virtual Series - COVID-19: Unprecedented Times, Desperate Measures

Published 31 March 2020 by gunnercooke llp

Foreward by Andrew Chilvers

The coronavirus pandemic has caused governments across the world to take measures that impact the movement of people rarely if ever, seen in peacetime before. Understandably, this has adversely affected businesses and created a host of employment law issues in every country.

When the first case of coronavirus – or COVID-19 – was reported in Wuhan, China in December 2019, nobody could have guessed that within three months it would spread across the globe at lightning speed. Indeed, from the start of March hundreds of thousands of cases of the disease have been reported in more than 160 countries and territories, resulting in thousands of deaths.

The speed of the spread of the virus – declared a pandemic by the World Health Organization on March 11 – caught governments across the world off guard. And many have since reacted with draconian action. This includes travel restrictions, quarantines, curfews and event cancellations, and advising people to avoid all but essential contact with each other for the foreseeable future.

Of course, this has had a tremendous impact on employment and with employment law in ways that have never been seen before. For instance, with employees being told to stay at home, flexible working has become more common than ever, although in some professions it just isn’t feasible. What this means for employers and employees – especially in terms of payment for those employees who have to take time off because they are sick, to quarantine or self-isolate, or to take care of dependents – has never been tested and different jurisdictions are reacting in different ways.

With the COVID-19 crisis and the response to it among different countries evolving daily, employment lawyers are advising employers on what they can or cannot do to safeguard their businesses and their employees under existing legislation. And the disease is spreading faster than laws can be adopted – although some countries are starting to respond quickly to take care of workers and ensure that businesses stave off bankruptcy.

How are companies responding to COVID-19 (the coronavirus) and what practical suggestions do you have?

Companies have fought to stay open and continue to trade, but the human element has come to the fore very quickly. We have extensive statutory provisions for most aspects of employment law, but not so much of it covers this unprecedented situation.

Employers initially responded by trying to strike a balance between their legal duty to ensure the welfare and safety of their staff with trying to keep their businesses going. The early steps being taken in London, which I expect were similar to other places, included improved vigilance and sanitisation and trying to reduce unnecessary contact between individuals given the highly contagious nature of the virus. There was a surge towards working from home, and businesses also stopped holding meetings in person and switched to video meeting facilities instead.

There is existing statutory provision for unpaid leave for employees to look after dependents, and this has been enhanced by a government extension of the statutory sick pay provisions for employees who are sick, in self-isolation or looking after dependents. This is an important concession, but the truth of the matter is that in modern-day Britain, surviving on statutory sick pay at a rate of £94.25 a week is almost impossible. This pandemic has highlighted a lot of failings in the country’s social welfare provisions.

These steps were gradually overtaken with the UK government announcing a partial lockdown of the country, including the closure of all but essential retail outlets, with effect from 23 March 2020.

The urgent question of emergency downsizing has arisen across industry sectors and most businesses have been forced to consider redundancies. This has triggered extensive rescue measures from the government aimed at deterring mass layoffs and supporting employed and self-employed workers alike.

My practical advice is to continue trading if you safely can and preserve your workforce as far as possible, making use of the extensive economic rescue measures that have been made available. This will not only demonstrate your support for your staff in the short term but also ensure your business is equipped to bounce back when the pandemic passes.

The coronavirus is moving faster than the law – how are lawyers responding and adapting to this evolving crisis?

We have a similar situation here again, with existing laws in England not equipped to deal with the sudden workplace challenges posed by the pandemic including absences from work and layoffs on a mass scale. But after a slightly slow start, the UK government has eventually announced a wide-ranging package of economic rescue measures. These include an emergency loan scheme for businesses and an extensive suspension of tax liabilities.

From a labour law perspective, the main development has been the announcement of the Coronavirus Job Retention Scheme which is open to all UK employers for at least three months. The scheme offers a grant of 80% of wage costs, capped at £2,500 per month employee, in return for placing employees on “furlough leave” instead of dismissing them.

There is also a scheme for self-employed workers called the Self-employment Income Support Scheme, which offers a similar taxable grant to the “gig economy” and includes freelancers, ride-hail drivers, many in the creative industries and independent tradespeople. The gig economy was initially overlooked by the government, but the announcement of the scheme following public pressure has come as a much-needed reprieve to the sector

How are specific industries or sectors and their employees impacted and what are the potential legal consequences?

In England, everything right now is being driven by the national drive for social distancing and efforts to leverage the emergency economic measures put in place by the government. We are also a country in partial lockdown for the moment, with all but essential shops required to stay closed. This has devastated the retail sector, though some online suppliers are still open for business. The restaurant and leisure sectors have also been forcibly shut by government order, as have all gyms and public entertainment venues.

Working from home is viable for some, especially professional, financial and insurance services and other office-based sectors. But of course, the retail sector doesn't lend itself to home working and the same is also true for manufacturing industries. Emptying a high street store or a factory floor is very different from emptying an office building and asking staff to work at home, which can be done much more readily.

In terms of the types of legal issues we are dealing with, there's a prevailing sense of crisis management where employers are trying to make informed decisions in a fast-changing scenario which requires decisionmakers and leaders to be very responsive on a macro and micro level. My clients are working on contingency plans, looking at what their businesses will do in terms of survival strategies if the lockdown becomes an extended scenario.

The government rescue packages are very impressive, but the benefits have yet to be felt in the real economy and the earliest grants are unlikely to be paid until the end of April. There are also indications that it will take up to six months for the UK economy to return to some form of normality. So, there is still a need to survive in the short to medium term and this is placing businesses under immense pressure.

The “gig economy” in particular was facing devastation in recent weeks until the Selfemployment Income Support Scheme was announced, and the importance of this can’t be underestimated. After all, it is a sector that has doubled in size since 2016 and is now estimated to include one in ten working-age adults in the UK.

Business leaders are generally facing tough strategic choices and getting those decisions wrong can lead to a variety of employment claims including claims for unfair dismissal, breaches of contract, unlawful deductions of wages and failing to comply with statutory redundancy consultation procedures. But getting them right could be the difference between those businesses which survive the pandemic intact, and those which sadly will not.