Furloughed employees: what happens next?

With 185,000 UK companies applying for the government’s Coronavirus Job Retention Scheme on its opening day and reports that up to half of UK companies are planning to access the scheme overall, it is estimated that around 9m employees will end up on furlough. Most real estate companies have staff who are affected, including those in offices, retail, hotels and leisure. Many companies have already made the decisions they need to, but what about the longer term? Is furlough feasible long term? Furlough involves a temporary leave of employees (see EGi, What does it mean to be furloughed?, 6 April 2020). It is used where employers have a reasonable expectation that they will continue to trade in the long term. It can, however, bring problems including increased costs as compared with redundancies, increased workloads for remaining employees (which can create additional stress and increase the likelihood of human error) and administrative headaches.  Employers can claim under the scheme until 30 June 2020, but there is no requirement that furlough has to end then. Employers may choose to extend furlough on the same revised terms after that, but without the benefit of the scheme (unless extended). Should employers be thinking about a return to work plan now? Absolutely. Employers should definitely be thinking about what a return will look like and what steps they will need to take to ensure that employees (and clients) stay healthy and productive once they return. It’s unlikely that things will go back to exactly how they were before so employers should be proactive. Questions to consider will include who needs to be back on day one, what measures can be put in place (eg liaising with facilities teams to increase sanitation and manage continued social distancing requirements), whether the number of employees on site should be reduced, whether automation can be increased (eg doors) and whether changes need to be made to the way in which meetings and common areas are managed to reduce their approved capacity. Property management is likely to be a particular focus for many employers in the months following a return to work. What will a return to work look like? There will be different approaches for different businesses. Some, such as dentists and certain retailers, are likely to experience an urgent or quick increase in demand. Others may see a more gradual increase and a handful, such as airlines, may never get back to normal. Location will also be significant, as those in rural areas with few confirmed cases may be able to move quicker than larger cities. There’s no set process for returning employees to work. Instead, it’s going to depend on the operational/business needs of the employer once lockdown ends. We anticipate that any return is likely to be a gradual processs, rather than a “national return-to-work day”. This might include phased returns of certain categories of employees sooner than others. Where an employer is choosing which employees return to work first (eg where it only requires half a team to return initially), it needs to be ready to explain/justify its selection process – this will often be based on which employees have the skills/experience needed most (in a similar way to how employers use selection criteria on a redundancy exercise), with particular care being taken to avoid discrimination. Employers would be well-advised to start thinking about this sooner rather than later. Employers should also be aware of potential discrimination issues in requiring all employees to return to work on day one, including the risk of indirectly discriminating against certain groups, such as parents with child-caring responsibilities (particularly if schools or nurseries remain closed), those suffering from mental illnesses such as anxiety, and older and/or pregnant employees in the vulnerable category. Reasonable accommodations should continue to be made so far as possible. Employers should consider their needs and review employees on a case-by-case basis. Employees who return to work will do so on their previous terms and conditions. Can employees request that they be taken off furlough? Currently, the scheme is due to run until 30 June 2020 (unless extended) and many employers will have included an end date in their furlough letters to employees. Employers can, however, consider bringing employees back to work sooner. If a request is received from an employee, this should be considered alongside the business need. Unless a prescribed notice period was provided in the furlough letter, it’s suggested that at least 48 hours’ written notice is provided to employees. What if employers don’t see work picking up or can’t afford to take employees back at the end of the furlough period? Employers can make furloughed workers redundant during the furlough period or immediately afterwards. There’s no requirement to bring employees back to work after the period of furlough. Employees must, however, be treated fairly and a thorough redundancy procedure must be followed. This includes engaging in collective consultation where there’s a proposal to dismiss 20 or more employees. A failure to follow a fair procedure will open employers up to the risk of unfair dismissal proceedings. HMRC guidance warns that grants cannot be used to substitute redundancy payments and that HMRC will be closely monitoring this once the scheme closes. What’s next? It’s unlikely to be business as usual. There’s likely to be a renewed focus on employee rights and flexible ways of working. Approaches that were once considered too difficult – like flexible hours or remote working – have now become necessary, if not compulsory. The Conservative Party manifesto and the draft Employment Bill 2019-2020 pledge to make flexible working the default unless employers have good reason not to. The steps that employers have taken in recent weeks have demonstrated that this is workable for many. It is therefore likely that, post-crisis, we will see a number of requests from employees to continue with flexible approaches. Employers will need to consider carefully how to respond; old tests of suitability may have been rendered obsolete, quite aside from the need to maintain good employee relations and staff morale when seeking to rebuild their brand and business. Richard Yeomans is a partner and Leigh Jackson is an associate in the employment team at Addleshaw Goddard