A return to “hybrid working”? – What would this mean for staff wellbeing?

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On 26 January, the so-called “Plan B” COVID restrictions came to an end in England.

The Government had previously re-introduced a number of measures to tackle the outbreak of the COVID-19 Omicron variant on 8 December 2021. In England, this was referred to by the Government as “Plan B” and meant a return to the compulsory wearing of face coverings in public places, and working from home, wherever possible.

Millions of office-based employees across England have therefore been back to working full-time from their home offices, kitchen tables, and garden sheds.

Although this may have been an easy and desirable transition for some, there has also been an increase in the number of employees reporting feelings of stress and loneliness when working from home, typically attributed to missing out on the in-person, human interactions associated with office working.

Most employers will have made allowances for staff to attend the office on the occasions when their required tasks made it unavoidable. However, some large employers, such as accounting giant PWC and city law firm Slaughter & May, went further and added “mental health needs” as an acceptable reason for going into the office, even if the employee’s tasks did not strictly necessitate it. This acknowledges the potential benefit to an employee’s wellbeing of being allowed to attend the workplace, particularly if, in doing so, they are able to meet and interact with clients, colleagues or managers.

Whether the latest announcement will mean a sudden surge of staff returning to work full-time in the office is uncertain but seems unlikely. It is more likely that many staff will continue to work partly from home and partly from the office (i.e. hybrid working), as was the case after the previous relaxing of restrictions. In some cases, staff may even continue to work from home much, if not all, of the time.

This is borne out by polling, which has shown a lack of appetite among office workers to return to work in the office 100% of the time, and a desire from both employers and employees for a balanced blend of home and office-based work. Shakespeare Martineau, for example, has joined this trend with its ‘empowered working’ model.

Some international companies such as Twitter and Spotify have implemented “work from home, forever” and “work from anywhere” policies, respectively. Neither company envisages closing all of their offices permanently but will re-shape their use from a place of everyday deskwork to more collaborative workspaces.

So, the impact on mental health of periods of working from home, or away from the workplace, will remain a live issue.

In the UK, from an employment law perspective, it remains important that employers consider both their office and employees’ home working environments when considering their health and safety duties towards staff. Any home working plan and risk assessment should consider both mental and physical wellbeing when working from home, and each employee’s needs should be taken into account.

When staff are working from home, employers should be issuing specific and tailored advice to look after employees’ safety and wellbeing. This might include encouraging staff to keep in contact with managers and colleagues, to keep a routine that separates work and personal life, and to take regular breaks that involve stepping away from desks and moving around.

Employers should also be mindful of the potential for an employee who is struggling with their mental health to be deemed disabled under the Equality Act 2010. The general litmus test is if the mental illness has a substantial and long-lasting impact on their ability to do day-to-day tasks.  If an employer suspects this may apply to one of their employees, they should consider obtaining a report from an occupational health provider. Employers are required to make reasonable adjustments for disabled employees, and this is best done in open consultation with the employee in question, supported by any relevant Occupational Health report or medical documents.

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Robin has experience in employment tribunal litigation and ACAS conciliation, acting for both employers and individuals. Robin also advises on non-contentious employment matters including IR35, TUPE, GDPR, contracts, and more.

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Compulsory vaccination for care home staff

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The Health and Social Care Act 2008 (Regulated Activities) (Amendment) (Coronavirus) Regulations 2021 will come into force on 11 November 2021 and will make COVID vaccination compulsory for care home staff. Here we examine some of the key questions you may have.

What do the regulations say and why have they been introduced?

Given the higher risk COVID poses to residents of care homes, who are generally elderly or vulnerable (or both), when compared to the general population, the government decided to make the COVID vaccine mandatory for anyone working in a care home. It’s not a decision without controversy and it has been acknowledged that requiring anyone to undergo a vaccine as a condition of keeping their job is a highly unusual step. However, the government’s line on this – which will sound familiar – is that the pandemic is an exceptional situation and that unusual steps are needed to tackle the crisis.

What if an individual can’t have the jab for a medical reason?

The regulations anticipate this scenario and make it clear that where someone can’t have the jab for a medical reason, they will still be allowed to attend work, provided they can provide evidence of their medical exemption or, in the short term, self-certify their exemption. The actual numbers falling within this exemption will be low.

Do the regulations just apply to frontline care workers?

No, the rules apply to anyone working inside a care home.  There are some specific exemptions (see below) but otherwise, the rules apply to all staff regardless of the role they carry out and regardless of whether they actually have any direct contact with residents during their day-to-day work.

What about families visiting relatives in care homes?

The regulations contain a fairly lengthy list of exemptions that apply, the most significant one being that people visiting residents do not have to be fully vaccinated.  This includes friends as well as family members. This gives rise to a slightly bizarre scenario whereby an individual turning up to work at a care home without being fully vaccinated would have to be turned away, but the same person attending in their capacity as a friend or relative would be allowed in!

Whilst there are various other exemptions that could apply, in practice these will only apply in a limited number of scenarios.

What are the timescales on this?

The deadline for care home workers to be fully vaccinated is 11 November. Anyone not fully vaccinated by that date is strictly forbidden from entering the care home unless one of the exemptions applies. This means that workers will need to have received their first jab by 16 September in order to get the second jab in time for the deadline.

Anyone who is willing to get the jab but misses the deadline could ask their employer to try and bridge the gap (e.g. with holiday and/or unpaid leave) but this is only likely to be a feasible option where the delay is relatively short.

What if somebody won’t have the jab?

Unless the employer can relocate them to a building without any residents (e.g. a separate head office) the likelihood is that they will be dismissed. Such dismissals are likely to be fair provided a proper consultation process has been followed by the employer.

So is this good news or bad news for care home operators?

It depends on your viewpoint. On the plus side, it provides certainty for operators who were otherwise stuck in a bit of a quandary when dealing with employees refusing to get the COVID vaccine. However, it is likely to lead to operators having to dismiss employees that they would otherwise want to keep, and many operators are already struggling with severe staffing shortages.

Watch our importance of employee well-being in the workplace and practical issues for employers to consider webinar

In this joint webinar with Brewin Dolphin, we will look at factors to consider in order to promote good health and wellbeing in the workplace which can boost employee engagement and organisational performance.

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Matt’s expertise cover all areas of Employment law. He has considerable experience of advising clients on complex employment litigation, senior hires and exits, large-scale redundancy exercises and complicated TUPE issues.

Employment

From guidance on the Coronavirus Job Retention Scheme and support with largescale redundancies, to working from home and policies and other workplace issues, our team of experts are on hand to work with your HR teams to help with any issue, large or small.

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Fixed-Fee Service

Preparing for the COVID-19 vaccine

How to prepare your business for the COVID-19 vaccine rollout

As the Covid-19 vaccine roll-out continues at speed, organisations are facing unprecedented challenges, particularly around whether they can make the vaccine compulsory for their employees. Whatever approach you decide to take as an employer, an important and practical starting point is to put a vaccination policy in place.

We’ve seen an increase in the number of employers wanting to know if they can make it a requirement for their workforce to be vaccinated or penalise employees who refuse.

While there may be some employers in certain sectors who can justify requiring their employees to take the COVID-19 vaccine – for example, those in healthcare where the risk of not taking it can be detrimental to vulnerable people in their care – this will not apply across the board.

It is important to note that the government has not, at present, made it mandatory for members of the public to be vaccinated, nor does it appear likely that this will be the case.

How we can help

An essential important first step is to ensure you have a policy in place that outlines your approach and expectations of your employees. We’re offering a fixed-fee vaccination policy drafting service, for a fixed price of £950 plus VAT.

 

Outside of this fixed-fee package, our team of employment law experts are also on hand to work with you once you have your draft policy prepared, including:
  • Consulting with employees, staff associations and unions.

  • Advising on how to communicate with staff regarding the vaccination policy.

  • Ensuring GDPR compliance when processing related data and how to communicate with staff about how their personal data will be used.

  • Evolving your vaccination policy in line with Government policy changes.

This is such a rapidly developing area that employers should be prepared to keep their position under constant review over the coming months and adapt their approach where appropriate.

How our fixed-fee service works

For a fixed price of £950 plus VAT, you will receive the following:

  • A consultation to determine the best approach for your employees

  • A dedicated team of experts who will work with you to ensure your policy is the right policy for your business

  • A bespoke vaccination policy for your business

*This fixed fee is applicable to the contract review and legal opinion only. Any ancillary work done will be charged at the appropriate rate agreed on engagement.

Want to find out more or have further questions?  Contact us today using the button below.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.

We've put together the most frequently asked questions and
what actions you should take

Unfair dismissal claims are a primary risk where they involve an employee with at least two years’ service.  To successfully defend such claims, you will need to persuade a tribunal that it was reasonable to require vaccinations and that the employee(s) unreasonably refused.

A proper dismissal process will also need to be followed and you must consider if there are any alternatives to dismissal in the circumstances. This dismissal would most likely be for misconduct, although the circumstances are very unusual so it may instead fall within the “Some Other Substantial Reason” (SOSR) catch-all category.

Claims for indirect discrimination are the other main risk you may face, particularly in cases where the reason for refusing to get the vaccine is linked to a “protected characteristic”.  For example, a pregnant worker will be well within her rights to refuse the vaccine given the current government guidance.  Note that there is no minimum service requirement in order to bring a discrimination claim.

We strongly suggest that you take legal advice before making any decision to dismiss an employee because they refuse the vaccine.

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Enhancing the hybrid working experience with home workspace loans

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Home workspace loans for hybrid working

Hybrid working is expected to become the new normal for many and while it offers great flexibility, it has left some people working in less-than-ideal circumstances.

However, with employers having a duty of care for their employees, now is the time to consider how they can help to create the best working conditions for those continuing to work from home.

Offering a ‘home workspace loan’

Some employers may wish to introduce an interest-free ‘home workspace loan’, which can be packaged as an employee benefit. This would provide financial support for staff looking to make their remote working conditions more comfortable.

The terms of the home workspace loan are at the business’ discretion, so it can be tailored to suit both employer and employee. Terms to consider include:

  • Timeframe
  • Eligibility
  • Repayment options

If businesses choose to introduce this perk, it must be approached in a fair and inclusive way, to ensure all employees are given the chance to make as many changes as necessary.

Not a normal loan

It is important to remember that this type of loan is different from those offered by banks and other finance providers.

It is not a regulated credit agreement and doesn’t fall under the Financial Services and Markets Act 2000, meaning it isn’t regulated by the Financial Conduct Authority (FCA).

Offering the loan as an employee perk does mean that certain levels of bureaucracy can be avoided. However, to ensure that it is not deemed a regulated activity, there are strict rules to follow. If these are not adhered to, the loan scheme will require authorisation.

Understanding the differences

The first major difference between this loan scheme and a standard loan is the structure of the agreement. The home workspace loan requires the agreement to be between a borrower and lender alone, meaning the employer cannot get involved with any of the chosen contractors or suppliers.

Another aspect to consider is the interest rate. In most cases, it’s advisable that it is offered on an interest-free basis, which would make the terms more beneficial to the borrower than the lender, showing a focus on employee wellbeing.

Lastly, the agreement cannot be a ‘restricted use credit’. Employees should be free to use the money how they see fit within the purpose of the loan and the employer cannot interfere.

Keep your employees informed

When communicating the loan to the workforce, it is important to be transparent and not misleading. The terms and expectations must be laid out clearly, so workers understand the risks and costs involved with the agreement.

While the loan is an effective way of supporting staff working remotely, it may not be the right fit for every business. For smaller companies that might not have the financial capacity to offer a full loan to every employee, they may wish to provide smaller loans or purchase furniture outright.

Remote working has brought many positives, including creating a better work-life balance for employees, but it has left others struggling. By offering home workspace loans, employers can provide their teams with everything they need to do their best work.

Get in touch with our  debt and asset recovery team to find out how they can help.

Find out more about our home workspace loan fixed fee

For a fixed fee, our team of consumer credit experts work with you to set up a home workspace loan benefit for your employees quickly and efficiently.

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Eddie works with a highly skilled team to deliver industry specific advice to the asset finance and leasing sector.

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Make sure your business is prepared for the challenges and opportunities that you may face in the future of work.

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  • Flexible and hybrid working policies.
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Home workspace loans | Future of flexible working

Home workspace loans for employees | An employer's guide

The pandemic has revolutionised how employees work. As lockdown in the UK lifts, it is likely that flexible home working will permanently become the norm for many organisations.

However, the need for employers to ensure that they are supporting their staff wherever they work has not changed. Now is the perfect opportunity for employers to review how they continue to support home working, and the benefits they have in place. 

A new and innovative option for employers is to introduce interest-free home workspace loans into staff benefit packages, enabling employees to create an appropriate working environment at home. Find out more below. 

What is a home workspace loan?

A home workspace loan is an interest-free benefit that employees can opt into as part of their benefits package, providing them with the funds they need to set up a home office of their choosing – from larger loans to cover bigger expenses such as the construction of a garden office or convert a garage, to smaller loans to purchase items such as office furniture.  

What are the benefits of introducing this type of benefit?

This innovative staff benefit has multiple benefits for both your organisation and your employees.  

For employers who are looking to continue full- or part-time remote working on a more permanent basis, it is a low-cost option to help make employees feel supported in both their mental health and financial wellbeing. It ensures that employees have a safe and healthy space in their working environment, and helps to set clear boundaries between home and work-life balance. 

For employees, this has clear knock-on benefits. A home workspace loan presents the opportunity to invest in creating a more permanent working setup that suits them, helping to boost morale and promote wellbeing. The loans are interest-free and repayments are made through salary deductions, meaning it is a simple, effective and low-cost option for employees. 

Is a home workspace loan a suitable option for my organisation?

Our team of experts work with you to assess the suitability of introducing a home workspace loan benefit into your organisationGet in touch with a member of our team using the button below or contact Eddie Flanagan to find out more.

How our fixed-fee service can help

For a fixed fee, our team of consumer credit experts work with you to set up a home workspace loan benefit for your employees quickly and efficiently, including:

  • Carrying out a no-obligation assessment of the suitability of implementing home working space loans for your organisation.

  • Working with you at every step of implementation and delivery, from loan documentation and FCA regulation requirements, to compliance agreements and communications with employees.

  • Offering expert advice on putting strict provisions in place when offering employee loans, helping you to navigate the potential complexities with ease. Above all, we help you to focus on what’s important: your employees.

Want to find out more or have further questions?  Contact us today using the button below.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.

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Guides & Advice

Your Guide to Commercial Landlord and Tenant Dispute Resolution

Helping commercial landlords and tenants resolve rental disputes following the COVID-19 pandemic.

Introduction

Over the past 15 months, since March 2020, commercial rent arrears have increased to unprecedented levels in the UK. And, with Government restrictions still being applied to some of the usual remedies to recover rent arrears for commercial landlords, it’s all the more important for landlord and tenant disputes to be settled quickly, through negotiated agreements for the future.

Recent announcements have indicated that new legislation is likely to be published in the coming months, which could force landlords and their tenants into binding arbitration rather than going to Court. This will impact any arrears discussions and potentially put landlord and tenant relationships and enterprises at risk.

Given this situation, our expert team of property litigation and debt recovery specialists will work with both parties to try and achieve mutually beneficial agreements and will provide support during these negotiations. As such, we’ve put together this useful guide to give you all the information you need as a commercial landlord or tenant, to help you take the necessary steps to avoid further financial complications and build a lasting relationship that protects both of your enterprises.
 

The current situation

The Coronavirus Act 2020 initially gave a three-month moratorium on forfeiture of lease due to rent arrears in respect of commercial property in England, Wales and Northern Ireland. This was due to expire on 30 June 2021, but following the Government’s announcement on 16 June, this has now been extended to 25 March 2022. The current moratorium on action by landlords to recover rent arrears via bailiff action under the CRAR process has been similarly extended. These extensions mean commercial landlords are now faced with further delays in rent collection for arrears accrued during periods of enforced closure during the pandemic.

It’s important to note that the moratorium does not excuse tenants from paying their rent during the pandemic. All commercial tenants remain liable for payments due since March 2020.

So far, many commercial landlords have been successful in negotiations with their tenants for new, improved lease agreements that align better with current financial situations. It is possible these successful rent concessions could have followed the Government’s publication of The Code of Practice for Commercial Property Relationships in June 2020. A key takeaway from this documentation was that tenants were (and still are) required to be transparent with their landlords regarding their finances, although the code itself has not been seen as a mandatory order.

 

Binding arbitration

In the Government’s recent announcement, it was declared that new legislation will be introduced in the coming months to ring-fence arrears which have built up while commercial tenants were forced into temporary closure due to successive pandemic lockdowns. It is still expected that landlords and tenants will try to negotiate agreements in terms of all arrears relating to COVID-19, but naturally, not all negotiations will result in success. To address this, the Government advised that a new legally binding arbitration process will be introduced for landlord and tenant disputes that have yet to be resolved.

No date has yet been given as to when this proposed legislation will be published but it is expected in Autumn 2021, which is why we strongly encourage commercial landlords and tenants now to seek legal advice early on in their negotiations. It is expected that tenants who can pay should pay. We understand the difficulties involved with securing early settlement of these types of disputes between landlords and tenants, but it is even more important to try to achieve this quickly, otherwise, both parties risk being forced into binding arbitration later this year.

Find out more about our
rent dispute resolution service

Our property litigation experts work closely with both commercial landlords and tenants,
to help both parties reach commercial solutions, provide legal advice and support during any negotiations.

We have worked with a variety of landlords and tenants and have a market-leading property disputes teams
who can support you at all stages of your dispute.

What can commercial landlords do?

We understand the importance of generating income quickly and efficiently, particularly given the financial crisis following COVID-19. We also know it’s crucial for any commercial landlord to protect their capital value and maintain bank interest covenants; it’s a case of striking a balance between these that can be challenging at the moment.

 

Commercial landlord remedies for non-payment of rent

Any commercial landlords facing rent arrears resulting from the pandemic have a number of options to consider. As a commercial landlord, the remedies for non-payment of rent currently include starting Court proceedings to recover rent arrears. Nevertheless, it is always better to first explore with your tenant whether both parties can find a solution which they can agree to commit to.

Problems can occur when tenants assume/expect their landlords to offer reduced rent (under false assumptions that they can afford to do so). This risks placing landlords into a negative cash situation with their tenants. These are the sorts of issues that can cause disagreements between both parties, which could put successful negotiations at risk.

 

Risk of insolvency

Many landlords will accept that negotiations and rental concessions are crucial to long-term financial stability. Being able to reach mutual agreements is important to allow tenants to continue their business, given that finding replacement tenants who can afford to pay (and who aren’t still reeling from the pandemic) can be challenging.

If landlords were to lose tenants to insolvency in this current climate the costs of going through the insolvency process are high, and they would potentially need to survive with empty premises and be liable for business rates.

 

Debt recovery

Some landlords may nevertheless choose to adopt a debt recovery strategy. It’s widely known that many commercial landlords or tenants do not look upon debt proceedings favourably, as reputational damage can be a factor. There is currently no bar on landlords starting debt proceedings in the Court – and they may decide to still do so and risk them being stayed to arbitration if they are not concluded by the time the proposed new legislation becomes law. Landlords will normally be able to include within their proceedings a claim that their tenant pays their legal costs as well.

We have a team of debt recovery specialists who can help if you wish to start the recovery of debt proceedings against your tenant.

How we can help

Our solicitors are highly experienced in commercial landlord representation.

  • We can help commercial landlords negotiate new terms, so both parties can come to an arrangement for commercial rent arrears recovery that minimises the impact on their business.

  • We have a team of experts in property litigation and debt recovery, who can provide legal advice for negotiations with your tenant.

  • We can give specialist support to help you find a commercial solution, or equally, we’re able to represent you throughout any commercial rent arrears recovery proceedings.

To discuss your options and to find out how we can help you and your business call us on 0330 024 0333 or request a call back, and one of our rent dispute resolution experts will call you.

What can commercial tenants do?

Many commercial tenants have felt the financial strain of the pandemic lockdowns, and equally the strain it has posed on relationships with their landlords. We understand the priority for all tenants is their business, and how important it can be to ensure they can keep trading from their current premises to enable business as usual.

Throughout the moratorium, tenants have been encouraged to pay as much as they can afford and give their landlords as much financial transparency as possible. The Code of Practice says as much, with the concept of enabling landlords to provide appropriate support wherever they can, to avoid any insolvency proceedings or bad faith between parties. Unfortunately, the Code as we know does not have any teeth as it is not mandatory legislation.

This means there are still many tenants who are yet to agree on concessions with their landlords. From our perspective, it’s advisable that any commercial tenant looking to negotiate in this way should take note of what the Code outlined, and to consider providing details of their financial information to their landlord in negotiations.

We also strongly advise commercial tenants to get in touch with our team, so we can give appropriate legal advice to support them throughout the negotiation process.

It’s worth noting the importance of trust here too. If trust is broken down between landlord and tenant due to unwillingness to share information or at least trying to negotiate properly with transparency, this is likely to form a barrier to success.

 

What happens after 25th March 2022?

Regardless of the moratorium, tenants are still expected to pay their rent whether it fell due during the pandemic or afterwards. The impending arbitration process will only apply to pandemic arrears, and there is every chance that the actual legislation (once published in the Autumn) may include various exemptions so that some tenants may still be at risk of action for pandemic arrears. There will naturally be questions from both parties, and unfortunately in the meantime, the Courts are choked with a significant backlog of rent proceedings. There is a large value of unpaid rent locked up in those proceedings.

It is clear that commercial tenants are expected to “sort out their differences” by early negotiations with their landlords themselves, otherwise, they risk facing the consequences of either Court action or forced arbitration.

It’s important to note all tenants could still be sued for arrears accrued for non-payment of rent during the pandemic. If a tenant and their landlord are forced into binding arbitration, this process is only likely to cover arrears accruing due throughout the pandemic. That also means tenants are still liable to face proceedings for post–pandemic rental payments (as they are not likely to be subject to the arbitration process in any event) which could leave them in a worse financial state than if they’d agreed to concessions with their landlord.

 

Breathing Space: The Debt Respite Scheme

On 4 May 2021 the Government introduced “Breathing Space”, a debt respite scheme that gives some debtors legal protection from their creditors. Standard breathing space is available to anyone with problem debt; it gives them legal protection for up to 60 days. There is also breathing space available to certain individuals on mental health grounds.

Some commercial tenants who are individuals may qualify for this.

Find out more about the Breathing Space Debt Respite Scheme >>

How we can help

Our solicitors are highly experienced in commercial tenant representation.

  • We can help commercial tenants negotiate new terms, so both parties can come to an arrangement for commercial rent arrears recovery that minimises the impact on their business.

  • We have a team of experts in property litigation and debt recovery, who can provide legal advice for negotiations with your landlord.

  • We can give specialist support to help you find a commercial solution, or equally, we’re able to represent you in terms of resisting any debt recovery action.

To discuss your options and to find out how we can help you and your business call us on 0330 024 0333 or request a call back, and one of our rent dispute resolution experts will call you.

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Guides & Advice

What will working arrangements look like in a post-pandemic future?

It’s been over a year since the World Health Organisation (WHO) declared COVID-19 a pandemic and working arrangements shifted dramatically from in-office to remote. But with normality on the horizon, how will we all be working in a post-pandemic future?

Facilitating flexible working

With staff beginning their gradual return to the workplace, businesses will need to start making decisions around working arrangements, informing staff of these as soon as possible. It might be that business owners choose to ask employees for their thoughts beforehand to ensure their needs and concerns are considered.

Businesses choosing to return full time to the workplace will need to establish whether this will be done on a rota basis or not. For those adopting a more hybrid way of working, clear expectations will need to be given to staff, including establishing working hours and days in the workplace versus days at home.

Considering contractual changes

Depending on the decisions made around an employee’s working conditions, contractual changes may be required. This would include details of where a staff member is required to work from and their expected working hours. For those working from home full time, employers must consider whether a new risk assessment is needed for their place of work.

It would also be wise for employers to reserve the right to request an employee’s presence in the physical workplace. For example, to attend client or customer meetings.

It is important to note that any contractual changes must not be made until the employer is certain that they will be implemented for the foreseeable future. Discussing these changes with the workforce beforehand can reduce the risk of employees making formal flexible working requests, such as for alternative working hours, at a later date.

Implementing new policies

In the event that an employer has some of their workforce operating full time from home and others on flexible working terms, it may be necessary to implement a homeworking policy. This would also be beneficial to businesses looking to trial a hybrid approach, before implementing one permanently.

For those working alone whether at home, at customer premises or in the workplace, a lone worker policy may be necessary. This would set out the measures in place to ensure the health and safety of those working by themselves, including regular check-ins and the reporting of any incidents.

Although some businesses will return to the workplace full time, it is likely that more and more will begin to adopt hybrid ways of working in the future. Organisations should seek to consult their staff before making any permanent decisions, to avoid any issues later down the line.

 

Read more: Frequently Asked Questions about Post Pandemic Working

Watch our post-pandemic working arrangements webinar
We’re here to help

Get in touch to find out how our employment team can help.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.

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Guides & Advice

Ban on evicting commercial tenants extended - this time until March 2022

Updated 17 June 2021 - On 16 June 2021 the Government confirmed that the evictions ban on commercial tenants for non-payment of rent will be extended again until the 25 March 2022 and a new piece of legislation to boot

This further extension of the commercial tenant evictions ban will help those worst affected by the pandemic, such as bars and restaurants, who are still suffering due to ongoing restrictions, due to reduced capacity and some venues not being able to open some 16 months on and being forced to close.

In an effort to lessen financial pressure on tenant businesses, the Government has also extended the restriction on the use of the Commercial Rent Arrears Recovery (CRAR) process by landlords until 25 March 2022. This measure does not, it seems, increase the total number of days' outstanding rent required for CRAR to be used, namely:

• 457 days (between 25 March 2021 and 23 June 2021), and

• 554 days (between 24 June 2021 and 30 June 2021).

The Government is also planning on introducing a new Act of Parliament to deal with the accrued arrears of businesses forced to close during the pandemic – effectively forcing landlords to agree on a payment plan with their tenants who have been forced to close through COVID or be thrust into an arbitration process where an agreement may be imposed upon them.

Can commercial tenants be evicted?

No, the commercial eviction ban means that tenants cannot be evicted for non-payment of rent until 25 March 2022. However, this only applies to disputes regarding rent arrears. If a commercial tenant is in breach of the covenants in their lease, the landlord may still take action against them (and the outcome could include forfeiture of the lease).

We help commercial landlords and tenants to resolve property disputes fairly and with commercial objectives in mind, whether this relates to non-payment of rent or breach of covenant – get in touch to find out how we can support you.

How will the business evictions ban extension help tenants?

The commercial evictions ban extension will continue to provide a much-needed lifeline for those businesses still struggling, particularly those in the hospitality sector, helping them get back on their feet after months of restrictions and closures.

However, it is important to stress that this extension will only delay the landlord’s rights; it does not affect a landlord’s right to forfeiture after the March 2022 extension ends and commercial tenant evictions will once more be possible from this point onwards. The new act of parliament is essentially creating a ring fence around accrued debt during periods of closure and businesses are being encouraged to prioritise new and future rent.

As a landlord, is there anything I can do about the commercial evictions ban?

Many commercial landlords have shown flexibility, understanding and commitment to protecting businesses during an exceptionally challenging time. However, with yet another delay, the extension of the commercial evictions ban will significantly impact their own cash flow in some cases.

It is important that landlords use upcoming months to assess their position and seek to resolve the matter with their tenants. At the moment, there is little detail on the proposed new act and no date given as to when it will come into being, so for some this will mean continuing to issue proceedings at court for debt claims of arrears accrued before being forced into arbitration.

But for many others, continuing to negotiate with their tenants to reach an agreement on unpaid rent may be the most commercially astute way forward (particularly if the alternative is to force the tenant into an insolvency situation).  Either way, landlords would be well advised to grasp the nettle now, as doing nothing is not a helpful strategy.

If a negotiated solution is reached, it’s important to remember that:

  • any voluntary arrangements, including monthly rent payments or rent holidays, are properly and legally documented to protect both parties;
  • new agreed terms are clear and binding and do not prejudice any other lease provisions; and
  • the arrangements do not require either a lender or bank consent.
We’re here to help

Our commercial property disputes team can help you through these difficult situations and guide you towards a solution - contact James Fownes, Martin EdwardsJustine Ball or another member of the property disputes team, for advice and support. 

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND. 

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064. 

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Guides & Advice

Your summer guide to recovery and resilience in COVID-19

Your updated summer guide to recovery and resilience

As the UK takes its first steps to ease the current national restrictions and looks forward to an increase in economic activity and recovery it is vital that businesses are prepared in every aspect.

To support businesses and people navigate their way out of the last year and the current national restrictions, unlock their potential and drive for a brighter future, we have updated our guide to recovery and resilience.

From financial considerations, employees, leadership and premises, to supply chain implications, health and safety and protecting your private wealth, our guide highlights what organisations and individuals should consider when moving from survival to recovery to thrive.

Financial considerations

Whether a large corporate with a highly structured board, an SME or an owner-managed business, the financial viability of a business is key to its future success.   However, as the thoughts turn to the roadmap out of lockdown once again, and what the future may look like, businesses that have got through the last year should consider a range of measures to enable them to cope with what is likely be a recession for some industry sectors of the UK. Prudent business owners will be well aware of the predictions and while there will be a bounce back it may take some time for confidence and stability to return from customers and suppliers.

Your employees

Managing a workforce of any size can have its challenges, let alone one that is recovering from a global crisis. Many businesses will have furloughed employees or made the difficult decision to make a number of their workforce redundant. For those businesses that haven’t, it’s highly likely they will still face having to make difficult choices, albeit further down the line.

The knock-on effects of the COVID-19 outbreak have changed the way employers engage with and effectively manage, their employees. The processes, policies and guidelines that worked previously may no longer be fit for purpose for your business, or for your workforce, in the new working landscape. With the rollout of the COVID vaccine facilitating the gradual return of employees back into the physical workplace, this in itself will bring a host of new opportunities and challenges.

Buildings, workspaces and leases

As the world and economy move forward out of lockdown, owners and investors of real estate as well as occupying tenants will have to consider the adjustments they now need to make whilst the restrictions around social distancing continue.
They will need to find new ways of working and inevitably different ways to use their space over the coming months and, at the same time, consider how to manage the cost of premises in these changed circumstances.

Suppliers and supply chain

Many businesses have struggled to comply with their contractual obligations as a result of the COVID-19 pandemic and may have been forced to rethink their supply chains. A focus in recent years on minimising costs, reducing inventories and maximising asset utilisation has often resulted in a reduced ability to cope with disruption. Whilst the impact of the COVID-19 pandemic is unprecedented in modern times, disruption to the global economy is an increasing risk, whether due to political events such as Brexit, US-China trade tensions, or climate change.

Private wealth, family businesses and family

The effects of COVID-19 will undoubtedly have a huge impact on our economy for years to come, with many businesses collapsing under the strain and the level of unemployment set to rise significantly. However, what is less widely reported on is the effect it is having and will continue to have, on families and personal wealth. We’ve already seen that the pandemic has led to an increase in people looking at how they may pass on their wealth to the next generation –and even more so for those that own family businesses.

Compliance – Health and safety

Employers have clear duties under existing health and safety legislation. Obligations to comply with health and safety at work, and to manage and control workplace risks, includes protecting workers and others from the risk of COVID-19 infection in the workplace. That duty is to do everything “reasonably practicable” to manage these risks. The onus of demonstrating that everything reasonably practicable has been done falls to the employer. The best way to demonstrate compliance with the law is usually to follow government and industry-led guidance wherever possible.

Leadership

Strong leadership is a cocktail of authenticity, collaboration, passion, compassion, and a great deal of bravery. We all know the best results occur when we are pushed out of our comfort zones and the ingredients are shaken up, and COVID-19 has done exactly that. With government guidance signalling the UK’s route out of current national restrictions, the time for positive leadership is now. It’s time to take control of what we can and create an environment with enough certainty where people can feel safe enough to flourish centre stage.

We are here to help

The team here at Shakespeare Martineau remain committed to supporting our clients and our communities throughout these challenging times, with

the depth of experience, collaborative ethos and the creative know-how to lead positively to the future.  We are able to offer advice and solutions on a range of subjects for life and business - from employment and general business matters, through to director’s responsibilities, insolvency, restructuring, funding and disputes to issues affecting family businesses, personal wealth planning and family law. Do contact us on 03300 240 333

 

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Guides & Advice

Vaccination policies: what the hospitality sector needs to know

The UK vaccination program is well underway and, as the hospitality and leisure sector prepares to reopen fully, a question is being asked around how best to protect employees and consumers. Although the vaccination provides a universal level of protection, requiring employees to take it can be risky.

Hospitality leaders will be faced with the decision of whether to implement a compulsory vaccination policy as they aim to reopen safely. Therefore, what should businesses be thinking about this approach consider?

Implementing a compulsory vaccination policy

Although current guidance does not support mandatory vaccination, it is within a company’s right to choose to implement a strict policy that makes vaccines compulsory for all and imposes sanctions on those who refuse. However, assuming the sanction is ultimately dismissal, this will inevitably lead to employment tribunal claims.

For job roles that cannot be undertaken safely without a vaccine, there may be a legitimate argument for compulsory vaccinations. However, in sectors like hospitality and leisure, this is unlikely to be the case.

The risk is lower for employers planning on making vaccination compulsory just for new recruits, because there is no unfair dismissal risk.  However, discrimination protection does extend to job applicants, so there are still risks if the reason for the refusal is linked to a protected characteristic.

Refusing the vaccine

If an employee refuses the vaccine, the first course of action should be to attempt to understand their reasoning.

There are a number of reasons people may choose not to have the vaccine, for example, such as pregnancy or religion, so it is vital to tread carefully to avoid accusations of discrimination. It is also important that these worries are not dismissed, and confidentiality is maintained.

Should the business choose to impose sanctions on employees who refuse to have the vaccine, it is highly likely that claims will follow. Therefore seeking legal employment advice at an early stage will help companies understand the full extent of the risk around unfair dismissal claims and discrimination claims.

Understanding other options

Employees should be encouraged and informed about the vaccine, but it is important to avoid undue pressure if you aren’t planning on making vaccination compulsory.

Although generally not possible for the hospitality and leisure sector, businesses can also ask employees to work from home for longer, or look at changing responsibilities to put hesitant employees in roles with less public interaction to lower the risk of transmission.

Regardless of the approach, all employers should put a vaccine policy in place as this will help to protect and guide future business planning. It also gives employees an overview of the company stance on vaccines and an outline of the processes in place as we navigate this ‘new abnormal’.

We're here to help

Our team of employment law experts can draft a policy for you, outlining your approach and the expectations of your employees.

Read more about our fixed fee vaccination policy drafting service, including some of the most frequently asked questions and what actions you should take.

For more information, advice or support please contact Matt McDonald or another member of our employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Blog

Post-COVID challenges | Contracts at breaking point

The coronavirus pandemic has highlighted to many businesses the fragility of their supply chains, whether they be local or global and, in addition to Brexit, many of these businesses supply chains are being pushed to breaking point. As the world recovers from the pandemic at different rates, business will undoubtedly face a number of issues.

Last year, businesses suddenly faced insurmountable difficulties trying to secure supply of products that they had formerly taken for granted. As a result, many were forced to compromise, try to reach accommodations with their counterparts, or otherwise, were simply unable to either produce or supply goods and services they had committed to.

Whilst many hope that a return to normality is around the corner, anyone managing risk for a business of whatever size, will not only have to take a close look at those supply chains to understand their future resilience, but also their rights and obligations to prepare for the future. From suppliers being forced to prioritise customers, to downsizing or closing down manufacturing facilities or supply chains, the difficulties will be significant.

 “Anyone thinking the issues that plagued our supply chains in the past year will magically disappear will be in for a nasty surprise”

A global head of risk engineering, and a voice of industry, noted the above recently – and it is undoubtedly true. The problems for businesses meeting their contractual obligations does not stop with supply of either materials or the final product. Skill-shortages have also been impacted, again, potentially affected by Brexit. As employees have been forced to find jobs in other sectors, there are gaps in critical business chains. From shortages of protective equipment, to absences of products as diverse as toilet paper to pasta, or hand sanitiser to bicycles, an uneven pattern of contract performance is clearly here to stay.

Contract disputes

Many businesses sensibly held off from litigation in 2020, protected by central government funding, drawing on reserves, or otherwise seeking to maintain relationships. As the economy heats up and recovery comes forth, few businesses will have that luxury, with funding falling away and reserves here to be trained.

Lessons from previous supply chain issues show being at the front of the queue, to not only understand but to protect and enforce your rights of contract, will be critical to a business’ survival; goodwill and past favours are quickly forgotten. Whilst no business wants to destroy long healthy relationships, the need to take steps to protect themselves will only become more stark as we continue through 2021.

Suez Canal blockage

Subsequently, the impact of these problems for many businesses may have been highlighted and or/accelerated by the recent blockage of the Suez Canal, after one of the world’s largest container ships ran aground, severing a vital trade artery and disrupting global shipments.

The Ever Given container ship, which is almost as long as the Empire State Building is tall, was wedged across the southern end of the canal, which is one to busiest shipping lanes in the world. Within hours shipping was backed up at both ends of the canal and, inevitably, moving such a ship was not light work. The container ship was eventually freed after six days.

To put the level of disruption into numbers, according the Suez Canal Authority, almost 50 per cent of the vessels that passed through the canal in February were container ships, carrying food, fuel and manufactured goods to Europe.

Lloyd's List estimated that, during the blockage, the value of the goods delayed each hour was US$400 million, and that every day it took to clear the obstruction would cause a disruption of an additional US$9 billion worth of goods.

Review your contracts and supply chain

Although many may think this was a rare incident, it takes little imagination to realise the potential impact this, and other global events, can have on any business.

Now that the UK has finally left the EU customs union and single market, and as the economy slowly starts to bounce back from the impact of the pandemic once again, now is the time to review your supply chain and network.

Our guide to recovery and resilience highlights the proactive steps you can take to ensure that you to get the products, parts and raw materials you need to continue to trade and deliver revenue.

Contact us

If you’re experiencing issues with your supply chain, with businesses struggling to meet the requirements of their contracts, our litigation & dispute resolution team can help - contact Daniel Jennings for guidance and support.

Our litigation team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

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What might a post-COVID workforce look like?

As the UK has cautiously eased lockdown restrictions, many businesses are now looking to the future and considering the options for their workforce and the possible end to remote working for some.

As the COVID-19 vaccine roll-out continues at speed, for those businesses bringing employees back into the physical workplace, employers are facing unprecedented challenges, particularly around the safety of vulnerable and shielding staff. Our guide outlines how businesses can prepare for the COVID-19 vaccine rollout now.

For many businesses, the pandemic has radically changed the way in which their staff work and therefore many employers may take the pandemic’s end as an opportunity to rethink the way they operate.

Here we highlight what workforces may look like after the pandemic.

Flexible working

Some large businesses have already stated that they will not ask staff to return to the office full time. For example, accounting giant PwC have announced a policy of “start when you like, and leave when you like” and indicated that most staff would be able to work from home around two-three days per week as standard.

Many employees may never have imagined a life outside the office, but the pandemic has changed that, with previous permanent office-based roles having been completed remotely across the UK for over a year. As a result, employers can no longer argue that such roles are wholly unsuitable for home-office or other flexible arrangements.

However, employers should see this as an opportunity rather than a problem. For instance, by making use of remote working, many businesses are reducing office space in towns and city centres to save on costly commercial rent. Indeed some businesses may get rid of any requirement to attend an office at all, with music streaming service Spotify announcing that all staff can “work from anywhere”.

For businesses where most or all work can be carried out from home, employers way wish to adopt a hybrid approach. For example, this may involve smaller office space being retained for collaboration and to allow essential in-person connections and supervision among staff, but with flexibility for all employees to come and go from the office on a more ad-hoc or necessity basis. This approach could allow employers to improve the morale and wellbeing of staff, whilst saving on commercial rent and other associated costs of a larger office.

Our handy guide outlines seven practical issues employers should consider when their employees work remotely.

Working abroad

Another interesting approach is the British-based financial technology business Revolut, which recently announced it is giving its 2,000 plus employees the opportunity to work abroad, up to two months a year. The tech start-up said this arrangement would give its employees “flexibility”, after receiving many requests to visit family overseas for longer periods. Such opportunities to work from abroad for extended periods may allow employees to travel abroad in 2021 and beyond despite restrictions on travel, as they will have time to complete strict testing and quarantine rules required in many jurisdictions. Any employees that take up this offer will have to ensure that they are compliant with the tax laws in the jurisdiction they reside in for those two months, which may mean completing tax returns in both countries.

Similarly, some warmer parts of the world such as Barbados, and the British Overseas Territory of Anguila have tried to tempt professionals to relocate for up to a year, whilst keeping their existing job and working remotely.  It is thought that the warmer climates and island lifestyle might encourage wealthy professionals to take up the offer and in doing so, support the economies that have struggled without tourism income during the pandemic.

Sabbaticals

Longer periods of leave, or unpaid sabbaticals can be an inexpensive method for businesses of rewarding employees, provided the business is not so reliant on particular individuals that their absence would cause significant harm. For example, the energy firm Bulb has a policy of offering staff one month’s unpaid leave following the completion of a year’s service, coupled with a relatively generous annual leave allowance of 33 days. In addition, another well-established employer that offers extended leave is the John Lewis Partnership which, for many years, has famously offered six month’s paid leave to all employees that complete 25 years’ service.

Geographical pay

With many roles now advertised as wholly available to 100% remote working, the concept of variance in remuneration based on geography may be brought to the fore. For example, historically, London-based businesses were able to attract talent to the city with offerings of big pay and generous benefits. However, it is possible that employers may look to take on remote talent from elsewhere who will work happily for cheaper rates. On the other hand, some professionals may be able to secure higher wages from a London-based employer, whilst working remotely and living in lower cost of living areas.

Supervision

For employers whose employees have worked remotely for over a year, many may have concerns regarding the supervision of junior staff, with remote working offering fewer opportunities for passive training and oversight.

Read our guide on how to effectively manage remote employees, including challenges when managing performance and how to effectively monitor employees who work from home.

Health and safety

Employers’ obligations to employees regarding health and safety as well as mental and physical wellbeing have not gone away despite office desks being empty. Any employer considering making roles 100% remote will have to consider how they will ensure that adequate measures are in place to protect the employees’ working environment, and to ensure their wellbeing is looked after despite their lack of physical presence in the workplace.

Read our guide on what employers need to know, including how to deal with workplace injuries, identifying risks and how HR teams can help reduce their likelihood.

We’re here to support you, whatever approach you decide to take.

If you’re considering a renegotiation of your commercial lease, or altering the terms and conditions of your employment contracts, then our specialist landlord and tenant team and employment lawyers can guide you through your options.

Our employment law experts are on hand to review your company policies and procedures and can advise and support you on transitioning roles to partially or fully remote bases.

Contact a member of our employment team to see how we can help you to unlock your potential.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.

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What are the true costs of redundancy?

As a result of government financial support gradually starting to wind down, including the furlough scheme, many employers will be beginning to feel concerned about the future impacts of COVID-19. For some, restructuring workforces and streamlining teams may be required, and in the worst cases, making roles redundant will be one option to save money in the longer term.

Although a difficult decision for employers, it can sometimes be the most effective solution, especially when work levels are down. However, redundancy does come with its own costs. We highlight the key points to consider when faced with those difficult decisions.

The direct costs of redundancies

The price of redundancy will vary depending on individual circumstances, with scale being a major factor. Here are the main direct costs surrounding the process:

  • Statutory redundancy pay: Statutory redundancy pay will only be available to employees with at least two years’ service and will usually equate to between 1 to 1.5 week’s pay (depending on age) for each full year worked.
  • Enhanced redundancy pay: Not all employers offer enhanced redundancy, however, for those that do this will obviously increase overall costs, particularly if those made redundant have longer service. Don’t forget that enhanced redundancy entitlements can carry over from previous jobs under TUPE, so employers need to profile who they are dismissing.
  • Notice pay: Longer serving employees will have longer statutory notice periods, up to 12 weeks. This means that the cost savings will only start showing at a later date. Alternatively, businesses may choose to pay in lieu of notice, bringing forward savings but requiring a significantly larger initial pay out.

From 6 April the weekly cap on pay for statutory redundancy purposes has increased.

Considerations of redundancy

Businesses also need to consider the indirect and less tangible costs that can arise, such as:

  • A dip in productivity: As the redundancy process can be time consuming, with managers having to hold meetings with every individual who has been placed at risk of redundancy, there may be a dip in general productivity. Even those not being made redundant will likely feel the impact, which could potentially making them less motivated and result in poorer productivity.
  • Legal ramifications: With good legal counsel, businesses can ensure they are undertaking a fair redundancy process. However, this does not prevent ex-employees from bringing unfair dismissal claims. Defending these claims will impact the company productivity, morale and comes with substantial associated costs. Making enhanced redundancy terms conditional upon employees signing settlement agreements is a good way of mitigating these risks, but will obviously only apply to those employers prepared to offer enhanced pay.
Alternatives to redundancy

As an alternative to redundancy, businesses can look at restructuring alternatives that don’t rely on reducing headcount, for example:

  • Reduce workforce related costs: Reducing wages is difficult but possible in extreme circumstances. Stopping discretionary bonuses and withdrawing discretionary benefits are less risky alternatives.
  • Evaluate the space requirements: Consider whether property portfolios are still suitable now that agile working practices are becoming more common.
  • Review financial arrangements: Assess whether more beneficial rates are available in the market.
  • Releasing financial assets: Look into whether assets, such as stock and machinery, are an option for cash generation.

Find out more about alternatives to redundancy in our free webinar, available to download now.

Reducing the workforce can cost more than expected. Reassessing the company’s property portfolio or rethinking other overheads can help businesses to avoid redundancies. However, if a redundancy programme does go ahead, business owners and HR managers must ensure they do what is required by law, treating employees fairly and with compassion.

We’re here to support you

If you have concerns or queries on the implications of making redundancies then speak to a member of our employment team for guidance and support.

Our corporate restructuring and insolvency team can also work with you to identify areas of business stress and distress as early as possible, and help you develop and put in place a successful corporate restructuring and turnaround strategy.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Guides & Advice

Are employees with long COVID entitled to compensation?

In total, the UK has had 4.2 million positive cases of COVID-19 since March 2020, and it’s estimated that 20 percent of those have suffered with long COVID. The workplace can present a moderate risk for contraction of the illness, leading to some employees attempting to seek compensation from employers for potentially catching the virus at work.

With MPs increasing the pressure on ministers to recognise long COVID as an occupational disease, claims for compensation could become more common in the near future. So, what do employers need to know and how should they face these claims?

 

What is an occupational illness and can long COVID be classed as one?

When employees are exposed to long-term hazards or strenuous workplace activities, they may develop chronic ailments. Although occupational illnesses can be hard to pinpoint due to unclear cause and effect and latency issues, employers have a duty to protect employees from any hazardous activities.

In recent months, the Government has come under mounting pressure to treat long COVID as an occupational disease. Backed by MPs and the British Medical Association (BMA), the proposal aims to ensure that frontline health workers and other key workers can be compensated for the debilitating effects of the disease.

COVID-19 has already been recognised as an occupational disease in countries like Belgium, Denmark, France, Germany, and Spain. With this in mind, employers should be aware of the legal implications if the UK were to follow suit and the potential effects on long COVID compensation claims.

 

What proof needs to be shown?

As with any other illness, employees may be able to demonstrate that they have long COVID with a doctor’s note, where such a condition is stated. Medical records and treatment plans can also be used, however there is no legal requirement to provide this level of detail to employers.

A more in-depth medical report can be requested by an employer, should they wish to have further clarity and to fully understand the condition, prognosis and any adjustments required.

 

Can employees claim compensation for long COVID?

For those suffering with long COVID, it will often be difficult to prove that the virus was picked up at the workplace, with causation proving a major barrier to compensation claims. Therefore, employees may not have an automatic right to claim compensation.

Nevertheless, employers shouldn’t dismiss any requests for compensation made by employees suffering from long COVID. The Government could announce that long COVID is to be recognised as an occupational disease, which would provide some backing for sufferers to make compensation claims.

Whilst this may not happen, claims could still be made on other grounds. If the disability test is satisfied (namely, there being a physical or mental impairment that is long term and has a substantial adverse impact on what the person can do day to day), then the equality legislation still needs to be considered – sufferers could potentially argue that they are being treated less favorably due to their disability.

Our blog on disability and making reasonable adjustments considers the practicalities and legal position in relation to such requests and their refusal.

 

Work with your employees, not against them

There is still much to be studied around COVID-19, however the long-term impacts of the disease are already starting to take hold. Although there’s some uncertainty on how to approach the effects of long COVID, employers should not be too quick to dismiss employees' concerns, and should instead listen to their workforce and be open to compromise. This could take the form of a temporary change in schedule or position that fits the new physical or mental requirements of the employee.

 

Rollout of the COVID vaccine

As the Covid-19 vaccine roll-out continues at speed, you may also find our guide on preparing your business for the vaccine useful.

 

Contact us

If you need advice or guidance on dealing with employees suffering with long COVID, or any other occupational illness, then our employment team can guide you through your responsibilities – contact Rhys Wyborn for guidance and support.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

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How can we help?

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News

COVID-19 Vaccines | Best Endeavours Contracts and the Law – What is the Reality?

The Headlines

Press and television news has been full in recent days of the dispute between AstraZeneca and the European Commission over supply of vaccines to the European Union. Indeed, the press has been particularly excited by demands that vaccines manufactured in the United Kingdom should be sent to the European Union and that AstraZeneca has a legal obligation to supply such a vaccination.

AstraZeneca in its turn has denied the same and has referred to its contract as being a “best efforts” contract based upon a schedule for deliveries.

This is an important and high profile news story.  Best efforts contracts are common in supply arrangements but the question is what is the legal position based upon what we currently understand. On 29 January 2021 a redacted version of the contract was published.

Based upon the European Commission’s statement, the European Commission has been notified of a delay in performance of the contract; the delay being a delay compared to the forecast that was laid out within a contract. Both of these are particularly significant.

The European Commission in turn has suggested that the new schedule that has been provided is not acceptable to the European Union, however, the situation is not as straightforward as it may seem.

In response to AstraZeneca asserting that it is complying with its contract by reasonable best efforts, the European Commission on 27 January stated: “the view that the company is not obliged to deliver because we signed a best effort agreement is neither correct nor is it acceptable”. Of course, what is acceptable is different to what is correct or lawful.

The contract

This contract is an unusual species of contract being an advance purchase contract. The agreement being made in advance, for example, of development of vaccinations or the authorisation for their usage are a supposed balanced risk between supplier and purchaser and therefore, do not fall into the realm of standard form supply contracts. They are inherently more uncertain that many other contracts can be.

The contract is based on Belgian law and that must be noted – the intricacies of Belgian law are another important matter. However we can form a view.

Best reasonable efforts are defined as “in the case of AstraZeneca, the activities and degree of effort that a company of similar size with a similarly-sized infrastructure and similar resources as AstraZeneca would undertake or use in the development and manufacture of a vaccine at the relevant stage of development or commercialisation, having regard to the urgent need for a vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world but taking into account efficacy and safety.”

In short, reasonable best efforts is quite complicated to understand hence why a dispute has arisen even beyond the normal grandstanding.  We are used to seeing Best Endeavours clauses, or Reasonable Endeavours clauses. Here, however, we have a “hybrid” clause but which is inherently vague and uncertain.

Reasonable efforts

The one thing that is clear in this argument is that there is no precedent to determine what best reasonable efforts, that would be undertaken in a global pandemic, are.

Those best reasonable efforts are critical at present when considering the “Initial Europe Doses” – those are what are potentially delayed. In respect of these AstraZeneca committed at clause 5.1 to use those best reasonable efforts to manufacture those within the EU for distribution. The EU there means the EU 27 countries and does not include the UK.

Manufacture of the vaccine as defined is referred to at clause 5.4 and for that clause alone EU is said to include the UK. We therefore have a contract where the initial doses the EU has ordered are to be manufactured in the EU, and the vaccine is to be manufactured in the EU and UK. To say the drafting is unhelpful seems a fair comment; however that clause 5.4 seems to apply to later doses of the vaccine, not the initial doses Europe is demanding now.

Ultimately, therefore, it appears probable that Best Efforts alone do not absolve AstraZeneca of responsibility for supply; however it must use its Best Reasonable Endeavours to manufacture the doses in question in the EU, and appears to be doing so. The European Commission argument therefore seems far less certain that it is arguing.

What appears clear is, however, that Best Efforts remains an extremely loose and nebulous term, beyond the mere every reasonable effort and which therefore would create some potential issues; however, further, that in common with many contracts, provisions in regarding to timing and abilities to vary the terms of the contract are crucial.

Supply

AstraZeneca has provided the notice it is required to of difficulties in supply and therefore seems to be following process.

What has caused most comment seems to be whether AstraZeneca should or must divert supplies being made in the UK and provided to the UK to the EU. On this contract that is not open and shut for anyone. Neither the Best Reasonable Endeavours clause being debated in the media nor the contract has itself expressly required any supply to be diverted. The argument seems to centre on whether in the context of the pandemic and the issues it is defined to cause; Best Reasonable Endeavours means AstraZeneca supplying less products to another party suffering the same consequences from the pandemic or not.

From a lawyer’s perspective given the obligations regarding location of manufacture for the Initial Europe Doses is it does not have to go that far – the contract requires Best Reasonable Endeavours to manufacture in the EU 27 countries and in that context AstraZeneca seems to have a sound argument that it must do that and diversion of supplies made in other locations, at least for initial doses may not be required. Of course the redacted sections including for time of delivery as well as the specific orders could affect that and we could only reach a final view then. Neither party has any knock-out blow disclosed today however.

A timely reminder to all

It seems improbable that this dispute will find itself in a litigation and if were litigated, appears to be a matter which would fall to the Belgian Courts to determine; it serves as a timely reminder, however, of the need for careful examination of all terms of the contract upon a dispute arising in regard to it and that parties’ views upon what provisions of a contract determine a dispute or are even directly relevant can be very different to those which actually will determine liability.

The terms of an international supply contract are inherently and inevitably complex; indeed, the advance purchase agreements may be some of the most complex that one can envisage given the sheer number of uncertainties at the time of execution. What is not in doubt, however, is the importance of a party properly understanding both the full extent of its obligations; the circumstances in which it can vary or avoid any obligations; and the consequences of any breach of the same, as well as understanding what conduct would or would not amount to a breach of the same.

The final point is, however, of course, whether an obligation upon a party to exercise its Best Efforts to comply with one contract would require it to breach another contract.

In English law, it is difficult to envisage any circumstance where a Best Endeavours obligation would require a party to engage in any form of conduct that was unlawful; albeit negotiating a variation to the terms of other obligations would be a different matter. One can envisage a situation where a party is to required at least explore the possibility of varying other contracts, even if it must ultimately comply with them if no variation can be agreed.

Clarification of terminology

Best Endeavours in English law "means what the words say; they do not mean second-best endeavours". There is no absolute obligation involved but those best endeavours “must at least be the doing of all that reasonable persons reasonably could do in the circumstances".

Reasonable Endeavours in English law are less burdensome, commonly thought to be "what would a reasonable and prudent person acting properly in their own commercial interest and applying their minds to their contractual obligation have done to try".

Best Reasonable Endeavours seems closest to All Reasonable Endeavours in English law – a compromise meaning “a middle position somewhere between the two, implying something more than reasonable endeavours but less than best endeavours".

Ultimately an endeavours clause should always be considered in light of any specific obligations identified in the contract and will normally give way to those obligations, hence the view above.

A final word…. for now?

As to this dispute, in all probability it will never see a court determine it – the uncertainties and risks for both parties are probably too great.  However it does highlight how all contracts can fall into disputes even where parties think terms have been drafted perfectly.

The team here at Shakespeare Martineau has lawyers with considerable experience on international supply contracts having arbitrated international supply disputes in London, Switzerland and Hong Kong.

Contact us

For further advice regarding possible disputes or with concerns over any contract, contact Daniel Jennings or another member of the litigation & dispute resolution team in your local office.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Guides & Advice

The Corporate Insolvency and Governance Act 2020

UPDATED: 25 March 2021 – The government has given businesses more breathing space by further extending measures from the Corporate Insolvency and Governance Act.

A number of measures introduced in the Corporate Insolvency and Governance Act to protect businesses from insolvency, which were due to expire on 31 March 2021. However, the following have now been extended once again:

  • Statutory demands and winding-up petitions will continue to be restricted until 30 June 2021 to protect companies from aggressive creditor enforcement action.
  • Termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will remain exempted from the obligation to supply until 30 June 2021.
  • The modifications to the new moratorium procedure will also be extended until 30 September 2021. A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding-up petition.
  • Business owners affected by the pandemic will be protected from eviction until the end of June 2021.

The above extended measures follow on from The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 (SI 2020/1349). This came into force on 26 November 2020 - renewing the suspension of wrongful trading liability for directors to 30 June 2021. 

 

What is the Corporate Insolvency and Governance Act 2020?

The Corporate Insolvency and Governance Act 2020 received royal assent and came into force on 26 June 2020.

Central to this new legislation is a new moratorium, which will give a company in financial distress a 20-business day breathing space from creditor enforcement action. This can be extended for up to a year with the consent of creditors.

A full copy of the guidance can be found here.

This new moratorium gives protection to businesses that may be financially struggling, and may result in the rescue of the company as a going concern. The moratorium is intended to be a “light touch procedure” and is overseen by a monitor who must be a licensed insolvency practitioner.

 

What impact could the moratorium have on the business world?

The new moratorium gives protection to businesses from creditors and may save viable businesses that are struggling financially.

Saving viable businesses that are struggling could achieve a better result for the company’s creditors as a whole, than would be likely if the company were wound up (without first being subject to a moratorium).

 

What action can’t be taken against a company in moratorium?

Legal and enforcement action against a company in moratorium is extremely restricted. Without permission of the court:

  • a landlord cannot forfeit a lease or re-enter property;
  • no steps can be taken by a creditor to enforce security;
  • HP creditors cannot repossess goods;
  • legal processes for debt recovery cannot proceed (except employment claims); and
  • floating charge holders cannot crystallise their charges.

Supplying goods and services to a company in moratorium

When a company enters an insolvency or restructuring procedure, suppliers of goods and services will often either stop, or threaten to stop, supplying the company. The supply contract often gives them the right to do this, but it can jeopardise attempts to rescue the business. Suppliers will no longer be able to use contractual terms to jeopardise a rescue in this way.

Any goods or services supplied in the moratorium period should be paid for, and will be a priority debt to be paid, if the company in moratorium fails.

 

The role of the monitor

A monitor must be a licensed insolvency practitioner and can only consent to take office as monitor if a company can demonstrate that the moratorium will result in the survival of the company as a going concern.

They are required to bring the moratorium to an end as soon as it becomes clear that this purpose cannot be achieved.

 

The responsibilities of directors

Key offences have been introduced in relation to the duties of directors (including shadow directors) of companies that enter into a moratorium. They must supply information on request to the monitor (to satisfy the test that survival as a going concern can be achieved) and the monitor must submit a report on the conduct of the directors as part of this process.

Directors will commit an offence of fraud in anticipation of a moratorium if they:

  • conceal assets with a value over £500;
  • conceal debt due of over £500;
  • fraudulently remove assets to the value of £500 and above; or
  • make false representations to the monitor to secure consent for them to act.

What are the key provisions that secured lenders should be aware of and the impact on qualifying floating charge holders (QFCH)?

Lack of control over the process

A moratorium can be entered into by simply filing documents at court. There is no requirement to obtain consent (or even notify) a qualifying floating charge holder (QFCH), or other secured lender, ahead of entering the moratorium. A QFCH will be notified of the moratorium by the appointed insolvency practitioner (the “monitor”), alongside other creditors, once the moratorium is already in force. Therefore, unlike in an administration, a QFCH will not be able to “veto” the directors’ choice of insolvency practitioner.

The moratorium lasts for 20 business days and can be extended for a further 20 business days by the directors - and for up to 12 months with creditor (or court) consent. However, the required creditor consent for these purposes is from creditors whose debts fall outside of the moratorium. As set out below, debt arising from loan agreements and other finance documents still needs to be paid during the moratorium. Lenders would therefore be unlikely to form part of the voting class of creditors, and would not be able to vote down any requests for an extension for up to 12 months.

Lenders must still get paid

A company subject to a moratorium is given breathing space from “pre-moratorium debts” that have fallen, due from which the company has a “payment holiday” (whether due before or during the moratorium). This catches, amongst other things, trade creditors.

However, there are certain debts that the company must pay during the moratorium and failure to do so may cause the monitor to terminate the moratorium (and/or prevent the directors from seeking an extension of the moratorium). This includes debts and other liabilities arising under a contract or other instrument involving financial services. This means that the usual capital and interest payments due to lenders will still be payable (unless otherwise agreed with the lender).

Enforcement restrictions

Although lenders’ debts will still need to be paid during the moratorium, the restrictions may significantly impact the enforcement options available to QFCHs. Lenders may well wish to factor the following in to their credit and operational procedures to enable them to deal with the risk of a hostile monitor appointment by the company’s directors:

  • The moratorium suspends a QFCH’s ability to crystallise its charge or appoint an administrator;
  • Certain floating charge provisions enhancing a QFCH’s rights may be void (e.g. provisions providing for crystallisation of a floating charge – whether automatic or following notice, and restrictions on the disposal of property ); and
  • Under the moratorium, charge holders are unable to enforce security without the consent of the monitor or the court.
Other security risks

A company cannot dispose of property subject to fixed charge security without court consent. However, directors may apply to the court to dispose of property as if it were not subject to the fixed charge. There are provisions providing fixed charge holders with compensation for their loss of rights (effectively reimbursing the lender for what the court thinks the property would be worth in the open market). However, this effectively enables a restructuring package to ignore the security. This could result in fixed charge holders being put at a significant disadvantage, with a loss of rights (particularly in a potentially depressed market).

For floating charge assets, a company can either:

  1. deal with assets in accordance with the terms of the floating charge instrument; or
  2. obtain consent of the court to deal with the assets in another way.

As the floating charge cannot be crystallised, floating charge assets can usually be disposed of in the ordinary course of business (which we expect would be in accordance with the terms of the floating charge instrument), potentially materially depleting the assets available to a lender ahead of any post-moratorium enforcement. Once assets have been sold, lenders will have a floating charge over the proceeds of sale, but usually will not be directly entitled to the proceeds (and cannot enforce the charge to obtain payment).

Disposing of assets

Lenders should therefore review the terms of their security and facility to consider whether the restrictions and controls provide adequate protection. In particular, how and when companies can dispose of assets and fine tuning the definition of a disposal of assets in the “ordinary course of business” (e.g. should consent be required for a bulk stock sale). Whilst such controls are not ordinarily as important, the inability to crystallise a floating charge, or otherwise enforce security during a moratorium, may mean that restrictions need to be tighter to retain some control and dialogue with companies in the event of a moratorium (whilst still enabling the company to trade effectively).

Finally, lenders should also be comfortable that fixed charge security will withstand scrutiny and is not vulnerable to challenge as a floating charge. The risk of fixed charge assets being treated as floating charge assets could be substantial, as the assets could be sold without court consent and the proceeds of sale (and other compensation) would not be required to be paid to the lender. Lenders should therefore audit their charges and ensure that appropriate levels of control are exerted over fixed charge assets. For example, if taking a charge over plant and machinery, ensuring it is properly scheduled to the debenture and valuable items are plated. Similarly, if a lender intends to create a fixed charge over debts (as opposed to an assignment), they will need to ensure that the receipts are paid into a blocked account and other appropriate controls are both in place, and enforced.

 

What options are open to lenders?

Although a QFCH cannot appoint an administrator during the moratorium, the moratorium will automatically terminate upon directors filing a notice of intention to appoint administrators. At that point, the QFCH would be able to exercise its powers as usual and regain control of the appointment process by appointing its own nominated insolvency practitioner as administrator, if it was not comfortable with the directors’ choice.

The directors will not be able to extend the moratorium unless they confirm that all debts that have fallen due in the moratorium, or pre-moratorium debts that are not caught by the payment holiday (i.e. potentially bank debt), have been paid. In addition, the monitor must bring the moratorium to an end if they are of the view that it is no longer likely that the company can be rescued as a going concern.

Bringing the moratorium to an end

Entering into a moratorium, will in many cases, constitute an event of default that will automatically accelerate the entire debt. Even in those cases where acceleration is not automatic, it may be open to lenders to issue a notice accelerating their debt to make it payable on demand during the moratorium period and thus regain some control given the company is unlikely to be able to pay. If the entire debt is accelerated it becomes due and payable during the moratorium period. As a consequences, if the company cannot pay (which is likely to be in all cases) the monitor will either have to bring the moratorium to an end (as they would unlikely be able to continue to believe that the company could be rescued as a going concern) or the company will have to negotiate with the lender to agree a stay.

If a stay cannot be agreed, then acceleration could enable the lender to re-take control of the process via an administration appointment or other enforcement process once the monitor (as they will have to) terminates the moratorium.

Further if the debt is accelerated and becomes payable during the moratorium, the lender would also be in a better position in the event of a subsequent insolvency (see below).

We would expect that a moratorium would usually be an event of default triggering automatic acceleration of a loan.

Payment holidays and deferrals

In relation to any requests by borrowers for payment holidays, waivers or deferrals of covenants, lenders should consider making those waivers or deferrals void in the event that the company files for a moratorium without the consent of the lender. This would then avoid a position where the lender is prevented from accelerating their debt during the moratorium period as a result of a pre-moratorium waiver/deferral.

Other options

In addition, the following options seem to remain open to lenders:

  • The Act also introduces ipso facto provisions preventing termination of contracts upon insolvency. However, financial services providers are generally exempt from these restrictions. Therefore lenders could cancel non-committed facilities (e.g. overdraft and invoice discounting) and may also be able to rely on provisions in the facilities to, for example, charge default interest or impose an independent bank review (which would be payable as moratorium expenses);
  • Lenders may be able to obtain additional security for additional lending (subject to obtaining the monitor’s consent); and
  • Lenders can challenge the conduct of the directors or the monitor at court, which may result in the reversal of detrimental decisions.

How will lenders’ debts be ranked in a subsequent insolvency?

The Act makes consequential amendments to existing insolvency legislation to alter the priority of distributions, where a company enters into administration or liquidation within 12 weeks of the moratorium ending. The amendments rank moratorium debts and pre-moratorium debts that should have been paid during the moratorium (i.e. bank debt) ahead of preferential creditors (and ahead of paragraph 99 expenses and floating charge distributions in an administration). The amendments do not provide for the ranking within this class, instead making provision for changes to be made to the Insolvency Rules to govern the priority within this category.

In the meantime, the Act introduces temporary provisions that provide for the order of priority for debts payable under the moratorium to be paid in a subsequent administration or liquidation. Lenders’ debt would rank ahead of the monitor’s remuneration and expenses, but behind suppliers who are covered by the “ipso facto” provisions and employment-related costs. This would appear to be a significant disincentive for secured lenders to continue to support the company and provide working capital funding during the moratorium.

In addition:

  • CVA proposals submitted within 12 weeks of the moratorium ending cannot provide for debts payable during the moratorium to be paid otherwise than in full; and
  • any restructuring plan applied for within 12 weeks of the moratorium ending, cannot compromise moratorium expenses (or pre-moratorium debts without a payment holiday) without first obtaining consent of each of these creditors.

We’re here to support you

For further information, guidance and support on how the Act can help relieve the financial burden during the current COVID-19 outbreak, and allow you to focus your efforts on continuing to survive and operate, do not hesitate to contact a member of our corporate, insolvency and restructuring team.

Alternatively, you can get in touch online or visit our corporate restructuring and insolvency solicitors page to learn more.

Our insolvency team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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Guides & Advice

New law to scrutinise pre-pack sales in administration

UPDATED 24 March - Further to its announcement on 8 October 2020, the government has now published its updated pre-pack reform legislation for independent scrutiny of pre-pack administration sales. This is where connected parties, such as previous directors, shareholders or associates, are involved in the purchase. The new legislation, which will come into force on 30 April 2021, aims to improve the transparency of pre-pack sales in administration.

What is a pre-pack sale?

A pre-pack administration sale is a procedure where an insolvent business reaches an agreement to sell its assets to a buyer before appointing administrators to facilitate the sale of the business. This could be a trade buyer, existing directors or a third party.

Pre-pack sales are often arranged between the company and persons connected with the company, such as previous directors. This raises concerns for creditors as they are only informed after the event, which allows them little or no input into the sale.

The Graham Review

An independent review into pre-pack sales took place in 2014 – known as the Graham Review. Following the publication of the Graham Review, a number of voluntary industry measures were introduced in 2015 to address the core issues identified.

The Graham Review concluded that although pre-pack administration sales often helped to preserve jobs, and were a vital tool for rescuing businesses, there were issues around the lack of transparency in the process. This was particularly for unsecured creditors who were excluded, and so felt any deal made was not in their best interest.

As a result of the Graham Review, measures were introduced. This included the establishment of a group of experienced business professionals, known as the Pre-Pack Pool, to offer an opinion on marketing principles. Viability statement and independent valuations or the proposed connected-party pre-packaged sale were also introduced. However, referral to the Pre-Pack Pool remained at the discretion of the purchaser.

In addition, amendments were made to the Statement of Insolvency Practice 16 (SIP 16), which sets out regulatory guidance on how insolvency practitioners should handle pre-pack sales. The aim was to reduce the concerns of lack of transparency by requiring administrators to provide creditors with information about the marketing of the business. Any alternatives to the pre-pack sale were then considered.

The government’s pre-pack sales in administration report

On 8 October 2020, the government published its report on the findings and recommendations of the independent review of the voluntary industry reforms to pre-pack sales in administration, that were introduced in 2015. Although improvements were introduced by the Graham Review, the government considered further reforms were required regarding the transparency of pre-pack sales and to improve creditor confidence. The report was accompanied by a set of draft regulations to increase independent scrutiny of pre-pack sales in administration to connected parties.

Proposed regulations

On 24 February 2021, the draft statutory instrument of the regulations was published following a period of consultation. The regulations were debated in the House of Commons and the House of Lords and were approved on 23 March 2021. They will come into effect from 30 April 2021.

The new regulations will apply where there is a ‘substantial disposal’ in administration of the company’s assets.

We provide a summary of the regulatory framework below.

Independent qualifying report
  • An administrator will be unable to make ‘substantial disposal’ of property of a company to a person connected with the company within the first eight weeks of the administration, without either the approval of creditors or an independent qualifying report produced by an evaluator.
  • The connected party purchaser will be required to obtain the qualifying report and provide a copy to the administrator.
  • A connected party purchaser may obtain more than one qualifying report.
  • Where a qualifying report states that the case is not made for the support of the substantial disposal, an administrator can still proceed with the substantial disposal. However, they will be required to provide a statement setting out the reasons for doing so.
  • The provider of the independent qualifying report (the evaluator) must be independent of the connected party purchaser, the company and the administrator.
  • The administrator must send to every creditor of the company, other than opted-out creditors, a copy of the report. If more than one report was received, then they must send all the reports.
Statement of proposals
  • The report(s) must be sent with the statement of proposals (required to be sent to Companies House and to creditors under paragraph 49(4) of Schedule B1 of Insolvency Act 1986).
  • If the administrator seeks creditor approval, rather than a qualifying report being obtained, the administrator will need to seek a decision of the company’s creditors when issuing their proposals, referred to in paragraph 49 of Schedule B1. The creditors are required to approve the administrator’s proposals without modification, or with modification to which the administrator consents.
Provider of qualifying report

The provider of the qualifying report meets the requirements as to qualification. The individual needs to be satisfied that their relevant knowledge and experience is sufficient for the purpose of making a qualifying report:

  • They have professional indemnity insurance;
  • They are independent (i.e. not a connected person); and
  • They are not excluded from acting as an evaluator.

The evaluator must state in their qualifying report that they have considered any previous qualifying reports obtained. This is to avoid connected parties ‘opinion shopping’ for a qualifying report they prefer.

Do the regulations address previous concerns?

While the draft regulations stipulate the criteria which an evaluator must meet in order to produce a qualifying report, which include being independent and insured, the regulations do not require the evaluator to have any specific professional qualifications. The evaluator simply needs to be satisfied that their ‘relevant knowledge and experience’ is sufficient for the purpose of making a qualifying report.

The new regulations will apply where there is a ‘substantial disposal’ in administration of the company’s assets. The term ‘substantial disposal’ has not been defined within the regulations. The reasoning for this is that what amounts to a ‘substantial disposal’ may vary depending on the size of the relevant business. It is also a term that is used in other insolvency legislation and insolvency practitioners are therefore familiar with it.

One concern was that it should be the administrator that should obtain the independent qualifying report, as they have technical experience which may assist the evaluator. However, it remains that the qualifying report is to be obtained by the connected party purchaser rather than the administrator.

What does this mean for the future of pre-pack administration sales?

In the current uncertain times, company insolvencies are likely to increase once the government’s support under the Corporate Insolvency and Governance Act 2020 expires. As a result, this will likely lead to a rise in the use of pre-pack sales and it is therefore inevitable that they will be subject to more public scrutiny than usual. This is particularly due to the costs of the government support packages which will have kept such businesses afloat during 2020.

The requirement for an independent written opinion, or creditor approval to be obtained before a pre-pack administration sale, can be made to a connected person. This, in theory, adds a layer of protection for creditors and should improve confidence in the pre-pack process. Pre-pack sales can then be effectively used by insolvency practitioners to obtain a successful sale which, in turn, should protect both businesses and jobs.

As obtaining creditor approval could be a long and uncertain process, particularly for a company that has many creditors, it is likely that the independent written opinion will be used in the majority of pre-pack sales. Whilst obtaining an opinion does not guarantee that the report will agree with the substantial disposal, and an administrator will still be entitled to proceed with the proposed transaction as long as a statement for his reasons for doing so is provided, it may be a quicker and more convenient course of action than creditor approval.

We’re here to support you

While pre-pack sales do sometimes (rightly) get bad press, it shouldn't be forgotten that they can also be a valuable tool for maximising value to creditors. In distressed situations, often the only buyer in town is a connected party, as the lack of time to undertake meaningful due diligence rules out other buyers.

It remains to be seen how successful the regulations will be at increasing creditor confidence in the pre-pack sale process once they come into effect on 30 April 2021.

For further information, guidance and support on how these changes may impact an existing or planned pre-pack administration process, do not hesitate to contact a member of our corporate, insolvency and restructuring team.

Our insolvency and corporate recovery team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

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New legislation

Health and safety protection extended to workers from 31 May

During the coronavirus pandemic employees have benefitted from protection against being treated unfairly or dismissed as a result of raising serious health and safety concerns in the workplace. This long held right derives from section 44 of the Employment of Rights Act 1996. However, historically, workers (for example, those who work in the ‘gig economy’) have not had the same rights.

A case was brought against the government by the Independent Workers’ Union of Great Britain, which was heard by the High Court, in October 2020. As a result, new government regulations have been put before Parliament extending the health and safety detriment protection rights to workers.

Furthermore, there is also a plan to extend Regulation 4 of the Personal Protective Equipment at Work Regulations 1992 (“PPE Regulations”) that require employers to provide suitable personal protective equipment to employees, to also include workers.

What is changing from 31 May?

On 31 May 2021 the Employment Rights Act 1996 (Protection for Detriment in Health and Safety cases) (Amendment) Order 2021 is due to come into force.  If approved, the new regulations will extend to workers the rights currently conferred under section 44 (1)(d) and (e) of the Employment Rights Act 1996, which are rights not to be subjected to detriments in certain health and safety cases.

This is to say that workers, as well as employees, will be protected against being treated unfairly as a result of raising serious health and safety concerns. Subsequently, this will have a significant impact on the protection of workers’ rights through the challenges created by the coronavirus pandemic.

What does this change mean?

Workers are not able to bring claims for unfair dismissal, however, they will be able to bring claims in an employment tribunal if they suffer detrimental treatment in relation to health and safety cases as follows:

 

  • If they have to take absence, or propose to take absence, from work due to a reasonable belief that their presence in the workplace would put them in serious and imminent danger. This is provided that they could not reasonably be expected to avert that danger.
  • If they have to take, or propose to take, appropriate steps to protect themselves or others as a result of the reasonable belief that there is a serious and imminent danger.

However, this protection only applies if the date of the relevant act or failure to act (or the last of a series of similar relevant acts) occurs after 31 May 2021.

Change to PPE regulations for workers

The explanatory memorandum to the new regulations amending the detriment sections of the Employment Rights Act states that there is a proposal to consult and extend to all workers the Personal Protective Equipment at Work Regulations 1992. This is due to be laid before Parliament later this year.

The current regulations require that suitable personal protective equipment (PPE) is provided to employees who may be exposed to a risk to their health or safety whilst at work, except where the risk has been adequately controlled by other means which are equally or more effective. The proposal is that this will be extended to workers as well.

How could this change affect employers?

The coronavirus pandemic has raised the importance and awareness of the protections employees have under the Act.  As a result of the extension of the health and safety detriment protection rights, and potentially PPE protection to workers, employers will therefore need to increase their health and safety obligations to include workers as well.

What action should employers take now?

In conclusion, it is key for employers to communicate with employees and workers about the risks in the workplace as a result of the pandemic, and the steps that they are taking to mitigate those risks.

For instance, employers should encourage staff to work from home (where possible), complete a risk assessment, and take reasonable steps to prevent harm in the workplace. It’s also important to remember that employers are still responsible for their staff welfare, even if/when they work remotely. Our handy guide outlines how to deal with workplace injuries when your workforce is working from home.

There is also useful government guidelines on safer working practices, which include a range of different types of workplaces and sectors.

Each workplace will have different challenges. However, ultimately, employers should ensure that care is taken when dealing with employees and workers who have highlighted reasonable concerns.

Contact us

If you need guidance on your health and safety obligations then our employment team can advise you on your responsibilities – contact Esther Maxwell or Natasha Jasinska for more information.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.  

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

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Guides & Advice

The Job Retention Scheme | your questions answered

UPDATED 3 MARCH - The Chancellor has confirmed that the furlough scheme will be extended until the end of September 2021.

We’ve updated our FAQs and laid out the commonly asked questions, and answers, about the Coronavirus Job Retention Scheme (furlough scheme). and This post explains how you can utilise this furlough to keep your business going and retain staff during these difficult and unprecedented times, covering the most frequent furlough questions for employers.

What are the job retention scheme and furlough leave?

Furlough leave is a job retention scheme announced by the Government in March 2020 which allows employers to retain staff while they address any economic downturn as a result of COVID-19.

  • The Government had paid up to 80% of the wage costs (subject to a cap of £2,500) of any employees who are designated as furloughed, up until the end of August 2020.
  • From September 2020 Government contributions to wages under the furlough scheme were reduced to 70% (up to a maximum of £2,187.50) with employers paying at least 10% of wages.
  • From October 2020, Government contributions to wages were reduced further to 60% (up to a maximum of £1,875), with employers paying 20%.
  • On 17 December 2020 the Government announced a further extension of the furlough scheme to the end of April 2021, confirming that the Government will continue to pay up to 80% of an employee’s wage (up to a maximum of £2,500).

On 2 March 2021, the evening before the Budget, the Chancellor announced that the furlough scheme will be further extended until the end of September 2021. The Government will continue to pay up to 80% of an employee’s wage (up to a maximum of £2,500) but from July, employers will be expected to pay 10% towards the hours their staff do not work, increasing to 20% in August and September.

Employers will have to pay employer national insurance and pension contributions, although the Chancellor has confirmed this will be reviewed in January.

Furloughed employees are those who have been designated as having no work to do (i.e. will remain at home and do not have the requirement to complete any tasks) but who will be retained by the employer.

Since 1 July 2020, furloughed employees have been able to return to work on a part-time basis (flexible furlough), or remain fully furloughed. Employers pay in full for days worked and can claim under the CJRS for days not worked, subject to the relevant caps.  An employee who is fully furloughed is allowed to take part in volunteer work, as well as training, so long as the work does not provide services to or generate revenue for, or on behalf of your organisation.

When does the furlough scheme end?

The scheme, initially announced to run from 1 March 2020 for three months has, as of 2 March 2021, been extended once again until the end of September 2021.

Is there a minimum period for furlough?

There is no minimum time that a worker can be on furlough leave. However, when submitting a claim to HMRC to recover furlough wage costs, the claim must cover a period of at least seven calendar days, unless a claim is being made for the first or last few days in a month.

Employees who are union or non-union representatives may also undertake duties and activities for the purpose of individual or collective representation of employees, or other workers, whilst fully furloughed. This is on the condition that they do not provide services or generate revenue for the employer.

Which employees will be eligible for furlough leave?

To be eligible, the employee must have been on the payroll on 30 October 2020. If they were hired after this, they will not be eligible.

The job retention scheme is not just limited to those who would otherwise have been made redundant. Rather, eligibility is not so prescriptive as to require a drop off in work akin to a redundancy situation. The focus is on the business’ operations being severely affected by coronavirus, with this impact clearly varying significantly from one employer to another.

As stated in paragraph 6.7 of the guidance, the employer and employee will need to agree in writing for the employee being placed on furlough. In terms of payments, the employer can claim for earnings, which it reasonably expects to be paid.

Employees who are self-isolating or on short-term sick leave, cannot be placed on furlough leave but can be placed on furlough leave afterwards. Employees on maternity leave should continue to receive maternity pay but can agree to return early and be placed on furlough leave. The Government confirmed on 9 June that employees who return to work in the coming months after being on statutory maternity and paternity leave, will be permitted to be furloughed (even after the 10 June end-date for new entrants). However, this will only apply if their employer has previously furloughed other employees.

On 5 January 2021 the guidance was updated to confirm that employees may be furloughed if they are unable to work, including from home, or working reduced hours because they:

  • are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance
  • have caring responsibilities resulting from coronavirus (COVID-19), such as caring for children who are at home as a result of school and childcare facilities closing, or caring for a vulnerable individual in their household

Read more about making reasonable adjustments for employees that have been classed as extremely clinically vulnerable.

Who does the furlough leave scheme apply to?

The scheme is available to all UK employers, regardless of size, including businesses, charities, recruitment agencies (where agency workers are paid through PAYE) and public authorities. Guidance on how to claim can be found on the gov.uk website. It’s also worth noting that, under the extended scheme, neither the employer nor the employee needs to have previously used the furlough scheme.

The scheme does not apply to the self-employed - there is a separate scheme available for self-employed individuals (Self-Employment Income Support Scheme).

What is the Self Employment Income Support Scheme?

The Self Employment Income Support Scheme allows those that are self-employed to claim a grant if they can prove their business has been impacted by the pandemic. There have been three schemes to claim for grants so far.

The fourth grant will be available to claim from April 2021 for those who feel their business has been negatively impacted between 1 February 2021 and 29 April 2021. It is available to those who have traded in the 2018-19 and 2019-2020 tax years (and submitted self-assessment tax returns by 2 March 2021), meaning around 600,000 additional self-employed people will now be eligible for government help. The grant will be worth 80% of three months' average trading profits (up to £7,500).

The fifth grant will apply to businesses who feel their business has been impacted from 1 May 2021 to 31 July 2021:

  • The fifth grant will be 80% of average monthly trading profit (up to £7,500) to those who can prove their turnover has fallen more than 30%.
  • If average monthly trading profit has fallen less than 30%, the grant will cover 30%.

What does the furlough contribution include?

The guidance states that the Government will contribute towards all wages costs, meaning that the contribution includes costs such as employer pension and national insurance contributions up until the end of July 2020.  From August 2020 employers have had to pay these contributions.  The employee will, however, pay tax on the salary (if earnings are above the taxation threshold).

Is commission included in the money that employers can claim back from the Government?

Yes. In addition to basic salary, the guidance states that an employer can reclaim 80% of compulsory contractual commission on past sales back from HMRC. Past overtime payments can also be reclaimed.

Does the 80% include non-monetary benefits such as health insurance or a car allowance?

No. The guidance expressly states that these costs cannot be reclaimed as part of the 80%.

Will employers need to top up the contribution so that employees receive their full pay?

An employer can choose to top up to 100%, but does not have to (subject to general employment law and the renegotiating any contractual entitlements).

Can employees be brought back off furlough on a part-time basis? What is flexi furlough?

Since 1 July 2020, furloughed employees have been able to return to work on a part-time basis (a process known as flexi furlough). Employers have to pay full salary for hours worked and can claim under the CJRS for hours not worked, subject to the relevant caps. The number of employees for whom a claim can be made under this new scheme is limited to the maximum number claimed for in a single claim under the old scheme (i.e. for the period up until 10 June 2020).

When claiming under the new scheme, the claim must cover a period of at least seven calendar days (unless the claim is being made in the first or last few days in a month). However, subject to compliance with this when submitting the claim to HMRC, under the new scheme, employers are able to furlough employees for any amount of time and any shift pattern. As before, employers will need to agree in writing any flexible furlough with the employee.

Non-working days or hours will count as ‘furloughed days/hours” and no work can be undertaken on said days. There are a number of record-keeping requirements under the new scheme, namely that: the furlough letter confirming the basis upon which the employee agrees to ‘flexible furlough’ must be kept for five years. Employers also have to keep records for six years of the amount claimed and the period of the claim for each employee; the calculation details and reference numbers; and the usual hours worked, the actual hours worked and the number of hours employees are furloughed for.

This accurate record-keeping is key to the operation of flexible furlough, and the guidance makes clear that employers should only make a claim when ‘you have certainty about the number of hours your employees are working during the claim period’. Furloughed hours will ultimately be the difference between an employee’s usual hours and the actual hours worked, even if this is different from what was agreed when the flexible furlough was implemented.

Can apprentices be furloughed?

Yes, apprentices can be furloughed, however, employers must pay apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage as appropriate for all the time they spend training. This means employers must cover any shortfall between the amount they can claim for the wages through this scheme and the appropriate minimum wage.

Can company directors be furloughed?

Yes and while on furlough leave, company directors can still perform their statutory duties, relating to the filing of his/her company’s accounts or providing other information that relates to the administration of the director’s company. They cannot carry out any other work for the company if furloughed. The guidance also confirms that company directors with an annual pay period can benefit from the scheme, as long as they meet the relevant conditions.

Can furloughed employees take another job?

Yes. Employees can start a new job when on furlough leave (meaning they might end up earning 80% of the old salary and 100% of a new one. Whilst this was not prohibited in previous guidance, the latest guidance expressly allows it. Employees will however have to check that their contractual terms allow them to start a new role, and seek approval if necessary.

What about staff without guaranteed hours and those on the minimum wage?

For employees whose pay varies, the employer can claim for the higher of (a) the same month’s earning from the previous year (e.g. earnings from March 2019); or (b) the employee’s average monthly earnings in the 2019-20 tax year.

Individuals are only entitled to the minimum wage for the hours they work. So where staff are furloughed – and therefore cannot work – they will still be limited to 80% of their normal earnings even if this results in their pay being below the minimum wage based on their normal working hours. However, they are entitled to be paid national minimum wage for any time spent training.

What about employees who have been served with notice of termination of employment?

Since 1 December 2020, employees under notice are no longer eligible to be furloughed.

Can you make employees redundant during furlough?

Even with all the financial support available, it is inevitable that COVID-19 will force some employers to make a number of their employees redundant. However, employers must ensure that their HR teams have all the resources and support they need.

To protect people’s livelihoods, on 30 July 2020 the Government announced that employees who are made redundant while on furlough leave will be eligible for redundancy pay based on their normal wages - not the furlough rate.

The new legislation will also apply to statutory notice pay, so that statutory notice pay is also based on normal wages, rather than the lower furlough wages.

Read more about making redundancies during COVID-19.

What if employers have already dismissed staff?

An employer can potentially re-hire employees whose employment terminated and claim for them under the extended CJRS.  The employer must have made a PAYE RTI submission to HMRC for the employee between 20 March 2020 and 30 October 2020, notifying a payment of earnings for them and the employee must have stopped working for the employer on or after 23 September 2020.

What if employees refuse furlough leave?

If an employee refuses furlough leave, normal employment rules will apply, i.e. if there is no work for that employee to do, employers could choose to make them redundant. If there are contractual layoff or short-time working provisions in the contract, these could also be applied.

Read more about applying best practice during COVID-19 and managing employees who refuse to attend work.

What if an employee wants to be placed on furlough leave, but employers want to retain them as normal?

If an employer has work for an employee to do (albeit at home), provided that employee does not fall within one of the vulnerable categories (which may result in them being entitled to sick pay) and remains fit and well and is able to do their job, the refusal to carry out their role is a potential disciplinary issue and should be dealt with in the usual way.

Read more about making reasonable adjustments for employees with a disability.

Can employees be forced off furlough by their employers? If so, how exactly could this happen?

The furlough scheme has not altered basic employment law principles. Any variation in the terms on which someone is employed requires consent from both parties. When employees commenced furlough, their employer may well have set out in advance the conditions under which that period of furlough would come to an end – possibly a specified date or possibly by way of a notice being served by the employer. In those situations, employees can be forced off furlough in accordance with what has already been contractually agreed. However, in the absence of any such provisions, an employer will need to secure the employee’s consent in order to bring the period of furlough to an end.

Can an employee take holiday during furlough leave?

Yes, Employees continue to accrue holiday whilst on furlough leave and can also take holiday during furlough leave. The Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay, so employers will be required to top up the pay to 100% for the holiday period.

Note that employers do have flexibility over when employees can take holiday in line with the requirements of the Working Time Regulations.

What about employees who have TUPE transferred?

TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) governs the transfer of employees from one organisation to another. Previously it was unclear whether new employers could benefit from the coronavirus job retention scheme if the employees transferred after 28 February 2020. However, the guidance now states that a new employer can claim in respect of an employee who TUPE transferred to them after 31 August 2020 if the following conditions are met:

  • They were employed by the transferor (their former employer) before 31 October 2020.
  • After 31 August 2020, there was a TUPE transfer of the employee to the new employer and the employee remained in employment.
  • Immediately before the transfer the transferor had a qualifying PAYE scheme and made a payment to the employee, as notified to HMRC in a return delivered to HMRC after 19 March and before 31 October 2020, or, if earlier, the last day of the employee's employment with the transferor before the TUPE transfer.
  • The transferor did not report a cessation of the employee's employment to HMRC after the payment, other than in relation to the change in employer on the TUPE transfer.

How do I claim the Jobs Retention Bonus?

The Job Retention Bonus, which would have seen a £1,000 bonus paid to businesses for each employee brought back from furlough leave, will no longer be available. The government has however said that a different job retention bonus will be introduced at a later date.

Contact us

This guide has answered a wide range of furlough questions for employers. If you have any queries on the furlough leave scheme or need any guidance or support, speak to a member of your local employment team or get in contact with us by using filling out our enquiry form.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.
Guides & Advice

How to effectively manage remote employees

One of the most obvious knock-on effects of COVID-19 has seen many people now working from home (as opposed to the workplace) as government guidance has generally remained that employees should work from home where possible to do so.

The proportion of workers in the UK who work entirely from home is still relatively low. However, perhaps unsurprisingly at the moment, numbers are growing.  There is no legal definition of “homeworker” but essentially homeworkers may work exclusively at home, divide their working time between home and their employers' premises, or work at home on an occasional basis.

Similarly, there is no legal determination as to who can work from home.  This really depends on the nature of the job in question, but also the circumstances of the employer and the employee. Some jobs, by their nature, require employees to physically be in the workplace.  Other jobs can be just as easily done from someone’s home as they can from a place of work.  Working from home usually suits those jobs with in-built performance measurements, such as those where time recording and financial targets are prevalent – this way it is easier for employers to monitor the performance of those working remotely.

Read our blog on the practical issues an employer should consider when their employees work from home.

Challenges when managing the performance of remote employees
Productivity

Perhaps the most obvious concern you may have as an employer is reduced productivity.  However, some employees may actually be more productive working remotely as they may feel more comfortable at home and encounter less distractions. On the other hand, for others, it can be harder.

Conflicting responsibilities

Related to productivity and one of the things we have increasingly seen recently, especially when schools were closed due to COVID-19, is a recognition that parents and carers may have competing responsibilities to manage during the working day.  This in turn can have an effect on productivity; for example where such an employee is having to spend their time looking after a child who would otherwise be in school.

Lack of routine or structure

Some employees need the structure and routine of working from a dedicated workplace and may find it harder to achieve that same organisation, time management and motivation at home.  Where employees miss the structure and routine that comes from being in an office environment, this may result in them being more easily distracted and less productive.  Again, you should consider what management tools you have in place to address such concerns swiftly and to ensure your employees continue to work productively, even when not in the office routine and environment.

Communication

How much contact should you have with your homeworkers?  As an employer you may want to monitor and regularly check on the progress of work carried out by your homeworkers.  If this is the case (and this applies to monitoring employees in the physical workplace too) you should have a clear policy dealing with such matters, setting out what is expected and why the system is in place.

You should also bear in mind that while regular contact is usually a positive thing, as it can make your employees feel integrated and part of a team, it can lead to problems with the working relationship if your employees don’t feel trusted.

How to monitor and measure the performance of remote employees
Implement a clear appraisal process

One of the most common ways you can measure performance is through appraisals - homeworkers should be appraised like any other workers.

As well as your own concerns around productivity, homeworkers may also be concerned that their managers (or other colleagues) will suspect that they work less (or less effectively) than workplace-based colleagues. Therefore, some thought should be given as to how you will measure the quality and quantity of your homeworkers’ output.

A suitable reporting and appraisal system should be agreed at the outset, building in sufficient opportunity for reviews of work progress, involvement in projects, levels of performance, expectations and any difficulties that either the homeworker or their manager consider should be addressed.

Furthermore, homeworkers should not be denied promotional prospects open to comparable workers merely because they work at home. There may be good reasons why such workers cannot be promoted to a particular position, but you will have to show that a decision can be objectively justified if, for example, a discrimination claim is brought.

Introduce a trial period

As part of reviewing an employee’s performance you could consider whether you wish to include a provision enabling the homeworking arrangement to be brought to an end.

If you have concerns as to how the arrangement will work, it is sensible to have an initial trial period and a right to require employees to revert to conventional working at the end of that period. If there is to be a trial period, the duration and the measures used to identify success or failure should be clearly set out in any employment contracts.

Set clear expectations

You should try to agree as much as possible with your employees and make sure expectations on both sides are clear in advance of any homeworking arrangement.  This leaves less room for disagreement and for potential problems and issues to arise further down the line.

Implement a homeworking policy

It is also advantageous for your business to have a clear homeworking policy in place, which needs to be effectively communicated to all employees and reviewed on a regular basis.  This helps with the point highlighted above about ensuring as much as possible is agreed in advance and expectations are set from the beginning.

Adapting to new ways of working

Homeworking was on the rise before COVID-19, but the pandemic has meant it has become “the norm” for more and more employees.

Indeed, this certainly looks to be the direction of travel and is something the government are looking at with the Employment Bill (where having the right to flexible working is being proposed as the default and a day-one entitlement for employees, and without a qualifying period of service).

Efficient performance is key for all businesses, so it’s important that it is managed as effectively for those working from home as it is for those in the physical workplace.

We’re here to help

To discuss implementing or reviewing a homeworking policy or process, or any other employment-related matter, please contact Ewan Carr or another member of our employment team.

Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Helping business prepare for the future of work post COVID-19

The workplace is going to look very different now that most restrictions have been lifted, for many reasons.
Make sure that your business is prepared for the challenges and opportunities that will face us all.

Visit our future of work hub on how we can help:

  • Draft vaccination and flexible working policies.
  • Review your flexible and hybrid working policies.
  • Implement new additional benefits to employees.

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Business interruption insurance for holiday lets

For many holiday homeowners, and for holiday-let businesses across the UK, 2020 was a very difficult year. A brief period of reprieve after the first national lockdown - when all hospitality businesses, including holiday lets were forced to close - has not made up for the inevitable losses in income suffered as a result of the first, second and now third lockdowns.

All business owners are now pinning their hopes on the 2021 holiday sector opening up again, waiting, with optimism, for the influx of summer bookings, however, how do you mitigate against the loss of income for such an unprecedented event as this global pandemic?

If you are running your holiday let as a business then insurance against fire, flooding and other insurable property damage will be something you will no doubt have.

You might also have some basic business interruption cover for any property damage i.e. to cover loss of earnings or profit in the event of a fire. However, whilst it will hopefully never be needed, knowing it is there can be a real business saver if the property is unable to be used. Some policies also provide cover for non-property damage (often as an extension to a property damage policy) and therefore have become very relevant because of the pandemic.

Why business interruption insurance is so important

Some policies cover business losses that relate to infectious or notifiable diseases, such as COVID-19. These policies may also provide cover for non-damage denial of access and for public authority mandated closures or restrictions.

If you had to close your holiday let business because of an outbreak of a disease at, or within the vicinity of, your holiday let, or due to the government’s mandatory requirements to close, then this is where this type of business interruption insurance may be of assistance.

If cover is provided it may lead to the insurer paying out for loss of profit or loss of earnings or any additional expenditure incurred, subject to the limitations in the policy.

Making a claim

During the first lockdown one of the biggest issues facing small businesses, including registered holiday lets, was that many insurance companies were dismissing claims that businesses and individuals were bringing under their business interruption insurance.

The Financial Conduct Authority (FCA) brought a test case on behalf of small businesses to seek clarity on various policy wordings in non-property damage business interruption policies. A number of insurers co-operated with the court case and had their policy wordings tested. In particular, the case looked at how to interpret disease clauses, mixed disease and denial of access clauses (hybrids), denial of access clauses and what triggered a pay-out under the policies.

In the Supreme Court (following an appeal from the High Court), it was decided that, in the main, the High Court’s decision in favour of the policyholders was right. The Supreme Court agreed with much of what the lower court had said and went further in some aspects.

As such, insurers will potentially now have to pay out billions of pounds to those businesses who rightly claimed on their business interruption insurance, (and for those yet to claim) providing a major financial lifeline in this challenging time.

Read more about the Supreme Court judgement.

Gaining clarity

As well as giving a lifeline to small businesses that they so desperately need, the Supreme Court’s decision provides some clarity. It will be much harder for the insurer to escape responsibility for those policy wordings identical to or very similar to the ones tested in the recent case. However, this remains very much a grey area. Whilst the decision provides business owners with the confidence they need to claim, you still have to look at each policy on a case by case basis. The court also did not say how much insurers should pay out, so there will be ongoing arguments about what sums are paid out and for what period.

It is still important to look at the specific wording in each policy. This analysis will work out whether you are eligible or not. Most insurers will have been in contact with policyholders affected by the Supreme Court’s decision (as the FCA encouraged them to be pro-active) but you should not wait. You should take a pro-active step yourself and get the policy reviewed.

We can help you with making a claim

If you are thinking about claiming on your business interruption insurance then our litigation and dispute resolution experts can help you to judge whether you are likely to be successful. Alternatively, if you were recently turned down for a claim, we can review your case to see whether you are in fact due a pay-out. Either way, we’re here to support you.

For further information, please contact Steven Skiba or find out more about how we can support you.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

 Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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Redundancies during COVID-19: Coronavirus job retention scheme extension provides some relief

In comparison to the US, there is a stricter redundancy process in the UK. For UK businesses faced with the prospect of making 20 or more staff redundant, there is an obligation to undertake a collective consultation process, which should consider ways to avoid or reduce the number of employees to be made redundant and mitigate the consequences of the redundancies. Where businesses propose between 20 to 99 redundancies the collective consultation process is 30 days. For 100 or more redundancies the period of collective consultation increases to 45 days.

Extension of the Coronavirus Job Retention Scheme

On 3 March 2021 the furlough scheme was extended once again until the end of September 2021. Our comprehensive Q&A guide on the coronavirus job retention scheme addresses those commonly asked questions about furlough and summarises the latest government guidance.

After being a lifeline for countless businesses over recent months, the news that the support is continuing will undoubtedly be met with sighs of relief by many. However, it also raises a number of complexities.

Is extending furlough just delaying the inevitable?

Whilst millions of jobs will be protected, a question mark does still hover over whether the government is still simply delaying the inevitable cliff edge of job cuts.

For businesses that have been saved from making redundancies by this extension, it is vital that they use the extra time wisely to seize every opportunity to make the most of the support available. However, they should also take every measure to ensure that as many furloughed employees as possible can come back into work full time once the scheme ends.

Taking a step back and reviewing expenses and business operations can help to find areas where costs could be reduced, potentially lessening the financial pressure once the end of September arrives, in turn, saving jobs.

The government has provided another generous lifeline for businesses during this challenging period, and it is important that they take advantage of the support while they can. Nevertheless, organisations must not use this as an excuse to ignore difficult decisions until September.

What if we still need to make a number of our employees redundant?

It is inevitable that COVID-19 will force some businesses to make a number of their employees redundant, regardless of the furlough leave extension. It is never an easy decision for employers to make, and in a time where many people are under huge financial pressure, the process can be emotionally draining. Nonetheless, if the worst comes to worst, employers must make sure they follow correct and fair redundancy processes to avoid any claims of unfair dismissal.

Largescale job cuts may lead to complex redundancy situations requiring collective consultation, designing and training managers on completing selection matrix forms, and assisting in individual consultation or appeal meetings with employees selected for redundancy.   Businesses considering largescale redundancies (20 or more) should start planning now.

How do I calculate redundancy pay for furloughed employees?

On 30 July 2020 the government announced that furloughed employees who are made redundant will be eligible for redundancy pay based on their normal wages – not the furlough rate. This also applies to statutory notice pay.

What are the risks when making largescale redundancies?

Adequate and timely planning is crucial.  Businesses who do not recognise trade unions will need to consider electing employee representatives to undertake collective consultation or utilise existing works councils/committees.  A failure to undertake collective consultation properly or at all can be costly (up to 90 days’ pay per employee).

Businesses will also need to ensure that any pooling and/or selection of employees is undertaken correctly and that at risk employees are consulted individually before any final decision to terminate their employment by reason of redundancy is taken. There must also be an appeal mechanism in place to hear any employee appeals.  Businesses will need to consider who will be the most appropriate person (managers/supervisors etc.) to be involved in each stage of the process ensuring that each step of the process is fair to avoid claims for unfair dismissal.

It is not uncommon during largescale redundancies for businesses to experience an increase in the number of grievances received or incur higher levels of sickness absences. Clearly, the nature of making large numbers of redundancies could mean that businesses find themselves exposed to greater numbers of employment tribunal claims, but proper planning, preparation and execution will mitigate against any potential claims.

How to deliver redundancy news while working remotely

As with any redundancy, clear communication and sensitive delivery of the message remains key. If not followed correctly the consequences can be significant, therefore it is important that the process remains fair and reasonable.

With many employees working from home, video conferencing is one of the only platforms available to businesses for face-to-face communications and can be a practical and humane method of making general announcements to the workforce.

Can employees be made redundant over a video call?

In principle, there is no issue with businesses using video conferences to deliver bad news about redundancies, however delivering the message that employees have been dismissed en masse can cause significant employee relations issues and is not recommended.

In order to remain fair, the correct processes must be followed which would include both collective consultation (where necessary) and individual consultation (for those with over two years of service) before a notice of termination is issued.

Redundancies should be handled with compassion and sensitivity

Redundancy during such a challenging period will always be difficult news to deliver, but for many businesses it may be unavoidable. For now, companies should ensure they follow the correct processes and communicate to their employees with compassion and sensitivity.

Watch our 30 minute webinar on how to apply the best practice when dealing with redundancies.

Alternatively, our webinar on alternatives to redundancy outlines what else can be done to save on overheads when redundancy isn’t an option.

We’re here to help

If you’re concerned about having to make redundancies and would like some guidance and support in managing a difficult process, speak to a member of your local employment team.

From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.

Our free legal helpline offers bespoke guidance on a range of subjects, from employment and general business matters through to director’s responsibilities, insolvency, restructuring, funding and disputes. We also have a team of experts on hand for any queries on family and private matters too. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

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