Expect a Rise in Covid-19 Employment Disputes
When the furlough scheme ends the culling starts and the claims begin. This is the fear of many in the business community; and lawyers are bracing themselves for the perhaps inevitable flood of litigation arising out of the government’s financial support schemes.
According to the Office for National Statistics (ONS), the number of people being made redundant in the UK almost doubled in the three months to August this year; and the unemployment rate jumped to 4.5%. We can expect that the worse is yet to come.
The chancellor has made clear what we all know anyway, that is the hard truth that not every job can be saved. What we do not know is how challenging the nature of covid-19-related employment disputes will prove for businesses and individuals because the measures and the related regulations are unprecedented.
What’s the latest for the CJRS?
Briefly, the coronavirus job retention scheme (CJRS) was to enable businesses to place their staff on furlough for at least three weeks and those employees would then be paid by the government (up to 80% capped). From September, the CJRS was modified such that the government’s contribution to wages reduced and businesses started to contribute
The CJRS ends on 31 October and the job support scheme (JSS) comes into effect on 1 November 2020 until 30 April 2021. This is a less generous scheme aimed at ‘viable’ jobs and employees will be expected to work for at least a third of their normal working hours and the business must pay for the hours worked. Payment for unworked hours will be split three ways between government, employer and the employee (for more detail see this month’s article, Covid-19: Government Reduces Financial Assistance for Businesses).
Potential for disputes
Despite the extent of government support, covid-19 has forced many businesses to close or to make workers redundant while others will have to make difficult decisions in the coming months. But there are many unknowns around the potential for litigation arising out of how employers interpret and apply the rules to their workers.
There have already been a handful of useful cases that firms should note. For instance, even if the employer was in administration its employees could still be furloughed, such that their wages would rank ahead in priority of the administrators’ expenses and payments (Re Carluccio's Ltd (in administration) [2020] EWHC 886 (Ch).
Separately, an Uber taxi driver applied for judicial review, arguing discrimination against him (a ‘limb b worker’) under article 14 ECHR against the Treasury in respect of the CJRS. The application failed. The High Court found that the Treasury had sufficient regard to equalities issues in relation to the JRS to satisfy its obligation under section 149 of the Equalities Act 2010.
A further factor for the court was the importance of rapid assistance in “circumstances of extreme urgency to provide help to millions of furloughed employees by seeking to preserve their jobs at least during the worst of the crisis” caused by the pandemic.
The court said: “The Defendant was entitled to take the view that any system which took months to establish would be almost useless, and a system which involved officials making rapid decisions in very large numbers of individual cases while minimising fraud would be impracticable… we are satisfied that as a matter of law, in particular under Article 14 and A1/P1 of the ECHR, and applying the test of a wide margin of discretion, the decision to confine the JRS to employees and other workers within the PAYE system was plainly justified.”
Under the JSS, employers are prohibited from making redundant workers for whom they are claiming a grant. Where businesses ignore or bend this rule, disputes are likely to follow. As the CJRS expires and the JSS kicks in, there is likely to be steady flow of redundancy claims, unfair dismissal and discrimination claim before the employment tribunals.
There could well be claims by employees – whether or not still employed – in relation to holiday pay. For instance, under the CJRS - where employees take annual leave during furlough, employers are required to top up the pay to 100 per cent. If they refuse, a claim is likely.
Under The Working Time (Coronavirus) (Amendment) Regulations 2020, employees were allowed to carry forward annual leave in circumstances where it was impracticable to take it because of the pandemic.
There could also be claims under health and safety legislation and, quite likely, personal injury claims if employees are significantly overworked to the extent it affects their health and wellbeing.
Businesses need to do what they can now to minimise any risk of litigation, for instance, keeping full records and documenting all agreements made with employees in relation to, reduced working hours and any agreement to top up wages. Take specialist advice where necessary.
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