By Aleksandra Traczyk, Solicitor at Winckworth Sherwood
2020 has thrown up challenges no one could have foreseen, so how can your business prepare for 2021 in light of Brexit and the Covid-19 pandemic?
31 December 2020, will not only mark the end of 2020, which has been a year like no other, it will also mark the end of the Brexit transition period.
In terms of changes to the employment law landscape, from 1 January 2021 any legislative change is unlikely to come immediately and the scope of any deregulation may be limited by level playing field provisions included as part of any trade deal with the EU.
The changes to retained ECJ case law are also likely to take time since cases will first need to reach the appellate court level for any departure to happen. From an immigration perspective, the changes are going to be more immediate as on 1 January 2021 the new points based system will be implemented for new arrivals from the EU, EEA and Switzerland.
There are a number of things that employers can do to prepare which include:
- Employers should conduct a review of their workforce. If they wish to employ anyone arriving from the EU after 1 January 2021, they will need to be a Home Office licenced sponsor and should apply for a sponsor licence as soon as possible. Any EU, EEA or Swiss citizen arriving before or on 31 December 2020 will be subject to the old immigration rules and able to apply for settled status under the EU Settlement Scheme until 30 June 2021.
- Employers should continue to check any job applicant’s right to work in the UK in the same way as now until 30 June 2021 and have a duty not to discriminate against EU, EEA or Swiss citizens by requiring them to show their status under the EU Settlement Scheme until after 30 June 2021.
- Those employers who transfer personal data outside the UK (which from the EU and data protection perspective on 1 January 2021 will become “a third country”) should review the adequacy of their organisation’s data processes and protections in place.
- Employers should conduct a review of contracts of employment in relation to post-termination restrictions and references to geographical limitation (i.e. non-compete clauses that refer to “throughout the EU”).
- Employers with an international workforce should examine whether they wish to retain existing works council agreements, both domestic and European and consider any impact on its UK workers who are temporarily posted abroad.
The Government scrapped its plans to introduce its widely-criticised Job Support Scheme and announced that the Coronavirus Job Retention Scheme (CJRS) (the ‘furlough’ scheme) will be extended and run until 31 March 2021, with a review to take place in January 2021. Employers should continue to watch this space for further developments but inevitably will have to consider whether or not they will make redundancies when the scheme ends.
The roll out of the vaccine means that there is a light at the end of the tunnel for businesses but in many cases the damage has already been done. Employers should remain alive to any collective redundancy consultation deadlines ahead of the scheme ending and ensure that if they intend to make 20 or more redundancies within one establishment in 90 days or less, they start the consultation process as soon as the redundancies are contemplated and in any event no later than 30 days before the first dismissal takes effect – and if that number is 100 or more, they will have to do so 45 days ahead and notify the Secretary of State in writing.
Another matter directors should be alive to is the wrongful trading provisions which impose personal liability on directors found to have over-traded while a company was insolvent – and if found liable, directors can be ordered to contribution to the assets of the company. When a director concludes (or should have concluded) that there is no reasonable prospect of the company avoiding an insolvent liquidation or administration, they have a duty to minimise potential loss to the company’s creditors.
In March this year, the Government suspended wrongful trading provisions so that directors could continue to trade through their companies without concern that they would be personally liable. This suspension ended on 30 September 2020. Directors are therefore advised to act with utmost caution and keep matters under continual review.
In particular it is prudent to:
- Hold frequent board meetings convened specifically for the purpose of reviewing the company’s financial position and keep proper minutes of those meetings, noting in particular any decisions made and the reasons for them.
- Maintain accurate and up-to-date company financial records.
- Continually monitor the company’s financial position and future cash flows and consider ways to reduce expenditure.
- Take professional advice aimed at reviewing whether insolvent liquidation is inevitable or whether there is some way of resolving or mitigating the company’s financial difficulties.
- View resignation as a last resort, but if it becomes unavoidable, they should minute any dissent with other directors at a full board meeting and set the reasons out again in a resignation letter to the whole board.
Employers are likely to remain subject to the same considerations in terms of asking employees to return to work while the threat of the pandemic is ongoing – in relation to individuals who refuse to or cannot work for health reasons, these can be split into four categories:
- Individuals who will refuse to or cannot work in the office for health reasons. This, in turn, will be split into four categories:
- Clinically extremely vulnerable individuals as defined in the Government guidance.
- Higher risk individuals as defined in the Government guidance.
- Individuals who live with or care for clinically extremely vulnerable or higher risk individuals.
- Individuals who are not clinically vulnerable or at higher risk but are simply worried about catching the coronavirus or passing it onto others.
- Individuals who simply would like to continue to work at home or part at home and part in the office.
In relation to the first category of individuals, there are clearly health and safety and whistleblowing and/or discrimination concerns that employer and directors should be alive to (in particular directors can be criminally responsible for health and safety failures). As vaccines continue to be rolled out, there is also debate whether employers could make it compulsory for employees to take the vaccine.
In relation to asking the second category of individuals to return to the office after the dangers of the pandemic have passed, employers should be sensitive that if the individual has shown they can work from home effectively and the purpose for them to be in the office is to be monitored or due to a lack of trust this may undermine the duty of trust and confidence owed by the employer to the employee. The best way to approach such conversation would be to ask the individual what they would like to do and explain the purpose behind why they are required to be in the office.
Employers should also be alive to the possibility that the individual could make a statutory flexible working request in relation to homeworking whether for permanent homeworking or working part at home and part in the office. Again, if the individual has shown that they can work from home effectively and has proven their productivity and commitment over an extended period of time, employers will be in a difficult position to refuse that individual’s flexible working request if it is framed in reasonable terms.
Employers may wish to start considering what the future of working will look like more generally. The pandemic has certainly accelerated the trends with regard to flexible and home working and has given employers the opportunity to revaluate the purpose of the office space and the use of new technologies to enable remote working.
There is also a question of what benefits will look like in the future – the current popular benefits such as season ticket loan, cycle to work scheme and so on may be out of touch with the future workplace and would salaries be lower or higher on the basis the individuals do not have to commute as often and/or the employer saves cost by not renting as big an office space? The change in approach to these will no doubt begin to emerge as we come closer to tackling the pandemic and returning to what will inevitably be a different normal.