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Adapting the workplace - UK

  • United Kingdom
  • Coronavirus - Workforce issues

21-07-2020

Updated 21 July 2020

As employers, trade unions, public health authorities and the government work together to safeguard communities, ease the lockdown and reopen workplaces, it is clear that leadership, trust and careful planning will play a vital role in this critical next phase.

To guide employers as they prepare to address the challenges ahead, we have published a series of briefings and webinars, as follows:

In this briefing, we highlight some key issues relating to adaptations that may be required for new ways of working, including where formal changes are needed to existing employment contracts and policies. This briefing is also accompanied by a webinar recording.

For further information, please do not hesitate to contact your usual Eversheds Sutherland advisor, or the individuals named below, to discuss your employer’s particular circumstances.

New ways of working: adapting the workplace and changing terms and conditions

Whilst health issues and safe-working must necessarily dictate the nature and pace of a return to work, employers are also thinking strategically about their commercial circumstances. From an employment perspective, this will include assessing (as best they are able):

  • staffing needs
  • cost base
  • terms and conditions of employment and
  • ultimate business model and business viability

In line with Government requirements and their own staffing and business needs, many employers are needing to introduce short term changes to the workplace and/or to working arrangements. For others, longer term or more profound adaptations to the business may prove necessary. 

Considerations for contractual change

The starting point will always be the individual’s contract of employment and any applicable collective agreement for the purposes of identifying current express or implied contractual terms and the ability and method of effecting change. But it is vital to bear in mind also that a successful transition back to operations will need the support of staff. As such, communication (and, preferably, dialogue) with employees and, where appropriate, with a trade union and/or employee representatives, will be fundamental to facilitating any changes on a return to work and to maintaining morale - more so than ever following this period of disruption and uncertainty. Employer strategy going forwards should certainly factor in how constructive communication in this regard can be undertaken.

Changing employee roles and contractual terms

Some options employers may be thinking about to vary ways of working or to reduce costs might include (as permanent or temporary measures) changing roles, redeploying staff, changing hours of work, all of which might affect pay, even if the employer were not looking to review its pay structures. Making any such changes is likely to require amendment to individual contracts of employment. There will be many important considerations for employers on any proposed contractual change. At the end of this briefing we have included a checklist of some of the more common issues. However, we start by looking at some of the changes employers may need to be thinking about (if they are to comply with Government guidance and safe working practices) but also according to their business needs.

Some specific examples of contractual changes potentially associated with adapting to new ways of working on a return to operations.

Changing working patterns / arrangements

Question Points to note
Is it possible to insist that an employee changes role? Check the individual’s job description and day to day role to identify contractual flexibility. Is the change permanent or temporary? Employee consent to change is always preferable but may be required if it involves a significant role change. Are there any individual or practical obstacles to the employer forcing change? Watch also for perceived demotion or over-stretching.
What support should be offered to employees who change role?  Think about training and transitional needs, to ease the employee into the changed role. What support will the individual require? How frequently will a supportive review take place. If the individual is reluctant, might a trial period work? Consider too that change, particularly following a period of potential stress, can affect employee well-being and stress levels. Considering undertaking risk assessments and additional support.   
It is now clear that there will be a phased approach to easing the lockdown.  How might employers approach this in legal/ contractual terms?  Subject to adherence to Government guidance, to meet post-lockdown demand and/or allow social-distancing, a return to work may require the introduction of shifts, new shift rotas or a change in hours of work. Again, check for contractual flexibility.  It is possible to change contracted hours with the employee’s (or, in certain circumstances, the recognised trade union’s) consent. In the absence of consent, it may be possible to change the contract by either: unilaterally imposing the change and using the employee's conduct to establish implied agreement to the new terms or dismissing and offering continued employment on new terms. NB If continued employment is offered on new terms, there could be an obligation to consult with any recognised trade union or employee representatives and in any event individual consultation should take place. Both approaches, however, raise employee relations and litigation risks, and advice should be sought. Watch too for potential discrimination (eg caring responsibilities) and inequality over amount and scheduling of work but also see check list (below) and risk of undermining collective bargaining rights.
To reduce initial headcount on return, is it an option to offer unpaid leave or sabbaticals to some employees? Voluntary or enforced periods of leave may ease initial staffing and costs issues. These should be applied fairly and in a non-discriminatory manner. Unpaid leave will need to be on a voluntary basis unless introduced via a pre-existing contractual right (eg lay-off) or contractual variation. Insisting on leave in the absence of a contractual right or agreement raises significant employee relations and litigation risks.
What can employers do about accrued but untaken employee holiday? Entitlement to holiday leave continues to accrue during lockdown. Ideally, employers will have been encouraging the taking of leave (even enforcing this in some cases) to avoid excessive banking of holiday. Where this is not possible, revision to the Working Time Regulations permits the carry-over of up to four weeks’ untaken leave for up to two years where, due to the outbreak, it has not been reasonably practicable to take holiday in the current leave year. Employers should review carefully the balance of untaken leave by all staff and how this might be accommodated once return to work resumes. This may well involve contractual/ holiday policy change to manage when holiday is taken -including carry-over. 
Can an employee insist on working from home if they have done so during lockdown?  It seems highly likely that, having done so successfully during lockdown in many cases, employees may request greater access to home-working. There is no legal right to work from home but employers should be anticipating such requests and determining their policy approach according to business need and fairness. For many, there will be costs benefits to permitting home-working. If requests are able to be accommodated, the decision must be fair, consistent and made without discrimination.  
Can employees claim reimbursement of expenses incurred as a result of working from home?  Yes. Employers will either need to provide employees with equipment, such as mobile phones, computers and other office equipment (including stationary) to enable them to work from home or, if the employee’s own equipment is used, reimburse associated costs (various tax exemptions and reliefs will apply). Employees will need to document expenditure, just like any other expense claims. 
On a gradual return, how might employers manage a ‘half-in half-out’ approach to working? As lockdown is lifted, office-based staff may well wish to start coming back to the office (even if only for part of their working time). This will present logistical challenges, not only with social distancing but also with equipment -for example, for office workers, IT equipment will be likely to be at home. For some staff, it may be appropriate for them to be provided with two-sets of IT equipment but, more commonly, employers will need to take a considered and risk-based decision as to whether they are to be encouraged to work entirely from home, or entirely from the office, and ask that they keep their equipment in whichever location is determined as their primary workplace. Where working from home (either part time or full time) is to be more long term employers should consider health and safety risk assessments and insurance issues.  
Are there particular data protection issues to consider related to home-working?   Managing data security outside the workplace can be particularly challenging but GDPR principles still apply. Employers  policies and procedures will still apply but adaptations/clarifications may be appropriate for those home-working. For example, staff should be discouraged from using personal printers to produce hard-copy documents at home without the means to store them securely or destroy them confidentially. Where this is not practicable, suitable security measures will need to be put in place and monitored. (Note ICO guidance on working from home). 
Can staff insist on a working pattern which accommodates caring responsibilities? As the lockdown is gradually lifted, so childcare settings such as schools and nurseries will gradually re-open. With schools, this is likely to be a phased return with certain year-groups attending on certain days, so employees’ childcare issues will not be resolved overnight. Staff have the right to request flexible working, but no free-standing right to insist on a particular working pattern. However, wherever possible employers should approach these requests with pragmatism and a constructive mind-set.
Ought employers be thinking now about “future-proofing” contracts?  If any positive actions are able to be identified for the future, following COVID-19, one must surely be the opportunity for employers to formulate a strategy for any future recurrence, to become more resilient and better-able to withstand future shocks, whether pandemics or otherwise. This is likely to involve proactive embedding of workplace flexibility and assessment of the extent to which employment contract terms are able to meet changing circumstances.

 

Changing pay structures and/or cutting costs

Any contractual change which results in a reduction in pay is likely to prove an emotive issue and should be considered carefully in terms of what is needed in the interests of the business on the return from lockdown and how it will be achieved. 

Question Points to note
Can employers freeze pay to reduce costs? Employment terms are required to specify pay (or at least how it is calculated). However, unless the employment contract guarantees (or leads to a reasonable expectation of) a pay increase at certain intervals, freezing salary will not amount to a contractual change. 
Is a reduction in pay possible? To limit or avoid redundancies, reducing the wages bill may be necessary but will almost certainly be in breach of contract unless implemented with the express consent of employees. Communication and negotiation with affected employees (or their trade union) will be key but, if agreement to a pay reduction cannot be reached, as a last resort, the employer can consider a unilateral change (ie dismissing the employee and offering continued employment on new, lesser terms). Pay cannot in any event fall below NMW. Such an approach raises employee relations, possible trade union relations and litigation risks. An alternative would be to revisit staffing needs and, if practicable, effect redundancies as a cost-saving measure.
Are employers obliged to pay bonuses in light of current circumstances? The obligation to pay bonuses will depend upon the contractual basis of payment. Unless the employment contract guarantees (or leads to a reasonable expectation of) a bonus, not paying bonuses will not amount to a contractual change. Where receipt of bonus is a contractual right and is not conditional upon other factors (eg business or individual performance) agreement to withholding bonus will be needed. It may be possible to effect a unilateral change to the contract/ bonus scheme as described above (with the risks inherent in such a process)    
Isn’t an obvious solution to reduce use of casual staff? In theory, yes, but the reality may be more difficult. Many organisations label staff as ‘casual’ because they are employed on, for example, zero-hours contracts but this belies their true legal status. If casual staff see a sudden drop in their work-allocation, employers could risk legal claims on the basis of an implied right to be provided with work. Employers considering reducing reliance on casual staff should therefore do so following thorough review of business need and risk assessment. 
Can employers reduce costs by changing pension schemes?   If the proposed changes affect pensions, a 60-day consultation period with active and prospective scheme members and their representatives may be required. Significant adverse changes (eg. replacing DB pension provision with DC for future service) require extra care.




An outline checklist to effecting contractual change

There will be many important considerations for employers on any proposed contractual change but we have set out below some of the more common ones 

  • What changes are needed? Have a clear and well thought out business case. Keep a record of the basis and evidential/commercial support of any decision and/ or mitigation.
  • Is this a pure contractual change or a redundancy situation and offer of alternative role?
  • Who will the change affect? How many employees? What is the potential exposure to claims (long-servers, inadvertent discrimination, breach of contract/unlawful deductions)?
  • How much flexibility is there (if any) over the changes? Consensus and employee support is likely to prove more important than ever in a period of change or transition and capacity for flexibility and accommodating staff concerns will be important in seeking their agreement. Communication with staff (and preferably, dialogue) will be key.
  • What are the current contract terms? What do these stipulate and where are they set out -is there flexibility, impliedly or expressly?
  • Timing? Will the changes be phased or effected in one process? (Consultation requirements may affect timing).
  • Is collective consultation necessary? Yes if an employer does not believe the consent route will sufficient and there are 20 or more affected employees, consultation will be with the TU in accordance with the collective bargaining agreement (cba). If not, employee representatives will need to be elected unless they already exist to carry out such consultation functions. (In both cases see previous briefing and webinar, “redundancies in a virtual world” for information on consultation issues). 
  • Who has the competence to agree a contract variation where there is an element of collective bargaining? This will depend on the terms of the cba and the relevant employment contracts but, typically, TU’s will have competence over matters such as 'pay, hours and holiday' (though this varies significantly). Whether an employee is a TU member is not relevant to this analysis  - are they in scope of the cba and what is the scope of the cba negotiation on their behalf.
  • How will you seek employee consent to the change? Consider how  this will be undertaken and recorded. Communication is likely to be fundamental to effecting change but also to future relations.
  • What is the strategy if employees do not consent/consultation fails to secure agreement? The most successful changes will be by agreement. It may be possible to implement a lawful change through terminating existing employment contracts and offering re-engagement on new ones. Proceed with caution and with legal advice: this process can trigger collective consultation (affecting timing and communications) and can expose the employer to the risk of claims by individuals (unfair dismissal, breach of contract) but also from TU’s if this undermines their collective bargaining rights (s145b TULR(C)A 1992).
  • A high risk approach is for an employer is to purport to unilaterally impose the changes and not seek employee consent to the change. If employees object to the changes and work under protest the changes will not have been effective and employees can bring breach of contract or unpaid wages claims. Courts and tribunals are also wary of implying consent from employees who remain silent or do not openly object where the change does not have prompt effect. Where business circumstances are extremely challenging and the change is more immediate (eg a pay cut) this may be the only option open to an employer. It should proceed with extreme caution as there are risks of constructive dismissal, breach of contract/deductions from wages claims and even of employees standing and suing for unfair dismissal (under the principle in the Hogg v Dover College cases). Therefore, this option is not to be taken lightly and detailed advice would be essential.
  • For breach of  collective consultation obligations, is there any defence? There is a “special circumstances” defence in relation to changing terms scenarios (sections 188 (&) and 193 (7) TULR(C)A 1992 as above) which may apply in the current exceptional circumstances. This will however be fact specific. The defence is not made out simply by showing that there are circumstances which rendered compliance with the relevant statutory requirements “not reasonably practicable”.

 

NB this Alert covers England, Wales and Scotland. It does not cover employment law differences that apply only in Northern Ireland

This note is a generic briefing and is not a substitute for detailed legal advice on the specific circumstances employers are facing. Employers should therefore take legal advice.

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