Job support schemes and litigation
Bianca Venkata considers the potential for litigation arising out of job support schemes
This article discusses covid-19 support schemes, litigation challenges and the impact on employment law, with a key focus on the coronavirus job retention scheme (CJRS) and its successors – the job support scheme (JSS), open JSS and closed JSS.
The CJRS was eligible to employees paid through PAYE and had received a payment on or before 1 March 2020.
Under the scheme, employers placed employees on a leave of absence (furlough).
Furloughed employees were not permitted to work and the government paid 80 per cent of their wages, up to a maximum of £2,500 a month.
Each period of furlough lasted a minimum of three weeks.
Employees dismissed between 29 February and 18 March 2020 could be rehired and placed on furlough.
The scheme was initially intended to last until 30 June 2020, but on 12 May it was extended, in modified form, until 31 October 2020.
From September, government support slowly reduced with government contributing as follows:
- In September 2020, up to 70 per cent of wages and the employer paid 10 per cent.
- In October 2020, up to 60 per cent of wages and the employer paid 20 per cent.
- From September, employees could start working part time.
Employers needed to pay employees for the time they worked, as well as national insurance contributions and pension contributions.
The £2,500 monthly cap was proportionately reduced to reflect the percentage time an employee was not working.
To encourage employers to retain employees, the government will pay employers a bonus of £1,000 per furloughed employee brought back to work and retained until 31 January 2021.
LITIGATION AND THE CJRS
The High Court in Re Carluccio’s Ltd (in administration)  EWHC 886 (Ch) confirmed that employees could be furloughed even where the employer was in administration.
This meant that employees’ wages would rank ahead in priority of the administrators’ expenses and payments.
The CJRS survived a judicial review challenge in R (on the application of Adiatu and the IWGB) v HM Treasury  EWHC 1554 (Admin).
The claimants were an Uber driver and his union, the Independent Workers’ Union of Great Britain.
Uber drivers were described by the court as occupying an intermediate status between those working under a contract of employment and the genuinely self-employed, referred to as ‘limb b workers’.
At the time of writing, the employment status of Uber drivers is being determined by the Supreme Court in Uber v Aslam and others.
In Adiatu, the claimants alleged that the CJRS was unlawful because it only included workers paid by PAYE and thus discriminated against ‘limb b workers’ contrary to article 14 of the European Convention of Human Rights (prohibition from discrimination) and protocol 1 of article 1 (right to peaceful enjoyment of property).
The court dismissed the judicial review as it found that basing the CJRS on PAYE was essential to its rapid delivery.
Lord Justice Bean and Mr Justice Cavanagh emphasised that the CJRS had been “created in circumstances of the utmost urgency to provide help to millions of furloughed employees by seeking to preserve their jobs at least during the worst of the crisis”.
THE JOB SUPPORT SCHEME
On 24 September, the chancellor of the exchequer announced the JSS. This was to be open from 1 November 2020 and to last until 30 April 2021.
The JSS provided that workers would receive 66 per cent of their monthly wages up to a cap of £697.92.
The government and the employer would each pay 33.3 per cent of wages in relation to hours not worked by the employee.
There was considerable criticism that JSS did not go far enough.
Many businesses were unlikely to be able to afford to pay a third of workers’ wages and would be forced to make redundancies.
On 22 October, the chancellor announced significant changes to JSS. Notably there would now be two schemes:
- JSS open, applying to businesses which could continue to stay open but were facing decreased demand due to the pandemic; and
- JSS closed (to be wholly funded by government), applying to businesses which were legally forced to close their premises.
These will be reviewed January 2021.
IMPACT ON EMPLOYMENT LAW
At its peak on 8 May 2020, 8.9m employees were placed on CJRS. The Bank of England has warned that as many as 2.5m people could become unemployed by the end of the year following the closure of the CJRS.
In light of the more generous terms of JSS open and JSS closed, there will be hopefully fewer redundancies than at first predicated.
Employment law issues that are likely to arise out of the ending of the CJRS and the introduction of JSS open and JSS closed include redundancies, unfair dismissal and discrimination cases.
The aviation sector has been particularly impacted due to the pandemic and government travel quarantine restrictions.
High profile UK redundancies include EasyJet announcing 4,500 job redundancies and the closure of three of its bases; and Swissport announcing 4,500 redundancies.
Employers who carry out redundancies should remember that:
- A fair redundancy process needs to be followed for employees who have been employed for at least two years.
- A fair redundancy process requires consultation with the employees, considering alternative employment and using fair selection criteria.
- Particular attention needs to be paid to ensure non-discriminatory selection criteria are used.
- Collective redundancy procedures should be followed where an employer proposes making more than 20 redundancies.
STATUTORY SICK PAY
Government has also introduced several changes to statutory sick pay (SSP) through the Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020.
Those eligible for SSP was widened to include people who are:
- Shielding because they have an underlying health condition.
- Isolating at home for seven days because they have coronavirus.
- Isolating at home for 14 days because a member of their household has suspected covid-19 or they have been advised to do so by the government’s track and trace system.
It’s not available for employees who need to isolate because they have recently travelled abroad.
The government has made it easier to claim SSP. It can now be paid from the first instead of third day of sickness leave.
Employees can also self-certify the first seven days of sickness absence, then obtain a further certification from the NHS website.
Employers with less than 250 employees will be able to claim back 14 days of SSP per employee from the govern-ment.
LITIGATION AND SSP
These changes to SSP were challenged in Adiatu on the basis that the measures did not go far enough because SSP had not been temporarily extended to ‘limb b workers’ such as Uber drivers; and the £120 minimum earnings threshold was not suspended.
The claimants therefore argued that the measures discriminated against women and black and minority ethnic (BAME) employees as these tended to be less financially well-off groups.
The court dismissed the judicial review on the grounds that SSP was a welfare benefit within the government’s sphere of competence and that the coronavirus pandemic called for urgent action.
The judgment demonstrated the court’s reluctance to become embroiled in welfare benefit decisions, particularly in a time of national crisis.
The court noted that there were other measures of financial assistance to limb b workers such as the self-employment income support scheme (SEISS) and government loans.
THE HOLIDAY RULES
Lastly, new changes have been introduced by The Working Time (Coronavirus) (Amendment) Regulations 2020 permitting employees to carry forward annual leave, where it has not been reasonably practicable to take the leave due to the pandemic.
The advantage is that it gives the employer greater flexibility in deploying its workforce.
The danger is that employees become overworked, which exposes employers to potential personal injury claims.
This is hopefully counterbalanced by the fact that employers can only refuse a request for annual leave where they have ‘good’ reason.
A ‘good’ reason is likely to include the fact that the employer is providing an essential service and other employees are isolating.
Bianca Venkata is a barrister at Outer Temple Chambers outertemple.com