Coronavirus Legal Briefing | Employees, furloughing and testing

Furloughing becomes flexible

Our most-read recent Insight explains the UK's introduction of 'flexible furloughing' from 1 July 2020, and the closure of the existing furlough scheme – the Coronavirus Job Retention Scheme, to give it its proper name – to new entrants.

At the same time as announcing flexible furloughing, the government gave details of new employer contributions to the costs of furloughing. Those contributions will start from the beginning of August, and will increase through September and October.

Government support for furloughing will stop at the end of October. There will be intense interest from those sectors worst-affected by the pandemic – such as travel, retail and hospitality – as to whether sector-specific furlough schemes may continue after October. So far, no signs of that from Whitehall.

Our follow-up Insight then discusses three actions for employers, after the publication of detailed guidance from the government on how flexible furloughing will work, and looks at strategies for controlling workplace costs.

Clawback

What the government gives, it can also seek to take away. From the introduction of the furlough scheme it was made clear that incorrect use of the scheme would lead to clawback by HMRC.

The consultation on this clawback regime has now been published. As my colleagues write in this Insight:

How this regime will work will have a big impact on managing risk for businesses and stakeholders such as auditors, investors, purchasers and insurers…the signs are that the regime will be harsher than was expected by us and others, with the burden being on users of the Scheme to show they were entitled.'

The article also discusses actions employers should take to manage any risk, including the importance of accurate recording of decisions made and considerations taken into account when deciding to use the furlough scheme.

Medical monitoring and testing of employees, customers and others

Businesses are reopening and returning to offices as lockdowns relax. A pressing consideration will be the extent to which businesses undertake any medical monitoring and testing on employees, visitors, customers and other people entering their premises.

Our international privacy and data team cover issues around monitoring and testing in this Insight, concentrating on two questions: – what exactly do you want to do and where do you want to do it? – It also considers privacy issues to bear in mind.

Expenses, benefits, and executive remuneration

HMRC has published guidance on how to treat expenses and benefits provided to employees during the pandemic, which we discuss here, and has also published advice for people choosing to give up their income to support their business or donate to charity during the coronavirus pandemic, which we cover here.

Various institutional investor bodies have issued guidance on executive remuneration; my colleagues briefly review that in this Insight.

Supply contracts: big changes to be imposed by legislation

Away from employee and related matters, the Corporate Insolvency and Governance Bill, currently progressing at speed through Parliament, contains a fundamental change to the operation of most supply contracts. As my colleagues explain:

The provisions mean that termination on insolvency clauses in most contracts for the supply of goods or services will cease to have effect when the customer becomes subject to a‚ relevant insolvency procedure. The intention is to help companies trade through an insolvency process and improve the prospects of a company‚ rescue. But the changes put suppliers at risk and they should consider amending their contracts to ensure they have other levers to protect their position.'

There are limited safeguards for suppliers, some companies and services are excluded from these provisions in their entirety, and there are some short-term exclusions for small suppliers.

These supply contract provisions will apply to insolvencies from the date the Bill takes effect, but will be retrospective in the sense that they will apply to contracts that are in force before that date.

More Insights and webinars

Our Insights on coronavirus legal issues are collected here. We also run an ongoing webinar programme which‚ and this may be a relief‚ ranges across not just coronavirus but also many other topics of interest for business.

Please do speak to either your usual Osborne Clarke contact or me if you would like to discuss the topics covered in this newsletter.