12 May 2020

Six weeks on from the announcement of lockdown and the subsequent closure of all non-essential retailers, we consider the post-lockdown landscape and how retailers can plan to re-open safely and sustainably.

Life after furlough

On 12 May 2020, Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) would be extended by a further four months until the end of October 2020. This will be welcome news to retailers, although the exact details won't be known until later this month. It appears that the government has listened to industry and trade union demands to introduce "part-time furlough". However, whilst employees will retain the right to 80% of their normal pay, up to a maximum of £2,500 a month, employers will now have to share some of that cost by topping up pay to those limits with the CJRS covering the balance.

Whilst non-essential shops might be allowed to re-open in June, a return to normal will take some time. With social distancing measures and lower footfall until lockdown is eased and consumer confidence returns, it is likely that fewer staff will be needed in stores. As long as furlough remains an option, retailers will need to work out whom to bring back from furlough in the initial weeks. Those retailers who had to close their shops at short notice would have had few issues about fair selection when stores first closed, but potential discrimination and general fairness will be a concern when bringing back staff on a staged basis. The apparent right to take back employees for part of their normal hours only may make such decisions easier in practice.

It is hoped that employers reserved the right to bring employees back from furlough on short notice when they first sent their employees home. Where the return is to be on the employee's usual contractual hours and pay, there are unlikely to be practical difficulties. However, should the employer need employees to return on fewer hours and thus reduced pay, it is unlikely that the original furlough agreement covered such contractual variations. A period of consultation leading to agreement with the employee will therefore be needed, which may require some effort on the part of the employer at a time when a skeleton head office staff is likely to be busy covering a myriad of other tasks in preparation for store opening.

Whilst employees during the initial lockdown may have been unlikely to object to being furloughed and taking a reduction in pay, for fear of facing redundancy and with a general acceptance that the circumstances were unprecedented, it remains to be seen whether they will be equally co-operative once lockdown is relaxed but employers may not be ready for all to return. No doubt a robust approach might be taken by some, but retailers will be aware that a reduction in pay without the employee's agreement can lead to claims for unlawful deduction from wages or breach of contract, or even constructive dismissal.

It is important to note that if employers bring back an employee before 21 calendar days have lapsed from the beginning of furlough, they will be unable to recover payment from HMRC.

Redundancy options

Despite the significant assistance provided to retailers by the furlough scheme, there is no doubt that the effect of the current lockdown on many retailers will be significant. Some well-known brands are already in administration and more may follow. Even those retailers which will return to the high street might be thinking carefully about whether to reopen all of their stores. Redundancy programmes are therefore to be expected.

The current circumstances may seem to make for straightforward redundancy cases as the closure of an entire store will undoubtedly meet the definition of redundancy, but it is nevertheless important that employers pay particular attention to whether the procedure and process is fair. Where 20 or more redundancies within a 90-day period are expected at any one establishment (which in retail usually, but not always, means at any one shop) collective consultation with a recognised union, or elected employee representatives, is required. Whilst the extension to the furlough scheme may have taken the pressure off retailers to urgently consider whether they expect to have to make redundancies at the end of June, redundancies may still be required in the longer term. If that is the case, and if there is no realistic possibility of certain roles being retained, retailers may prefer to commence redundancy consultation in the near future whilst employees' salaries are still being fully supported by the furlough scheme. Consideration must be given as to whether and how individual and collective consultation can be undertaken effectively whilst employees are not physically present at the workplace. Employers have been warned not to allow employees to undertake any work for their own employer whilst they are furloughed, but it has been confirmed that acting as an employee representative would not breach the terms of the scheme. There should therefore be no impediment to employers carrying out redundancy consultation at this time, but clearly additional sensitivity will be required when conducting such processes remotely.

Unwillingness or inability to return to work

The prospect returning to work may be a welcome relief for some, but no doubt many employees will feel anxious and uneasy about their return. The Government's COVID-19 Secure guidelines will be the starting point for ensuring that the workplace is safe and should help reassure staff and customers alike. Please refer to our FAQs on Keeping Workers Safe. Even with all required steps undertaken, retailers should not underestimate the importance of taking into account employees' concerns and work with them to ensure that employees will feel safe to return to their workplaces.

Even where retailers are ready to open, and employees in general happy to return, there will be some for whom return to work will be difficult. There are a variety of reasons why an employee may not want to return to work immediately and sensitive handling will be required. The employee's reasons for not wanting to return should be explored to see whether a solution is possible.

Particular care will need to be taken with those employees who are vulnerable due to underlying health conditions or who live with a vulnerable person and therefore wish to shield themselves during this period. Some of these employees may themselves be disabled and so should not be discriminated against and employers should proactively consider whether any reasonable adjustments are required.

Another category are those employees with children who remain at home. Although it is currently envisaged that some children might go back to school in June, many more will be staying at home throughout the summer. As alternative childcare is unlikely to be available, it may simply not be possible for some parents to return to work.

Employees may be legitimately concerned about travelling to work on public transport where social distancing may prove impractical. Whilst an employee is entitled to take reasonable time off as "dependant leave" this is only meant for short periods of time to make arrangements for the longer term and there is no statutory obligation on employers to pay the employees for the time off. Employees could seek to take unpaid parental leave or make flexible working requests. However, rather than push employees down these formal routes, a negotiated short-term arrangement is likely to be preferable. In any event it is important that employers apply policies fairly and consistently to avoid discrimination in its decision making.

Where a compromise cannot be found, it may in certain circumstances be fair to dismiss, but caution should be exercised in the current circumstances as it may be difficult to prove that dismissal is a fair sanction.

Attributed by Sarah White, Trainee Solicitor