COVID-19 EXPERT LEGAL INSIGHTS

Employment Law FAQs for Senior Executives, Directors and Officers

Last updated: 21 May 2020

The following FAQs set out the key employment law questions that may arise at this time of crisis.

Please note that the questions and answers on this page are for general information only and must not be used as a substitute for legal advice. You should always take legal advice which is tailored to your specific circumstances.

Our business is very severely affected by the coronavirus crisis. All members of the senior team (including me) are being asked to take a substantial pay cut (or deferral). How should I react and what factors should I take into account?

  • You cannot be contractually required to accept a pay cut or deferral – except if there is already a mechanism in your contract of employment allowing cuts or deferrals to be made by the employer, which would be unusual.
  • However, you should be aware that (even if there is no overt statement that your job is at risk) your reaction to the proposal may affect your future job security.
  • In addition, if pay cuts or deferrals cannot be agreed, the business may be at greater risk of failing altogether. Read our blog: Taking a pay cut, is it the right thing to do?
  • You should review your personal financial situation, to check whether you will need to reduce outgoings and if so how (for example through a mortgage holiday, school fee refunds/deferrals and/or cuts to non-essential expenditure).
  • You should seek as much information as you can about the financial position of your employer and the steps being proposed to deal with the crisis more generally.
  • In particular, you should assess whether the proposed senior pay reduction is proportionate in the context of the severity of the situation and the other steps being proposed – such as furloughing of employees under the Government’s job retention scheme; pay reductions at more junior levels; discounts/reductions from suppliers, service providers and/or landlords and the use of loan support and other measures under the Government-backed schemes.
  • You should consult carefully with your colleagues within the senior team.
  • If you are to accept a cut or deferral, we would suggest that:
    • The agreement should be documented in writing;
    • It should be agreed that the reduction or deferral will be temporary, with a specified timeframe (say 3 months?) after which it will cease or, at least, be reviewed;
    • Any potential knock-on effects (for example, on pensions contributions or life insurance arrangements) should be clearly dealt with;
    • Preferably, the agreement should confirm that the same terms are being applied to a specified group of executives;
    • Preferably, the agreement should provide that once full pay has been reinstated and subject to the reasonable cash-flow requirements of the business, any held-back pay will be paid by instalments;
    • Preferably, the agreement should provide that if your employment is terminated by the employer before all held-back pay has been paid to you, it will be paid on or before the termination date.

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As result of the crisis, I’ve been told that the business unit I run is likely to be closed and that the whole team faces redundancy, including me. What should I do?

  • You should obtain as much information as you can from your employer about the proposal to close the business unit and the reasons behind it. As leader of the unit, you will probably already be aware of much of the background, but it is still worth asking questions and testing your own perceptions against those of your employer.
  • You should consider whether other steps could be taken which would allow the business unit (or part of it) to survive. As well as the usual steps that should be considered in “normal” times, these may include:
    • whether the senior executive team should accept a pay cut (see above);
    • whether employees should be furloughed under the Government’s job retention scheme (but note that only those who have already been furloughed at some point between 1 March 2020 and 30 June 2020 can be furloughed after 1 July 2020. See our Employer FAQs on the Coronavirus Job Retention Scheme);
    • whether more junior employees should be asked to take a pay cut (either as furloughed employees or as active employees);
    • whether the business unit (or part of it) could quickly adapt, for example by switching to providing on-line, home-delivery or video-based services;
    • whether suppliers, service providers and/or landlords could be asked to make cost reductions;
    • the extent to which the business unit could benefit from support under the Government-backed schemes relating to business rates, taxes and loans.
  • It may also be worth pointing out to your employer the moral issues and reputational damage likely to arise from the implementation of mass redundancies in the current crisis, while other options such as the Government’s job retention scheme are available and when employees in many sectors are likely to find it virtually impossible to find other paid employment.
  • Taking the above into account, consider putting together a case for an alternative proposal: you will obviously need to move quickly.
  • Assuming that you are not able to have the proposal shelved, you should ask about the role your employer expects you to play in the process. For example, you might well be asked to consult with members of your team about their prospective redundancy.
  • From your perspective as a manager:
    • ensure as far as possible that your employer is taking sound legal advice in relation to the proposal;
    • if you do not feel that you can, in good conscience, carry out your employer’s instructions, you could decline to do so. However, you should be aware that this may well lead to immediate termination of your employment.
  • From your personal perspective, as well as the usual considerations regarding potential redundancy in “normal” times, consider:
    •  if necessary, whether you can benefit from crisis-related financial support, such as through a mortgage holiday;
    • whether your skills are adaptable for use in sectors that are not so adversely affected by the crisis, or which are likely to come back strongly after the crisis is over;
    • whether you can take advantage of enforced downtime by building your CV/reputation, for example through on-line training, insightful sector-related commentary on social media and/or volunteering opportunities.

End

I am concerned about the impact of the crisis on our business. What can I do to increase my chances of keeping my job? 

  • You should ensure that you are able to work as effectively as possible in the new environment. For example:
    • if you are working from home, ensure that you are able to use the relevant technology effectively. If necessary, ask for on-line training, or ask technology-savvy friends (or kids!) to help you out;
    • ensure that you are available by email and telephone, at least during business hours;
    • structure your day, as much as you can, so that when you are working you are subject to as little distraction as possible;
    • if you have care responsibilities which mean that you cannot work effectively on a full-time basis, consider discussing the situation frankly with your employer. Although this may result in a proposal to reduce your pay on a pro-rata basis, it may mean that you are more likely to retain your job if and when redundancies are considered.
  • Even if you are working remotely make sure you are visible, without being annoyingly showy or needlessly distracting! Communicate with people, in a structured, supportive and thoughtful way, even more than you would normally.
  • If you manage a team, make sure you keep managing. Organise video meetings and video social events. Have 1:1 meetings and conversations with team members. Look out for team members who may be ill, vulnerable or over-burdened with the combination of work and domestic responsibilities (even though you may feel overburdened yourself!).
  • If you are a member of a team, make sure you show up for video or phone meetings and participate constructively in them.
  • Prepare for video or phone meetings in greater depth than you would for physical meetings. You will need to listen very carefully; it may be more difficult to get your points across and you may need to be more concise.
  • Avoid dominating video or phone meetings. Allow others to make their points.
  • Use summaries to check that everyone understands what is going on and what actions are required (by whom and by when) as a result of meetings.
  • Make sure that any actions assigned to you are carried out on time.
  • Make sure that you are up to date on any new metrics being used to measure your performance and output, and be sure to engage with these. If you are not sure, ask.
  • If you are ill to any material extent, report it your employer. If you become seriously ill, stop working and focus on your health.

End

Will my bonus be affected by the downturn in work?

  • This will depend upon the extent and length of the downturn, the nature of your bonus, and the relevant period covered by it. 
  • Cash bonus arrangements tend to fall into three main categories:
    • Guaranteed bonus – your employer is contractually obliged to pay you the agreed bonus, at the agreed time, provided you meet the specified conditions.  The conditions usually include that you remain employed and not under notice, but there may be others. In theory, guaranteed bonuses should not be affected if the specified conditions are satisfied. However, bear in mind that a “guarantee” may not be worth anything if your employer becomes insolvent. In addition, you may be asked to agree to give up or defer a guaranteed bonus in view of the impact of the crisis.
    • Contractual bonus, linked to specific criteria and/or targets – these kinds of bonus are generally linked to personal and/or company performance, and so a downturn in work or profitability is very likely to have an adverse  knock-on effect to your bonus. Again, even if you are contractually entitled to a bonus, you may be asked to agree to give it up or defer it, in view of the impact of the crisis.
    • Discretionary bonus – generally employers have a wide discretion regarding these types of bonus. Again, a downturn in work or profitability is very likely to have an adverse knock-on effect.  
  • You may feel that you are being treated unfairly or unlawfully regarding a bonus reduction, deferral or non-payment. If your bonus is guaranteed or contractual, you may still have a legal right to it, despite a downturn in business. Even if your bonus is discretionary, it is worth considering whether you are being treated similarly to your colleagues.  In the current context you should be aware that arguments about bonuses are unlikely to reach sympathetic ears. Consider parking the issue by reserving your rights in writing, allowing you to revisit it when the crisis is over.
  • You should also familiarise yourself with the terms of any applicable LTIP arrangements. In most sectors, any share-based or similar arrangements will currently be very deeply underwater, but may bounce back in a recovery.
  • If your role is critical to the business’s ability to address the challenges it is facing and/or you are having to work exceptionally hard, you may want to revisit your bonus and other incentive arrangements with your employer.

End

I am struggling to work effectively from home because of not having the appropriate set up / my caring responsibilities / feelings of isolation. What can I do?

Home set up

  • You are not alone in finding adaptation to the new environment difficult.
  • Communication with your employer is key. Do not suffer in silence.
  • If you are expected to work from home, your employer has obligations to take reasonable steps to ensure that you have a safe working set up. Additional obligations may arise (for example to provide equipment and/or make reasonable adjustments for you) if you have a disability.
  • Many people already have effective office facilities at home and/or can adapt existing space, equipment and furniture to provide a suitable workstation. However, you may have particular needs, perhaps arising from a chronic disability (such as a back condition). If so, you should tell you employer about it and about any suggestions you may have for furniture or equipment which could help you carry out your work effectively.
  • If you need training in using any equipment or software, you should identify it and ask for it. Free or inexpensive training is often available online. Alternatively, ask a colleague to help out by talking you through it over the phone and allowing you to practice using it.

Caring responsibilities

  • Many people are struggling to juggle working from home with looking after children who would usually be in school or nursery. Others are having to look after elderly relatives who live with them, without assistance from external carers. Space and tranquillity are at a premium in many households across the country!
  • Try to structure your working day so that caring responsibilities are shared (if possible) and that everyone knows when you are working and should not be disturbed except in an emergency.
  • Try to find a space to work in (however small) where you can shut the door.
  • If, in reality, it is not possible for you to continue to work your normal contractual hours, you should consult with your employer. Some employers will be prepared to be flexible and will allow you to work different patterns of hours which suit your circumstances. If you are unable to work the same number of hours in total, your employer may propose paying you on a pro-rata basis on a temporary basis.
  • If you have 26 weeks or more continuous service, you have the right to make a formal flexible working request to change your working pattern. However, in the current situation, it would be preferable to agree an informal arrangement with your employer rather than seeking to rely on formal rights which impose an administrative burden on your employer.

Isolation

  • Perhaps ironically, you are (figuratively at least) in good company if you are having to live and work at home on your own and/or if you miss the social aspects of work.
  • Try as much as possible to keep communicating with your colleagues by phone and video. Suggest and take part in video social occasions and meetings.
  • Unless you are self-isolating or shielding, reach out to help neighbours who may be vulnerable, even if you don’t know them.
  • Build yourself an exercise regime and stick to it. This can be both indoors and (for one session a day) outdoors, provided you stick to the social distancing rules.
  • If you believe your mental health is suffering seek medical help and inform your employer. If you are having difficulties getting through to your GP, mental health charities are an alternative source of help and advice.

End

How will my working from home be monitored?

  • Your employer should have relevant policies in place such as an employee monitoring policy, use of IT and office equipment, data protection and/or homeworking policy.  Make sure to familiarise yourself with these and keep up to date with any changes or new policies that are issued.
  • If you are unsure how your work targets, output and performance will be measured, consider asking your manager for clarification. 
  • If you need to vary your working hours (perhaps because of caring responsibilities), you should consult with your employer.
  • When working from home, more of your interactions with colleagues and clients are likely to be in writing, for example on chat platforms or emails.  This written evidence is saved and searchable, and tone is more easily misinterpreted than face to face conversations.  Be mindful of this and only send something that you would be comfortable to have shared publicly. 
  • You may be asked, or decide, to use your personal electronic devices for work purposes.  Check if your employer has a policy that covers this before doing so.  Familiarise yourself with your employer’s policy in respect of monitoring data created on your personal device, on your employer’s behalf.  Failure to protect the confidential information of your employer could lead to disciplinary action.

End

I am currently under investigation by my employer/regulator. How will an internal investigation be carried out at this time?

  • In our experience, employers are still proceeding with internal investigations, whether they be grievance, misconduct or performance investigations.  ACAS has issued relevant guidance for employers  and you should familiarise yourself with this guidance and the steps your employer has taken to comply.
  • These investigations still require evidence from the complainant(s) and witness(es).  Meetings or hearings may take place via phone or video call, rather than in person.  You could also be asked to submit your evidence in writing.
  • It is important to carefully consider the impact of this on your situation, and discuss this with your legal adviser.  In some situations, a written statement will be the most appropriate option, but this should be considered against the fact that it can be less impactful and persuasive in practice.
  • Conference and video calls allow the opportunity to have a dialogue and clarify points as you go.  However, they are also easier to record.  Consider whether this is in your best interest and something you will agree to.  You may be asked to confirm that you are not recording the meeting.

End

From a regulatory perspective, what are the considerations I need to take when my work is at home?

  • Any regulatory rules which apply to you will apply equally while you are working from home.
  • You should ensure that you comply with all systems which are designed to protect confidential information and personal data, including IT and data protection policies and protocols, such as those concerning the use of work and personal IT devices and systems.
  • Ensure that any confidential information (whether in physical or digital form) is kept securely, particularly when you are not working on it.
  • Avoid putting confidential waste unshredded into public refuse bins.
  • Maintain your professional persona and standards with clients and colleagues, even though you may be working in difficult domestic circumstances.
  • Avoid any temptation to open the drinks cabinet before finishing work.
  • Particularly if other members of your household are engaged in similar or related work which could involve conflicts of interest, try to ensure that calls and video meetings are conducted out of earshot. Where necessary, agree suitable protocols with members of your household.
  • Make sure that any voice-based services (such as Siri or Alexa) you may have at home are turned off during any calls or video meetings, to maintain confidentiality.
  • When working from home, more of your interactions with colleagues and clients are likely to be in writing, for example on chat platforms or emails.  This written evidence is saved and searchable, and tone is more easily misinterpreted than face to face conversations.  Be mindful of this and only send something that you would be comfortable to have shared publicly.

End

I’m working in the UK on a Tier 2 (General) visa. I’m worried that I will be dismissed/made redundant as my employer is unable guarantee work at this present time. What do I do?

  • Consider talking to your employer about unpaid leave. Employers normally have to stop sponsoring employees on Tier 2 visas if they take more than 4 weeks’ unpaid leave in one calendar year. The Home Office has confirmed that this 4-week limit does not apply if the employer considers that there are exceptional circumstances. The Home Office recognises that the current situation is exceptional. It has said that it will not take any compliance action against employees who are unable to attend work due to the coronavirus outbreak, or against employers which authorise absences for this reason and continue to sponsor employees.
  • If your employment is terminated your employer will have to report the end of your sponsorship to the Home Office within 10 working days of the last date of your employment. This usually leads to a curtailment notice – an email, letter or text message – telling you that you have 60 days to leave the UK or make an application to the Home Office to stay. If you find another job with a licensed sponsor this could be a Tier 2 (General) change of employment application, or if your spouse or partner is a British citizen you may be able to apply to switch into the partner visa category.
  • In practice the Home Office does not always send curtailment notices so you may have more than 60 days to make your next move. If you want to stay in the UK, you should not travel outside the UK after your employment has been terminated. If you do travel you could have trouble getting back into the UK, and if you receive a curtailment notice while you are outside the UK your Tier 2 visa will immediately lapse and you will be hit by the 12-month cooling-off period.
  • For more information see our coronavirus immigration FAQs or contact a member of our immigration team.

End

My pay is largely based on commission, what do I need to understand in this time crisis?

  • Most commission arrangements are formally documented. These terms are often not referred to when things are going well, but are crucial when things are not.
  • It may be that you are expecting a large commission payment for the last quarter, but you are concerned that your employer may withhold or delay payment as a result of on-going events.
  • Make sure to check the terms of your scheme carefully.  It is important to understand not just how your performance will be measured and your commission will be calculated, but also any conditions related to payment, particularly when the payment is due.  Consider taking advice to ensure you understand your entitlements.
  • Consider the extent to which your entitlements are automatic, or your employer is able to exercise its discretion.  If a large proportion of your earnings are commission based, then in our experience it is more likely to be a guaranteed contractual entitlement.
  • Your employer may have partial discretion, such as over matters such as the setting of targets and commission rates, the timing and conditions of payment and the circumstances in which an employee would forfeit commission. If that is the case, consider taking steps to ensure clarity over the expectations placed on you.  Do targets need to be reconsidered due to external events, for example?

End

My employer has dismissed me, what can I do to safeguard my future?

  • Your legal rights remain unchanged by the crisis.
  • We will not repeat here our general guidance for executives who have been dismissed. However, there are some additional points to bear in mind in the current situation:
    • If you were dismissed on or after 28 February 2020, your employer may be prepared to reinstate you and put you on “furlough” under the Government’s Coronavirus Job Retention Scheme, even if you are not re-employed until after 19 March 2020.In reality, your employer is most likely to consider this option if the reason for your dismissal was redundancy. This would enable your employer to claim 80% of your pay up to a maximum of £2,500 per month from the Government from the date on which you were furloughed through the scheme. Your employer would not be obliged under the scheme to top up the Government-funded element to your full contractual pay, but may be prepared to do so. You should ask your employer about this as soon as possible.
    • You should review your personal financial situation, to check whether you will need to reduce outgoings and if so how (for example through a mortgage holiday, school fee refunds/deferrals and/or cuts to non-essential expenditure).
    • You should consider whether your skills are adaptable for use in sectors that are not so adversely affected by the crisis, or which are likely to come back strongly after the crisis is over. Even taking a low-skilled job (such as in a supermarket) may help to tide you over and, in this time of crisis, may enhance your CV.
    • You should also consider whether you can take advantage of enforced downtime by building your CV/reputation, for example through on-line training and education, insightful sector-related commentary on social media and/or volunteering opportunities.

End

If you would like any further information or advice about the issues explored in this blog, please contact any member of our employment law team.

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