COVID-19: the implications for EPL claims

‘Furlough’, eh? Who would have thought that this previously obscure word would become so familiar to all of us involved in employment law claims. The last couple of months have certainly been interesting times for our sector as the country has grappled with challenges to normal working arrangements that are unprecedented in modern times. In this article, we consider the effect of the COVID-19 pandemic on employment practices liability (EPL) claims both immediately and in the longer term.

Current EPL claims

The pandemic has had an immediate impact on large numbers of current EPL claims.

Under a Direction issued by the Presidents of the Employment Tribunals of England and Wales and Scotland on 19 March 2020, all in-person trials and other substantive preliminary hearings that were due to commence on or before Friday 26 June 2020 have been vacated and re-listed instead for telephone case management hearings, with a view to rescheduling the matter at some future date.

All existing case management directions orders in such cases (i.e. in respect of disclosure, witness statement exchange etc.) are also likely to have been suspended pending variation at the case management hearing.

Accordingly, the determination of a large number of claims shall now be delayed until a later date. The extent of that delay is yet to emerge, and will vary from employment tribunal region to region, but it could be significant given:

• The uncertainty as to whether in-person hearings will definitely resume after 26 June 2020, or to what extent, or what conditions may apply; further Presidential guidance is expected after the next scheduled review on 29 May 2020.
• The volume of cases that will need to be re-listed; at least three months of substantive tribunal hearing time will have been lost.
• The requirement and availability of full employment tribunal panels in more complex cases that require multiple-day trials; claims involving discrimination or whistleblowing for example typically require a tribunal panel of three members rather than a judge sitting alone as is the case in more straightforward claims such as unfair dismissal. Ensuring an available panel over a sustained period often means such claims are ordinarily listed a number of months into the future, if not longer, and that timescale is likely to be elongated further in the current situation.
• The schedule of other cases already listed for hearings; the tribunal’s availability to hear postponed cases will of course be stretched given that there will be many other claims that were already listed for trial after 26 June 2020 and which have not been vacated. There is no indication, currently, that such cases might be ‘bumped’ in favour of hearing older cases that were vacated due to the pandemic.
• Employment tribunal hearing venues may not be able to accommodate the same number of people given the ongoing social distancing guidance that is anticipated to last for some time; so whereas a tribunal hearing venue might typically have been able to accommodate several separate trials taking place on the same day during normal times, with a number of witnesses, advocates and observers utilising communal waiting rooms and facilities, the number of trials taking place at any one time may need to be reduced, in turn causing further delay to the rate at which cases can be listed for hearing.
• Potential limitations on public transport; limitations or delays in using trains and buses, plus the finite availability of local car parking facilities, may also affect the ability of the parties to attend a hearing centre on any given day.
• Limited remote hearing technology; it is unlikely, in our view, that remote video hearings will provide a significant solution in the near future - the logistical, technological and judicial challenges of conducting all but the most basic of hearings remotely are significant, particularly in a jurisdiction where one or both parties are often unrepresented.

So, after a period of lull taking us up to at least the summer of 2020, we can expect in due course to see a large backlog of trials and other hearings begin to be relisted, but we are likely to see a slower rate of hearings taking place and longer-than-usual delays in re-listing matters.

For the same reasons, we can similarly expect to see a greater period of delay in current EPL claims that were not already listed for trial.

Finally, as regards current EPL claims that already have trial dates scheduled for 29 June 2020 onwards, we may also see a number of postponements of such hearings if ongoing social distancing restrictions mean that the particular tribunal venue has reduced capacity on any given day, or if the parties have been unable to adequately progress case preparation during the lockdown period.

Settlement

The impact of COVID-19 on EPL claim timescales may in many cases affect the parties’ attitude towards settlement.

Claimants may in many cases be more keen to explore early settlement given the delay in their claim reaching trial and/or because of heightened personal economic pressure caused by the current situation. Conversely, in order to protect cash flow during economic downturn, employer Insureds may be less willing to settle claims in cases where the settlement sum may involve amounts that fall within a policy excess or are otherwise not covered.

New EPL claims

In our view, the number of new EPL claims is likely to dip in the current period and then begin to rise as the lockdown eases.

Reduced working time and physical attendance at normal workplaces means that, in the shorter term, there is less activity by, and less interaction between, employees that might generate typical EPL claims; for instance, less working time and normal attendance should in theory mean fewer incidents of misconduct, discrimination, poor performance and other typical scenarios that generate EPL claims.

In addition, there is likely to be a delay in new EPL claims being processed by the employment tribunal – the tribunal system, like many other employers, has had to cope suddenly with lockdown working conditions that will inevitably mean slower processing times from receipt of a new ET1 by the tribunal to the notification of the Insured.

There is also likely to be a delay in new claims being notified to insurers by Insureds. Typically, the tribunal will serve a new EPL claim on the employer by post. Many Insureds, particularly smaller businesses who may have temporarily closed or furloughed a number of staff, may be checking post less frequently and otherwise have reduced ability to properly notify the claim to insurers.

That said, we expect that new claims involving typical EPL scenarios are likely to resume and get back to normal levels as the lockdown eases in the months ahead.

COVID-19 specific EPL claims

We may also see a rise in certain types of EPL claims specific to the effect of the COVID-19 pandemic, in particular claims about:

• Furlough, lay-off, and other reductions to pay and working time. For instance, there may be a number of claims by employees who allege that furlough or other pay reduction measures were imposed unlawfully and that Insureds are therefore liable for wages deductions, breach of contract and/or constructive dismissal. Similarly, we can envisage discrimination claims about how employees were selected for wage reduction measures. Or we may see claims about the correct calculation of furlough pay.
• Redundancy. Whilst many redundancies have been avoided through the furlough scheme and other measures in the short term, there will nevertheless sadly still be a number of redundancies in many industries as a result of the crisis in the medium and longer terms, and this is likely to generate EPL claims. For instance, claims for unfair dismissal and/or discrimination as to redundancy selection, claims in relation to redundancy payment entitlement, and claims in relation to collective redundancy consultation duties.
• Insolvency and TUPE. A number of businesses may enter insolvency proceedings and/or may be acquired by other businesses in circumstances of distress. In such scenarios, EPL claims may arise in relation to employment rights upon insolvency and/or as regards TUPE consultation obligations.
• Enforced working. In many industries employees have continued to attend work throughout the pandemic, and we are now beginning a phase of greater encouragement to return to work for those who cannot work from home. In some cases, employees who refuse to attend work may be disciplined or dismissed and will pursue claims, including claims for detriment or automatically unfair dismissal on health & safety or whistleblowing grounds, citing concerns about the safety of working during the pandemic and their employer’s adherence to official ‘COVID-secure’ workplace guidance.
• Enforced holiday. Many employers have required employees to take annual leave entitlement during the lockdown period. It is possible that we will see EPL claims from employees challenging the validity of such compulsory holiday instructions, given the reduced ability to enjoy leisure time during lockdown conditions, and/or claims in relation to how holiday pay has been calculated, particularly those employees who were furloughed at the time of their leave.
• Flexible working. The experience of homeworking during the pandemic may lead to many employees asking for regular homeworking on an indefinite basis, after lockdown restrictions have been lifted. This carries the potential for a spike in claims about employer refusal to grant such requests. Such claims could be for breach of the Flexible Working Regulations and, in some cases, for discrimination. Conversely, many employers, now armed with the experience of operating remotely, may seek to save on premises and other overhead costs by seeking to impose extended or indefinite flexible working arrangements on employees who might prefer to return to their normal place of work, again with the potential to generate claims.
• Remote communication conduct. As many employers have rapidly encouraged greater use of WhatsApp and other means of maintaining remote work and social communication between teams, we are likely to see EPL claims based on the conduct of staff in such settings, which are often perceived as less formal and with more blurred boundaries of acceptable behaviour; just as in recent years we have witnessed a greater number of EPL claims with a social media element (such as discrimination arising from comments posted by one employee against another, or misconduct by an employee who posts comments or material that damages the employer’s reputation), we can expect to see a similar spike in claims based on the behaviour of employees greater use of remote communication technology.
• Performance. Employees who have had to adapt suddenly to working at home, potentially whilst also grappling with home-schooling children and/or sharing limited home working space with other household members, may be less productive and trigger their employer’s performance management processes. We may see a spike in claims relating to alleged unfair or discriminatory detriment or dismissal based on poor performance.

Comment

We hope that this article on the impact of COVID-19 on EPL claims has been helpful in identifying just some of the potential EPL claims trends that the pandemic may cause.

As with all of these issues, we are in uncharted territory. The coming weeks and months are likely to continue to be interesting times for all those involved in EPL claims.