Covid-19: What should employers expect in a life after Covid-19?

As the Covid-19 crisis continues to evolve, we reflect on some of the key issues, positives and challenges in the workplace that employers can expect in a life after Covid-19, including some of the obvious changes, and some potential outliers.

The obvious

Back to BAU or redundancies for furloughed workers?

The level and scale of the new Job Retention Scheme is unprecedented. Recent reports suggest that more than nine million workers in the UK are expected to be furloughed under the scheme and 50% of UK companies are putting most of their staff into the scheme.

But when the scheme comes to an end, employers will have to make a decision, depending on their circumstances, whether employees can return to their duties, or whether to make them redundant and potentially restructure their workforces.

Change in attitudes towards flexible and agile working

For many businesses, Covid-19 has accelerated the adjustment to new ways of working. The current crisis has forced many companies to stress test their agile and remote working arrangements. Those that were previously sceptical of such ways of working may have a harder time explaining why employees have to be present in the workplace when they can work remotely or flexibly.

Impact on culture

Crises provide opportunities for employers in terms of workplace culture and how employers have reacted to the evolving pandemic and supported their workforce will impact their culture in the long-term.

If employers have actively supported their workforce and taken steps to care for their health and wellbeing of their workers, they are more likely to see a positive impact on culture in the long-term.

Alternatively, if employees feel they have not been supported, or if they have watched executives continue to enjoy their bonuses and dividend pay outs whilst they are asked to take unpaid leave or suffer pay cuts (more on this below), this could have a long-term impact on culture. These employers may see employees seek to jump ship once the economy stabilises and the job market becomes more fluid.

Employee litigation

Courts and tribunals have been closed and/or had reduced activity during lockdown. We will face an inevitable backlog which will take some time to clear.

We also anticipate an increase in employment litigation in the medium to long-term, as employers have had to take hard and quick decisions during the crisis without always following due employment law process. Employers may see an increase in claims relating to pay, breach of contract, and unlawful deductions of wages.

As we saw following the financial crisis in 2008, we may also see senior management and executives seek to bring breach of contract claims before the High Courts up to six years after the crisis, when it no longer seems as inappropriate or distasteful to bring a claim for a reduction in their (already high) pay in the aftermath of a crisis when redundancies are happening elsewhere across the organisation.

Contract and policy updates

We anticipate many businesses will look to review their contracts, agreements and policies in light of lessons learnt from Covid-19.

In an employment context, this might include reviewing, drafting and/or updating: (i) lay-off provisions in contracts of employment; (ii) restrictions on employees working for other employers during employment; (iii) deduction from wage clauses; (iii) termination provisions in services and outsourcing agreements; (iv) sickness absence reporting procedures and sick pay policies; and (v) crisis management plans.

Mental health

Mental health should be a focus for many employers in the short to medium-term as the crisis continues to evolve and in a life after Covid-19.

Many workers have been working remotely, some living alone, and others concerned over job security (particularly those on furlough). Employers should be considering how they can support their workforces’ mental health and wellbeing now and going forward.

Extra holiday

Holiday continues to accrue during lockdown and furlough leave. Employees and workers unable, or unwilling, to take their holiday during these times may return to the workplace with a significant proportion of their accrued holiday left to take before year end. Many employers will need to consider whether to change their policy on carry-over beyond the changes being imposed by the Government.

Pay

Employers are already having to take difficult decisions relating to the future of their workforces and their salaries. Whilst the impact is being felt across the wider workforce, attention is also being focused at executive pay, and how individuals leading organisations are being impacted financially by the crisis.

In recent weeks, we have seen executives from major organisations take voluntary cuts to their salaries. But some companies are under pressure to focus on variable pay, as this makes up a larger proportion of total remuneration for senior management.

In the short to medium-term, many businesses will be considering their total employee spend for remuneration and cash flow purposes (including dividend payments, paying cash amounts in the form of shares, and the structure of other long-term incentives).

Potential outliers

ESG – change in attitudes towards hospitality, corporate entertainment and corporate governance

Prior to Covid-19, there was a growing expectation that organisations should be embracing sustainability and recognise and address environment, social and governance risks to ensure their resilience and long-term viability.

The positive impact on the environment during lockdown has been widely reported in the media and for some organisations (particularly global businesses), reverting back to excessive corporate travel and hospitality after the pandemic may seem distasteful and excessive – particularly when many global workforces have shown they can stay connected remotely via technology.

Of course, there is the counter-risk that organisations, and many employees, will be desperate to travel (for business and pleasure) as soon as we resume to any kind of normality!

Impact on women and younger workers

Current reports suggest that women and the under-25s will be worst hit financially by Covid-19, as they are affected most by the closure of businesses in certain sectors (such as retail, leisure and hospitality).

In the future, if these groups are not able to get back to work, there may be long-term consequences, particularly as younger generations and graduates join a different job market to their predecessors.

Gender equality

In contrast to the potential impact on women and younger workers, the increase in flexible, remote and agile working may mean better gender equality in some roles in the future.

Change in attitudes towards shared employment

During the crisis, we have seen some workers look to change roles, either to help on the frontline, or seek alternative income during furlough or periods of lay-off.

In a life after Covid-19, we may see an increase in the concept of ‘joint’ or ‘shared’ employment opportunities, particularly within smaller communities where skills can easily be transferred across different roles (imagine something like a community gig-economy, but with a bit more security).

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Over the course of the weeks and months to come, employers will face a myriad of new challenges – both positive and negative. If you would like to speak to a member of the Employment & Incentives team about any of these issues, do get in touch.