The furlough scheme created in response to the 2019 novel coronavirus disease pandemic is one of the largest government interventions ever seen in the workplace and is expected to cost more than £54 billion between March and October 2020. However, as very few restrictions were placed on which employers could claim under the scheme, questions have arisen of whether businesses are behaving responsibly during the pandemic and how they may be held accountable for any perceived lapse in judgment.

The furlough scheme created in response to the 2019 novel coronavirus disease (COVID-19) pandemic is one of the largest government interventions ever seen in the workplace and is expected to cost more than £54 billion between March and October 2020. However, very few restrictions were placed on which employers could claim under the scheme, as long as they met basic eligibility criteria, which had little to do with size or revenue (see feature article “Furlough and COVID-19: looking for clarity).

This has brought the issue of corporate transparency to the fore, and understandably so. It raises important questions of whether businesses are behaving responsibly during the COVID-19 pandemic and how they may be held accountable for any perceived lapse in judgment.

Business response to recent events

While the furlough scheme is only one example of the areas in which businesses are currently under increased scrutiny, it has perhaps the highest profile as it involves a large amount of taxpayers’ money. It was clear that the aim of the policy was to allow all and any employers, right across the UK, to retain as many workers as possible on the payroll without resorting to redundancies. It worked for many struggling companies in the midst of a global pandemic where their businesses were unavoidably closed; it was a vital lifeline. It was also an important step by the government to prevent the economic firestorm that would be created by mass insolvencies and redundancies.

However, the spotlight soon turned to which businesses had been accepting the money and what they were doing with it. High-profile employers such as Premier League football clubs Liverpool and Tottenham had planned to furlough low-paid ancillary staff while still handing out eye-watering sums to players who were unable to play: decisions they swiftly reversed in the face of public fury and a media outcry. Victoria Beckham’s fashion label followed suit after coming under fire for furloughing 30 of its staff.

None of these companies were legally in the wrong. They followed the rules, but the force of moral feeling was so great that they backtracked under the pressure. Recently, some companies have opted to return their furlough grants to the government in an effort to show that they are doing the right thing; for example, Bunzl plc, The Spectator and IKEA have all repaid their furlough grants in recent weeks.

The ongoing COVID-19 crisis, and the return to work for many employees, has also created a focus on health and safety. The government has been pushing companies to publish their health and safety risk assessments online. In addition, there are continuing aftershocks of the Black Lives Matter protests, which saw many businesses leap to assert their commitment to equality. In many cases this invited further scrutiny and even backlash against some businesses where it seemed as though they were only paying lip service to, rather than actually demonstrating, racial equality.

Actions for business

Recent events have created many questions for businesses on what their duties are, including to their employees, shareholders and to wider society. It has also led to businesses exploring how they can balance the new demands for transparency with fairness, their duties and their corporate reputations.

Before the COVID-19 crisis, trust in business, especially big companies, was in a parlous state. Demands were already growing for increased disclosure, whether over diversity, pay gaps or environmental impact. This has now accelerated further. However, while businesses may be tempted to embrace the new ethos, they should also be mindful of the potential effects.

For example, while there is no legal duty to publish risk assessments, employers will want to ensure that employees feel safe returning to work and, where necessary, that customers feel safe interacting with them. Employees who choose not to return to work for safety reasons may well have cause to claim an unlawful detriment where it can be shown that their employer has not adequately provided for their safety and, of course, businesses need customers. What this means is that companies should involve workers and, where applicable, unions in the risk assessment process. They should also make sure that there are clear channels of communication so that employees and, potentially, customers can raise concerns about safety with them first, rather than going to the press or reporting to regulatory bodies.

Full diversity reporting is far from falling under a legal framework at the moment, but many companies are keen to demonstrate their commitment to diversity, including racial and sexual diversity. The issue is that collecting, processing and publishing these data, even when done for the good of employees, let alone for reputational reasons, risks falling foul of privacy and data protection laws.

There are strict legal duties within the EU and the UK that govern what data can be collected, when consent is needed (nearly always) and how it can be processed or revealed (see feature articles “GDPR one year on: taking stock” and “Employee monitoring: the value of being prepared). This applies to non-sensitive data and the rules are even stricter on sensitive data covering areas like ethnicity, gender, sexuality, religious belief, and genetic and biometric data. It would be potentially catastrophic (and ironic) if, in their efforts to demonstrate inclusion and diversity, businesses accidentally fell foul of data protection and privacy laws.

Where these two legal areas may meet is in the ongoing issue of health monitoring. There has been much recent discussion about workplace health monitoring, test-and-trace apps and other, potentially more intrusive, forms of seemingly benign surveillance; all with the very best of intentions (see News brief “COVID-19 and contact tracing: putting privacy first). The good news is that the Information Commissioner’s Office has recognised that employers may need to ask health questions as part of their duty of care to workers and the public, but data protection law still applies (https://ico.org.uk/global/data-protection-and-coronavirus-information-hub/data-protection-and-coronavirus/).

Collecting health data may be permissible but businesses will need to demonstrate that it is necessary, proportionate and that the same results could not be achieved through less intrusive means. In addition, the data will still have to be processed within the strict limits of data protection laws.

Corporate transparency

Corporate transparency looks set to grow with a vengeance. All companies are likely to fall under the microscope and those that have accepted government money, no matter how much it is needed, deserved or taken with the very best of intentions, can expect to find themselves under even greater scrutiny. Where the business can afford to give it back, this may provide a reputational boost but, for many, taking it in the first place was a survival decision.

There is currently a real drive towards businesses working to demonstrate their ethical qualities, but businesses would do well to remember that outwardly demonstrating their values should never conflict with other legal duties, and could well be a reputational hazard if not carefully thought through. Nevertheless, it would be wise to start planning for a new era of greater openness. Businesses that fail to do so will soon risk being accused of having something to hide.

This article was first published by PLC Magazine.

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Sungjin Park

Sungjin Park

Knowledge Lawyer, Employment
London

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