FURLOUGH DISCRIMINATION: 4 TIPS TO AVOID CLAIMS
Unlike most HR topics there are no books and few articles on the novel question of furlough discrimination. And the truth is that, for the last few weeks, employers across the country have been focussed on survival. Cash flow concerns and attempting to maintain some semblance of productivity have been close to being all consuming, leaving little space to consider the collateral employment law risk that coronavirus presents. Now, as people consider rotating those on furlough (or not) we discuss the discrimination risks in furloughing decisions, and how to mitigate the risks of ‘furlough discrimination’.
Just two months ago it was unlikely that anyone in your team had heard of the word furlough. With the Government telling us that over 1 in 5 jobs have been furloughed up and down the UK, the term is now on the lips of almost every HR practitioner and manager. But how do you decide who to furlough? Can you furlough your most expensive staff? Those over 70? How about those with school-aged children? The obvious risk is a discrimination claim if you get it wrong. And while there exists no free-standing claim for ‘furlough discrimination’, the Equality Act gives wide scope to employees who believe that a furlough decision may have been tainted by discrimination.
As is often the case in employment law, the answer as to whether the above questions might amount to furlough discrimination is “it depends”. To give an example, an employer who furloughs all staff who are over the age of 70, runs the risk of a direct age discrimination claim from both its older and younger employees. Those over 70 may claim that not being able to work and be paid 100% of their salary is less favourable treatment because of their age; conversely, a younger employee could argue that they have been treated less favourably in being required to attend a physical workplace.
Uniquely for direct discrimination claims, an employer will have a justification defence to a direct age discrimination claim if it can show that the less favourable treatment relied on was a proportionate means of achieving a legitimate aim. The legitimate aim here might be to protect the health of those over 70, and an employer could argue that given furloughing was unavoidable, selecting older employees was a proportionate means of achieving that aim. But what about younger employees with underlying health conditions? Both demographics are deemed to be equally “at risk” by the Government, which means that a Tribunal will want to understand the difference in treatment between the two groups, and whether that difference is discriminatory. Remember too, that if all of your non-furloughed staff are in fact working from home, then furloughing employees aged over 70 will have no impact on the risk they would otherwise face in being required to work. The measure may therefore not actually do anything to achieve your aim. In the circumstances it is unlikely to be justifiable.
How about furloughing your most expensive staff? Could that amount to furlough discrimination? Such a policy would not be directly discriminatory given being paid well is not a protected characteristic, however it could be indirectly discriminatory if in practice your most expensive staff are your older employees. Assuming that is the case then you are back in justification territory, and this will require some thought. As we all know, case law has established that cost on its own is unlikely to justify an indirectly discriminatory provision, criterion or practice – there must be something more. However, there may be more room for such a practice if the furloughing of those employees is essential to the ongoing survival of a business, which after all, is the purpose of the CJRS. So long as that claim is supported by strong documentary evidence, a Tribunal may have some sympathy.
A policy of furloughing employees with school-aged children is also not without difficulty. While such a policy may not amount to indirect sex discrimination (because men and women would be impacted equally), it could still indirectly discriminate on the grounds of age given younger employees are more likely to have school-age children.
A further ‘furlough discrimination’ angle could be a claim for indirect discrimination on grounds of sexual orientation (if it could be established, for example, that those in different sex households were more likely to have young children than those same sex households). In theory, however, such a policy could be justifiable. Case law suggests that securing efficiencies can be a legitimate aim: given the pressure on employees with child-care responsibilities to home school alongside their daily duties, it is arguable that ensuring that your team is working to maximum available capacity is a legitimate aim, although you would need to evidence a difference in productivity. Of course, the policy would have to be applied to all of your employees (and not just the women, for example) which may be impractical if you have a large number of qualifying employees. A Tribunal would also need to be convinced that the practice was a proportionate means of achieving your legitimate aim – there may be other more proportionate measures you could take, for example around flexible working hours.
Away from furlough discrimination, a final consideration to be mindful of is the impact of your furloughing decisions on employee relations. While furloughing employees with school-age children may in theory be justifiable, it could leave non-furloughed employees feeling aggrieved, particularly if you are topping up the salaries of furloughed staff. When all this is over, businesses will need to deal with the consequences of their decision making. And bear in mind the impact on your workforce demographic – even if a practice is justifiable in law, a furloughing decision that takes out your most experienced staff (for example) might have unintended consequences.
Given the minefield that furloughing represents, it must be worth considering what you can do as a business to mitigate the risk from a successful ‘furlough discrimination’ claim. Here are our top 4 tips:
- Draft a Furloughing Policy detailing how employees will be selected for furlough. Set out your rationale including (in broad terms) any legitimate aim, and the criteria that will be taken into account in furloughing decisions. Avoid subjective measures as far as possible
- Consider the implications of your policy. Could you be discriminating against employees in ways which are not immediately obvious? Consult and ask your employees for their views. Your staff will always be your biggest resource in spotting unfairness
- Consider rotating employees on furlough. This is likely to be the least risky approach to furloughing as it shares any deemed fairness/unfairness, but remain alive to the need to ensure that you have sufficient senior staff at work to take key decisions
- Implement your policy fairly and document the decisions you make.
