Repayment of furlough: transparency in overdrive?
Sungjin Park, July 16, 2020
The government's furlough scheme saw billions handed out, staving off the need for redundancies.
It is expected to cost over £54bn by October, but recently we've seen a surprising development – companies handing their furlough grants back.
Bunzl, The Spectator and Ikea have all repaid their furlough grants in recent weeks. The scheme focused public attention on companies taking grants, with premier league football clubs and fashion labels criticised for taking furlough money for low-paid staff, and firms are keen to show they're doing the right thing.
We have seen other transparency demands over workplace diversity disclosures, prompted by the Black Lives Matter protests, and the government urging firms to publish workplace risk assessments. Corporate transparency is top of the agenda again.
But what does this mean for companies? How can they balance their legal duties with their reputations, and what do they need to do?
Most companies which took furlough money were legally in the right. But the force of moral pressure was so great some backtracked. There is now a tricky intersection between what is socially acceptable and what falls within the law.
For many businesses, these grants were vital lifelines, but it is inevitable they fall under greater scrutiny. Most cannot afford to return the money, and may be looking for other ways to demonstrate how ethical they are. Greater openness will be appealing. But companies should take care.
Workplace risk assessments are a good example. Businesses will want to reassure employees and the public that they are taking safety seriously. But whilst they have a clear legal duty to do the latter, there is no requirement to publish risk assessments.
If they choose to, this should be treated as a piece of external communications and will need to be drafted carefully to ensure messaging is right.
People need to know they are safe, but do not need – nor probably want – granular detail on how the assessment was conducted. Doing this badly could become a reputational issue.
Another area where greater disclosure is currently being urged is around diversity. The recent Black Lives Matter protests have incited many businesses to assert their commitment to inclusivity – across all categories. There is no framework for reporting on this, but many companies are conducting diversity audits and surveys.
One challenge is that collecting, processing and especially publishing personal data – even when done to promote employee wellbeing – falls within data protection law. There are strict rules over what data can be collected and what can be done with it.
This applies to all data, sensitive or not, but laws around protected characteristics such as race, gender, sexual orientation or beliefs, are even stricter. Companies should therefore be careful about how they go about doing this, even if their intentions are good.
These two areas may come together in the new arena of health monitoring. Understandably, as part of their duty of care, companies are keen to keep track of employee health. Whether that is through track-and-trace apps, or other monitoring, there are ways of doing this, and it may be necessary to ensure workplace safety.
It is good news for business that the Information Commissioner's Office (ICO) has acknowledged there may be a need to collect this information in order to protect workers and others, but will still fall within data protection laws. It is permissible, but companies must demonstrate it is both necessary and proportionate, and could not have been done another way.
There will be challenges balancing legal duties with employee protection and reputation management. Companies will already be aware there is a trend towards greater openness, especially if receiving taxpayer support. But it is also important to ensure they are not in conflict with existing regulations. In order to do this, it is best to start planning now.
Sungjin Park is knowledge lawyer in the employment practice at Addleshaw Goddard