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Coronavirus - Returning to work: insights from the hedge fund industry - UK

  • United Kingdom
  • Coronavirus - Return to work
  • Financial services and markets regulation
  • Financial services and markets regulation - Hedge funds
  • Financial services


As lockdown begin to ease across the world, it is becoming clear that lifting restrictions on travel and association may prove more challenging than their implementation. In the UK certain sectors of the economy, including construction, were encouraged to return to work from the beginning of May. The timeline for any return to the office is far less clear and for now the advice, ‘if you can work from home, you should do so’, remains in force.

The UK’s hedge fund industry has been grappling with these issues and the specific impact COVID-19 is having on its business. To address these concerns, Eversheds Sutherland hosted ‘Returning to work (and other COVID concerns)’, a Chief Operating Officer (“COO”) roundtable on Wednesday 13 May 2020, bringing together COOs from firms across the hedge fund industry to reflect on the last few months and share different approaches to future planning. Ben Watford, organiser and head of hedge funds at Eversheds Sutherland, is clear on the importance of these cross-industry discussions: “No one has ever seen a crisis like this and all of us are adapting and learning as we go. We are fortunate to have a world-leading hedge sector in the UK and it has never been more important to draw on that collective pool of talent”.

In this briefing we distil the key points that arose from these discussions and present them alongside legal insight from our colleagues across the firm. While the issues facing asset managers dominated discussion, many participants were keen to highlight the positive changes they have seen during lockdown. For better or for worse, when fund managers do make a return to the office, it seems unlikely to be on the same basis as before.  


As the UK looks set to ease lockdown in the coming weeks or months, what are the key challenges for asset management firms as they return to the office? Three areas of consideration stand out, namely: employment law and the accompanying liability concerns; the stance of the UK regulators (over both the short and longer term); and how best to negotiate the government’s various industry support schemes. 

Legal considerations for employers

Employers have a legal duty, so far as is reasonably practicable, for the health, safety and welfare at work of their employees and anyone else who may be affected by the employer’s business, including visitors and members of the public. Regulations in the UK require employers to undertake a suitable and sufficient assessment of the risks to the health and safety of employees and anyone else who may be affected by the employer’s business. This duty is a continuing one and there may be a local requirement to record assessments. The UK Department for Business, Energy and Industrial Strategy has issued Guidance for socially distancing in offices and contact centres which sets out practical considerations that will apply generally to most asset management firms. 

The question of liability continues to hang over plans for a return to office working. However, these concerns should not be viewed as an insurmountable roadblock. If employers follow appropriate guidance, and refrain from mandating vulnerable or at risk groups to return to work, the risk of a successful injury claim being brought against the employer is minimal. Normally an employee would have to show that they contracted the virus at work due to a breach of duty on the part of their employer. It will be difficult to bring a claim on that basis if the employer is following advice and more importantly, how can the employee prove they caught the virus at work? The key to avoiding claims will be to understand that the assessment and control of the risk presented by COVID-19 is not a ‘one time’ activity. Few employers will attract liability because they have not adequately identified the risks – many will do so because they have failed to ensure that the control measures that they put in place are consistently obeyed in the longer term. 

Of course, there may be other reasons to delay returning to the office. Employee sentiments, concerns around disruption to established working patterns and social distancing practicalities will all have their part to play. We return to this question below. 

Where do the UK regulators stand?

The two primary regulators for the UK financial services industry, the Financial Conduct Authority (“FCA”) and the Prudential Regulation Authority (“PRA”), have focussed regulatory attention on the processes firms have in place to manage disruption. This applies both to the firm’s internal management – business continuity, operational resilience measures and portfolio management in inclement market conditions – and to its interactions with other entities. Throughout this crisis firms need to effectively maintain their relations with the wider world. In particular, the FCA and the PRA  have closely monitored how services and communications are being delivered to consumers.

On both points (internal and external crisis management) third party outsourcing has come up as an area of concern. Questions were raised about the resilience of firms in other jurisdictions delivering key services. The wide spread use of contact centres in jurisdictions outside of the UK was flagged as a particular issue.

However, certain requirements have been relaxed in response to COVID-19: flexibility around annual reports, capital raising and appointment of individuals to cover for absent senior managers are all examples of this more lenient regulatory approach. In the longer term, it is important to remember that the dispensations brought in to deal with the crisis are temporary and time limited; we expect regulators to make a gradual return to normality over the coming months.

That said, it may be some time before the FCA and PRA can bring forward new non-COVID related projects. Currently, FCA consultations are in abeyance and many ongoing projects have been shelved. The FCA’s 2020/2021 business plan was published in April and gives some indication of the regulator’s direction of travel, but it is unclear when many of the proposed measures will be brought forward for implementation.

Looking at furlough (and other UK government schemes)

In general, financial services have been able to operate effectively in a home-working environment and have therefore made limited use of the government’s furlough scheme and the various loan initiatives announced.

However, the same cannot be said for other sectors of the economy and for many of the businesses that asset managers hold stakes in. For these reasons, many of the participants at the roundtable were keenly watching as events unfold. Of the various schemes ‘furlough’ has been the most far reaching and it looks set to continue in its current from until August. At this point, the Chancellor has indicated that the scheme will be modified, with employers expected to make more of a contribution. However it appears that the scheme will persists with more limited government support until at least October.

Industry insight

Across the areas of employee welfare, office management, assessing productivity, managing expenses and fund raising, COOs are applying a varied range of approaches to manage the issues surrounding COVID-19.

Employee welfare

At the heart of discussion about any return to the office is a fundamental question: who should return to the office and why? It is clear that vulnerable groups should be excluded from the first stages on any return, but many questioned the rationale behind pushing forward too quickly. As one of the panellists noted, “there is little real benefit to being first through the door. Where staff are working productively it may be worth holding fire and learning from the experiences of other firms”.[1]

Other panellists were clear that the selection process for any staggered return would fundamentally be a quality of life decision. “Some staff love working from home, but I know others miss the office and don’t have a good home set-up for peaceful, focussed work. I think emotional and mental wellbeing may be as much of a factor in my decision making as the more obvious health concerns”, they concluded.

Public transport is likely to be a bottleneck for many business continuity plans moving forward. Government spokesmen have clearly discouraged use of mass transport for non-essential travel and employees are unlikely to feel safe or comfortable returning to work on this basis. The ability of staff to get to the office on their own power (walking, running and cycling), or in a private vehicle was generally settled on as the key determiner of whether they could return to the office.

In general, no policy that universalises people’s experiences of home working will be effective. Most COOs expect the return to office life to be gradual and voluntary. From a legal perspective, it is currently unclear whether firms will be able to oblige employees in the financial service industry (where the majority can work effectively work from home) to return to the office. With this in mind, most panellists felt that refusal to return would only become a disciplinary issue in the much longer term.

Due diligence and fund raising

Many investors are delaying investment while they update procedures, but ‘virtual due-diligence’ will become the norm for the foreseeable future. Moving forward, COOs expect business continuity plans to carry much greater weight.

Some capital is being held back as the crisis unfold, but it is clear that investors are spending money and continue to look favourably on funds that managed to beat the market in March and April. That said, other COOs pointed out that many of the investments currently being made are on the back of existing work in January and March. Investors are taking their time and in their view “the big opportunity may come in four of five months when funds can present a full narrative about the crisis and prove consistent capacity to deliver returns.”

Office Management

Certain basic precautionary measures are being accepted as the new ‘business as usual’ under the current conditions. In general, COOs are looking closely at the government’s guidance and planning to erect plastic screens, ensure staff are sat back to back, put deep cleaning routines in place and only bring employees back to the office in discreet teams, to minimise the risk of cross contamination. Although there is nothing prescriptive in the government guidance, it was generally agreed that these teams should be asked to isolate as a group if any one member becomes sick.

If staff are running or cycling to work, firms will have to ensure that social distancing and other appropriate safeguards are in place for communal showers and changing rooms. Of course, some offices are circumventing this problem entirely. “We have a few employees clustered together in north London and we are planning to send a cab round to pick them up each morning”, explains one London-based COO. “They will work as a team, so we can isolate them as a unit if necessary and everyone else who needs to be in the office can walk or cycle”.

The debate over whether the two meter social distancing guideline should be replaced with a more relaxed one meter rule will obviously have a huge impact on office management. In either case, concerns were raised about the capacity of open plan offices and many contributors felt that they would not be able to safely bring in more than 25% of staff with the available desk space regardless of other considerations.

Another issue raised was the amount of office equipment which had been taken away by staff or posted out to support home working set-ups. Screens, PCs and even desk chairs have all been stripped from offices and it will be hard to repatriate this equipment, particularly if staff return to the office on a staggered basis. Factoring in the possibility of a second peak,  one panellist explained that maintaining effective home working environments would be a priority for the foreseeable future: “If we have to, we will just invest in new IT set-ups. There are some costs of doing business in a crisis that businesses may have to accept. Ensuring that staff retain the flexibility to work at home and in the office on a fluid basis remains high on our agenda”.

Assessing productivity

Many of these discussions about a return to the office hinge on the productivity of staff working from home. Some teams are clearly more connected and may even be more productive in this new environment, but this is obviously a difficult thing to measure. Looking at hard data – IT usage, hours logged, and billing – together with soft data such as staff surveys and informal discussions with team members can give some indication of output. However, others argued that firms should be taking a more rigorous approach: “firms need to think about parameterising functions they regularly do. What day do you get your NAV pack and fact sheet out each month? How long does it take you do reconciliations? Are the same deadlines being hit? how many people hours are going into it? These are the questions COOs need to be asking”.

Managing expenses

If teams are working effectively from home, the cost-saving potential could be huge. Smaller teams in particular may find that they can work from home most days and rent shared working spaces once a week, or even once a fortnight, to work collaboratively in city centres. Whether this will be feasible in the long term will obviously depend largely on the views of investors, who may feel uncomfortable conducting due diligence on businesses without a permanent address. In the short term however, the benefits are evident. “One of my clients recent came to end of their lease”, explained one COO Consultant. “Their team has decided to hold off finding any permanent replacement until the worst of this crisis has passed – if they ever do. The team is working well, quality of life is better, the teams are getting hours of their life back from the commute and the business (a new venture) is cutting overheads massively.”

Obviously, this will not be an option for larger firms, but it seems likely that there will be a pressure to avoid expanding premises, or even downsize as staff work from home on a part time basis. “Working from home has been tested now, we know it works”, concluded one panellist towards the end of the event, “we are never going to go back to the same ways of thinking”.  


It is not yet clear when the UK financial services industry will return to their offices, but the industry is gearing up to make the jump. Just under half of respondents to AIMA’s recent survey expect 50% or more of staff to be in the office by November, while the COOs at Eversheds Sutherland’s recent event were all readying plans and conducting risk assessments. The sudden and largely successful shift to home working was a testament to the asset management industry. There are reasons to remain optimistic that the hedge industry will effectively meet the herculean task of returning to something like normality.

How Eversheds Sutherland can help

Our team has been at the forefront of regulatory interpretation and product development for the fund management industry since the 1980s. We advise on all types of fund structures and prepare all documentation necessary to achieve a successful fund launch. As trusted industry partners, we can co-ordinate with and can make introductions to a wide network of professionals including prime brokers, fund directors, administrators, banks and depositaries.

Our labour and employment practices have more than half a century of experience advising a wide range of organizations, from blue-chip FTSE and Fortune 500 companies to start-ups and owner-managed businesses, with extensive experience in cross-jurisdictional HR work.

View our "Return-to-workplace: guiding principles" >

[1]                 The meeting was not recorded, so all quotations set out here are reconstructed from notes taken during the meeting. The opinions set out in these statement are not attributable to any attendee and are included for illustrative purposes only.