Question: One of my employees is waiting for their visa to be approved. What is their and my legal situation?

Answer passage (source: UK):
page_title: Guidance Coronavirus (COVID-19): advice for UK visa applicants and temporary UK residents
section_headers: If you’re in the UK and your leave expires between 24 January 2020 and 31 July 2020
section_content: Your visa will be extended to 31 July 2020 if you cannot leave the UK because
of travel restrictions or self-isolation related to coronavirus (COVID-19).
You must request an extension by updating your records with the Coronavirus
Immigration Team
(CIT) if
your visa is expiring and you cannot leave the UK at present but are not
planning to stay in the UK in the long term.
If you have already had your visa extended to 31 May 2020 you visa will be
extended automatically to 31 July 2020.
You will be expected to return to your home country as soon as it is safe and
possible to do so.
If you’re applying to stay in the UK long-term
You can apply from the UK to switch to a long-term UK visa until 31 July 2020
if your leave expires between 24 January 2020 and 31 July 2020. This includes
applications where you would usually need to apply for a visa from your home
country.
You’ll need to meet the requirements of the route you are applying for and pay
the UK application fee.
This includes those whose leave has already been extended to 31 July 2020.
You can apply online. The terms of your leave will remain the same until your
application is decided.
Application and Service Centres in the UK
Some UK Visa and Citizenship Application Centres (UKVCAS) will reopen for
existing customers on 1 June 2020. You can check which UKVCAS centres are
open.
Service and Support Centres (SSCs) are temporarily closed because of
coronavirus (COVID-19).
If you’ve already made an appointment
We have contacted you if you made an appointment to attend a UKVCAS or SSC
that is still temporary closed to let you know it has been postponed. You’ll
be contacted when you can book a new appointment.
Your immigration status in the UK will not change as a result of you not being
able to attend an appointment.
If you are on a Tier 1 Entrepreneur visa and your business has been
disrupted
You no longer need to employ at least 2 people for 12 consecutive months. The
12 month period you are required to employ someone for can be made up of
multiple jobs across different months.
Time when your employees were furloughed will not count towards the 12 month
period.
If you have not been able to employ staff for 12 months by the time your visa
expires, you will be allowed to temporarily extend your stay to give you time
to meet the requirement.
These arrangements will continue for applications made after 31 May 2020,
where the jobs you are relying on were disrupted due to COVID-19.
If you’ve applied for a Tier 4 visa and are waiting for a decision on your
application
You can start your course or studies before your visa application has been
decided if:

your sponsor is a Tier 4 sponsor
you have been given a confirmation of acceptance for studies (CAS)
you submitted your application before your current visa expired and you show your sponsor evidence of this
the course you start is the same as the one listed on your CAS
you have a valid Academic Technology Approval Scheme (ATAS) certificate if required

If your application is eventually rejected as invalid or refused you must stop
your course or studies.
If you’ve applied for a Tier 2 or 5 visa and are waiting for a decision on
your application
You can start work before your visa application has been decided if:

you have been assigned a Certificate of Sponsorship (CoS)
you submitted your application before your current visa expired and you show your sponsor evidence of this
the job you start is the same as the one listed on your CoS

If your application is eventually rejected as invalid or refused your sponsor
will stop sponsoring you and you must stop working for them.
If you need more information about the measures in place for students and
their sponsors
You can read detailed guidance on the temporary measures in place for Tier 4
sponsors, their students and short-term students in response to the COVID-19
outbreak.
[UKVCAS]: UK Visa and Citizenship Application Centres
  [SSC]: Service and Support Centres

Reviewer feedback on this answer:
There is a lot of information here about getting a visa.  It seems like the answer to the question would be here.
This answer contains a mixture of information for different types of visa. The direct answer to the question is under the section "If you've applied for a Tier 2 or 5 visa and are waiting for a decision" on your application. This section provides information on the legal status and what employees and employers can do while waiting for visa decisions.
The answer is very descriptive and gives lots of information about visas. It could provide a little more information about employers rights.

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