10 Apr UPDATED Coronavirus briefing note for employers
This COVID-19 briefing includes subjects previously covered but also covers changes and developments since that time. This briefing replaces all previous briefings and is correct as of 10am on 10 April 2020. I have highlighted some key changes in green to previous briefings.
I am continuing to receive lots of enquiries, particularly about Furlough leave. This blog provides general information and I will continue to respond to specific enquiries as they arise.
Some answers to a few questions have not been addressed as yet by government guidance, so whilst I will attempt to answer the questions based on the latest guidance issued, existing employment law and common sense, unfortunately the advice supplied cannot be definitive and is subject to further legislation, guidance or other information as it becomes available.
The Coronavirus Job Retention Scheme (CJRS) – Furloughed employees
From the initial brief announcement on Friday 20 March 2020 the government has issued updated guidance weekly, on 26 March and 4 April 2020.
Yet further changes and clarifications were issued last night, Thursday 9 April 2020 and links to the latest guidance for employees and employers are:
The key points as updated are set out below.
Employers eligible for the scheme:
- This is open to all employers save for public sector employers or non- public sector employees who receive much of their funding from public sources.
- The intention of the scheme is to help pay salary for the employees who would otherwise be made redundant or laid off without pay. The latest guidance, however, states that all employers are eligible, and employers affected in other ways such as employees absent through “shielding” or looking after childcare are confirmed as eligible to be furloughed.
- It is important to note that the guidance does include a statement that the government retains the right to retrospectively audit all aspects of the scheme with scope to claw back fraudulent or erroneous claims.
Employees eligible for the scheme:
- The scheme covers the following individuals, provided that they were on the employers’ PAYE payroll on 28 February 2020, regardless of their contract type: full-time employees; part-time employees; employees on agency contracts paid PAYE by their agency; employees on flexible or zero-hour contracts.
- All employees who were made redundant or left employment since 28 February 2020 can qualify if they are re-engaged by their former employer.
- Employees who have started since 28 February 2020 or who were due to start during this period, will not be covered. Whilst this is principally an anti-fraud protection, it does also prejudice employees who have recently moved jobs.
- Employees on unpaid leave cannot be furloughed, unless that unpaid leave started after 28 February 2020.
- Employees on Statutory Sick Pay, which should be used for short term sickness absence, cannot be furloughed but the employer can now agree to furlough those on longer term sick or keep them on SSP/ contractual sick pay.
- Employees who are “shielding” can be furloughed and the guidance has also been changed to include that employees who need to stay at home with someone who is “shielding” can also be furloughed.
- It has also now been confirmed that employees who are unable to work because they have caring responsibilities can also be furloughed.
- If you have employees currently on unpaid leave due to either of these reasons, they could now be asked to sign a furlough leave agreement backdating furlough until the date when they first went off.
- An employer who has picked up employees under either the TUPE (Transfer of Undertaking (Protection of Employment) Regulations) 2006 or PAYE business succession rules since 28 February 2020, can still furlough such employees and claim under the CRJS.
What is furlough and how is it implemented?
- The term “furlough” has no designated meaning. It is used in the US but has not been defined and is alien here to employment law in the UK.
- If you have the contractual right to remove work, i.e. lay off or short time in the employment contract, then you can notify employees that they are now designated as furloughed – this should be done in writing and I am now using a form of agreement rather than just a letter to help ensure employees are aware of the requirements of the scheme and to deal with potential issues which could arise – please contact me if you are a client and would like an updated Furlough Agreement.
- If you have no such contractual provision (all of my retainer clients and those for who I have prepared your contracts of employment will have), then the employee will need to agree, and this may require some degree of consultation. Essentially, if the choice is be made redundant (with or without redundancy money), go home on no pay but with a claim against the employer for unpaid wages, or stay at home and get 80% of salary, this is unlikely to be a difficult decision as most employees will want to be furloughed. If more than 20 employees are involved and agreement to the change is required, then the collective consultation regulations which require employee representatives to be consulted (and elected if none exist) could be argued to apply and further advice should be sought.
- Critically, it is the employer who must designate the employee a furloughed worker and the employee cannot choose to be.
- Also, critically, the guidance states that the furloughed employee must NOT undertake any work for their employer.
- The employer will not, therefore, be able to seek reimbursement in respect of wages costs for employees who are still working on reduced hours.
- Normal employment law does apply in respect of the selection of furloughed employees, in particular equality and discrimination laws. Please be comfortable that you can justify how you have decided which employees to furlough and which not, for non-discriminatory reasons. If you think it possible that any of the affected employees will object to be putting on furlough or indeed, for anyone not chosen, that they will argue that they should be chosen due to a protected characteristic e.g. medical condition, then seek advice as consideration may need to be given to either seeking volunteers and/or doing a selection matrix. The obligation to make reasonable adjustments for disabled employees should also be considered and when furloughing staff, this could be argued to include selecting those with disabilities which make them particularly vulnerable to Covid-19.
- A common question is whether employees can be rotated on furlough leave. The latest guidance has confirmed this is possible, subject to each rotation being for the minimum 3-week period.
What earnings does the scheme cover?
- The guidance is now clear that HMRC will reimburse 80% of earnings and any regular payments you are obliged to make (see further below), up to £2,500 per employee per month plus employers NI contribution and minimum employer auto-enrolment contribution on that reduced amount.
- The 80% will be calculated for salaried employees based on their salary in February 2020.
- For those with irregular earnings employed for a full 12 months prior to the claim, the employer can claim the higher of the same month’s earning from the previous year or an average of monthly earnings from the 2019-20 tax year.
- If the employee has been employed for less than a year, the employer can claim for an average of their monthly earnings since they started work.
- If the employee started employment in February 2020, their earnings so far should be pro-rated.
- Employers may choose to top up to 100%, but are not required to do so, and if you have a requirement for some employees to continue working, my recommendation would be to keep the differential.
- The current CJRS period lasts until 31 May and employees should not be advised that they will be furloughed beyond this period, if and until the government extends the scheme. If any employees have been advised that they are furloughed beyond this date, they can be written to now to confirm that the current maximum date is 31 May 2020, or you could wait until nearer the end of April to see if the government has announced any extension to the scheme. If you require employees back sooner than this, then any letters or agreements prepared by me will have included the ability to bring them back earlier and seek advice if you anticipate any difficulties with bringing employees back early and be aware that if you bring any employee back within 3 weeks, you will not be able to claim for them under the scheme .
- The 80% can reduce a low paid employee below the National Minimum Wage.
- Regular payments you are obliged to make can be included in the 80% calculation e.g. past overtime, fees and compulsory commission but discretionary commission, bonuses and other contractual benefits should not be included in the 80% calculation.
- The latest guidance has confirmed that redundancy payments will not be covered by the scheme which indicates that an employer can not claim for weeks during which an employee under notice of redundancy is working their notice. It is hoped that this position will be clarified but there seems no reason why redundancy consultation at least can not be started whilst employees are on furlough.
How does an employer make a claim under the scheme?
- HMRC will be reimbursing the employer via grants which need to be applied for and HMRC have advised that they expect the system to operational from 20 April 2020 although this cannot be guaranteed and whilst I have seen a comment that payments should be received within 6-8 days of claim, issues and delays are widely expected so this may still present cash flow issues.
- Employers must be registered with HMRC’s existing PAYE online scheme and if not already registered. I have seen guidance that this should take @10 days to register. https://www.gov.uk/paye-online
- A claim must relate to a minimum 3- week furlough period, which can start from whenever any employees are eligible to be treated as furloughed (i.e. the date from when they last worked) after 1 March 2020 and another remainder that the scheme is currently due to end on 31 May 2020.
- Employers will access the scheme through an online portal, providing details of the affected furloughed employees and information about their earnings and any other information required, such as the employee’s NI number.
- To claim, the information the employer will need to submit will include: the employer’s PAYE reference number, the number of employees being furloughed and their National Insurance Numbers, the claim period (start and end date), the amount claimed, the employer’s bank account number and sort code (UK bank account), contact phone number.
- Employers can only submit one claim at least every three weeks, as this is the minimum length an employee can be furloughed for. Reimbursement will be paid via BACS payment to the nominated bank account.
- The claim can only be made at the point at which the employer runs payroll or in advance of an imminent payroll because actual payroll amounts need to be submitted.
- Some lawyers are also including a right for the employer to defer making payment to the employee until it is received from the CJRS. I don’t consider this good HR practice but for businesses who can’t or who are concerned they may not meet the April payroll without it, it could be included and see if the employee/s agree to it.
- The system is open to abuse so record keeping is essential. The latest guidance has confirmed that each individual furlough letter/agreement should be kept for a minimum of 5-years for HMRC audit purposes.
What happens with holiday during furlough?
- Employees will continue to accrue holiday during furlough leave. The employer could ask employees to agree to limit their accrual to the minimum 5.6 weeks statutory holiday during the furlough period within the furlough agreement.
- A HMRC tweet and the ACAS Guidance has been amended to confirm that bank holidays and pre-booked leave can be taken during a furlough period, but the employer will need to top up the employee’s payment for such days to 100% of normal holiday pay. If employers are unable to do this or would rather not do it, then the unpaid holidays days will be added to their entitlement for the remaining holiday year after the furlough period. Note: there is still no clear guidance from the Government on how the scheme interacts with annual leave. What I set out in this note (and in any advice given) may, however, change depending on further clarification issued by the Government.
- New regulations have been brought in which allow up to 4 weeks statutory holiday to be carried over into 2021/2022.
- Directors of personal service companies may claim under the scheme for 80% of PAYE earnings as of February 2020 but only provided they do no work for their company beyond complying with their statutory duties as a director.
- If an employee had 2 or more jobs prior to 28 February 2020, then each employer could claim under the scheme.
- The guidance has confirmed that employees may work elsewhere during this period. My latest agreement however includes that an employee should seek permission from their employer prior to doing this to try and minimise the risk of an employee competing in some way.
- An employee may undertake volunteer work provided it is not for the employer or otherwise circumventing the requirements of furlough leave which is likely to be considered fraud.
- An employee may also undertake training provided it does not include the provision of services or generating revenue for the employer. The employee’s pay for such hours of training must be topped up to at least the National Minimum Wage for such hours and that element of top-up will not be reclaimable under the scheme.
Statutory sick pay
The current position on this is as follows:
- The Government has made legislation to deal with the issue – The Health Protection (Coronavirus) Regulations 2020 which confirms that those who self-isolate pursuant to Public Health Guidance (see https://www.gov.uk/government/publications/covid-19-stay-at-home-guidance/stay-at-home-guidance-for-households-with-possible-coronavirus-covid-19-infection which effectively requires people with symptoms to self-isolate for 7 days and for those living with someone with symptoms, for 14 days) to Statutory Sick Pay (SSP).
- SSP for coronavirus will be from day 1 and small and medium businesses (less than 250 staff) will be reimbursed for the first 14 days SSP The regulations to introduce the former are now in and they apply retrospectively to absence from 13 March 2020 whilst regulations for the latter are still awaited but expected soon.
- The note required to get SSP will be given by NHS 111 and not just doctors. Employees can self -certify for the first 7 days and for any period after then, they can now get a note online from NHS 111 https://111.nhs.uk/covid-19 to cover them after this time.
- If someone is “shielding” for 12 weeks in line with a letter from their GP or hospital clinician, they are NOT entitled to SSP. Their time off will either be unpaid, or the employer is free to elect to cover such absence under its company sick pay scheme. The more recent guidance has also confirmed that such employees may also be furloughed. Assuming they have already been on unpaid leave, the employer could now ask them to agree to go on furlough and back date it to when they were first instructed to shield.
- If they live with someone who is shielding, then they are not automatically entitled to be off work. They are not required to adopt these protective shielding measures for themselves. They should do what they can to support the vulnerable in shielding and they should stringently follow guidance on social distancing, reducing their contact outside the home. This means they should still be at work unless they get symptoms and does not entitle them to stay at home. However, the latest guidance confirms that if they need to stay at home with someone who is shielding, an employer could still agree to furlough them. This could however result in other employees coming forward asking to be furloughed and there are associated risks of discrimination and/or arguments of the breach of the duty of trust and confidence from disgruntled employees. You should take legal advice to minimise any risk to your business in that regard.
- Everyone is supposed to be following the social distancing guidelines wherever possible, including at work places however work places are currently allowed to remain open, even if they are not an essential business, but employees should not be required to attend work where they are able to work from home.
- Any employee who chooses to not come to work as they are concerned about the situation but who is not required to self-isolate under the Public Health guidance, is not entitled to SSP. In light of the government guidance to stay at home however, it is likely now to be unfair to discipline or dismiss someone who refuses to come into work unless they are in an essential job or role. The time off would therefore become Unpaid Leave.
- NB: not all employees are entitled to SSP and the same criteria apply as before to be eligible.
Many employers now have this in place. If you already had an existing home working policy, then this can be issued to employees not previously home-working. If you did not have one, then it may be unlikely that you have had a chance to implement one but as the situation calms down, consideration should be given to implementing one.
Issues to consider include:
- Data protection
- Reporting requirements (to supervisory staff)
- Hours of work
- Rest breaks
- Insurance provisions
- Employers’ rights in terms of agreed terms to enter the home to inspect company property, carry out Health and Safety checks and all other reasonable checks
- An agreement on returning company property installed in employees’ homes.
In simple terms, all reasonable checks that would be necessary in the normal place of work. See further the ACAS Working from Home Guidance
If you require a home working agreement, I would be happy to supply a sample agreement without charge.
School closures and key workers
The blanket school closure has now been in place for 3 weeks. All children are to remain at home unless their parent is a key worker. The list of key workers can be found here.
If an employee is looking after their children due to school closures and cannot come in or is not really working from home, then this is unpaid time off or the employer can now agree to furlough them. Assuming they have already been on unpaid leave, the employer could now agree with the employee that they go on furlough and back date it to when they were first off after the schools shut.
If employees are working from home and their children are off school, managers may decide to have a frank discussion from them as to what actual work can be done from home. Are they really working 8-hours during the day, as parents have a timetable of learning from school and now have a teaching role? Realistically, the ability to work full time hours may also depend on the age of the children and the supervision required. Are some employees now, in reality, working a 2/3-day week and should their pay be reduced accordingly if there is a short-time working clause within their contract?
Must I close my business?
Many hospitality and non-essential shops are now under orders to close so have now had the choice removed. Currently, the advice is that if an employee can work from home they should.
If they cannot work from home, then essential travel to work is allowed. The work itself does not currently have to be essential. I anticipate, however, that we may see further measures soon with all non-essential businesses and building sites etc being made to close their doors (as has happened with Scottish building sites). This may require further planning and home working measures.
On 26 March 2020, the Coronavirus Act was introduced which includes the right for employees to take unpaid emergency volunteering leave. This is intended to allow workers to leave their main job and volunteer temporarily in the NHS or social care sector. Certain authorities (e.g. NHS Board) can certify an individual as an emergency volunteer and that person will then be able to take leave if he or she gives her employer 3 working days’ notice and produces the certificate.
The period of leave is unpaid and must be either two, three or four weeks long, and must be specified in the certificate. There is no provision for employers to refuse leave. Workers can take one period of leave in each “volunteering period”. Initially, there will be one 16-week volunteering period, but subsequent volunteering periods can be set by the Secretary of State.
Despite the leave being unpaid:
- An employee on emergency volunteering leave will be entitled to the benefit of all of the terms and conditions of employment (except remuneration) that would have applied if the employee had not been absent
- The employee will be entitled to return from leave to the job in which he or she was employed before the absence on no less favourable terms and conditions.
Other measures for businesses/individuals
The Chancellor has also announced other measures for businesses such as deferral of July interim tax payment for the self-employed to January and deferring any VAT payments. Other measures such as mortgage payment holidays for individuals and business rate relief for certain businesses have also been announced. These are however outside of employment law so not covered here but the gov.uk site has various information and is being updated daily.
Want to know more?
Employment Solicitor Karen Coleman is an advocate of Team Leek and is happy to help with the employment law questions that you may have. Get in touch on 01782 703052, drop her an email or visit her website www.colemanHRlaw.co.uk.
Disclaimer: This briefing note does not constitute legal advice and employers are encouraged to take specific legal advice on the scenario they face. This update is a statement of the current position as at the time it is written. It may, and is likely to, change following further developments and guidance issued by the government during the course of this current Covid-19 pandemic.