News - UK

UK - April 2020

Coronavirus FAQs

Last updated: 2nd June 2020 12:30

Here to help

Effective, regular communication is key to the successful management of your workforce in this crisis.  This is particularly so where your workforce is mainly working remotely and where you are looking to obtain their agreement to measures which will help ensure the continued operation of the business- both short and long term – but which may affect employees adversely even if only temporarily.

Our multi-disciplinary COVID Team can

  • Provide the advice you need
  • Draft communications to staff, including FAQs
  • Prepare revised contractual documentation
  • Advise on creative remuneration structures
  • Help you access and implement government assistance programmes - for more information see here
  • Plan for the post COVID world
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FAQs

Can I require staff to work at home?

Can I cut hours and/or pay?

Can we enforce workplace working if an employee is refusing to come in?

I don’t want to lose my employees but I can’t afford to keep paying them. What can I do?

How much can I claim?

Are there any conditions?

How long does the scheme last?

Will there be any changes?

Can I impose this on employees?

I still need most of my employees but I have less work for them. Can I cut hours and pay?

Can I take employees in and out of furlough?

Can I top up employees’ pay where they are furloughed under the Scheme?

What about holiday?

Does the Job Retention Scheme only apply to employees?

What about self-employed people?

How do I decide who to “furlough”?

Can I make my employees redundant regardless of the Job Retention Scheme?

How do I claim?

 

Can I require staff to work at home?

  • The government  advised from16 March 2020 that wherever possible people should work at home and has now stated that all people should do so except where absolutely necessary. That advice has now been modified to the effect that, as from 13 May 2020, employees who cannot work at home should discuss returning to the workplace with their employer, except for those in industry sectors that remain closed (for example, hospitality).
  • Where staff are working at home your obligation to ensure a safe working environment remains so you should take reasonable steps to ensure that an employee has a proper place to work and the right equipment to do so.
  • If there is no such term then the government’s advice is probably sufficient justification to make this a reasonable requirement.  You should however discuss with each employee in advance to identify any possible problems. Agreement to changes will be required - they cannot be simply imposed.
  • Your contracts of employment may contain a term enabling you to require employees to work at such place as you require – if so, requiring staff to work at home won’t be a problem.
  • Office or call centre based workers may be require to attend work if they work in “critical roles”.  These are positions which are “critical for business and operational continuity, safe facility management or regulatory requirements”.

 

Can I cut hours and/or pay?

  • Again, any changes to terms and conditions need employee consent.  If the alternative is a redundancy programme, however, consent may be forthcoming.

 

Can we enforce workplace working if an employee is refusing to come in?

  • An employer has a responsibility to all its employees to take reasonable steps to ensure their health and safety in the workplace.
  • Where employees are not themselves unwell but are genuinely concerned about attending work, or travelling for work, due to potential risks to their health, this should be treated seriously.  The law offers protection to any employee who refuses to attend work where s/he believes there is serious and imminent danger.  This would include concerns about using public transport.
  • The Government has published general guidance for employers and also specific guidance relevant to eight different industry sectors. This can be found at  https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19/offices-and-contact-centres.
  • This requires employers contemplating requiring employees to return to work to
    • Undertake a risk assessment specific to the impact of  COVID-19 on its workplace: it is expected that employees would be consulted on that and that it will be published when complete
    • Adjust the workplace system as required following that risk assessment
    • Ensure that the system is followed
    • Maintain social distancing

 

I don’t want to lose my employees but I can’t afford to keep paying them. What can I do?

  • Some contracts contain a “lay-off” and “short-term working” provision enabling an employer to require employees not to work without any obligation to pay them or to reduce their hours and pay accordingly.  These terms are not now common outside heavy industry. If there is no such contractual provision laying off or short term working will require employee consent and cannot lawfully be imposed.
  • The Guidance has now been given legal status by a Treasury Direction published on 15 April 2020 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf
  • Recognising this, the government has established a “Job Retention Scheme”.  Under this, all UK employers are eligible to access state support to “furlough” employees – require them to do no work - and continue paying part of their wages to enable employers to retain their staff during the crisis and avoid making redundancies.

 

How much can I claim?

  • Her Majesty’s Revenue and Customs (HMRC) will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month plus Employer’s National Insurance Contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. This will change from the beginning of July – see below.
  •  It applies  to basic salary, accrued overtime and accrued contractual commission payments – discretionary commission and bonuses are not to be included and seemingly basic salary is not to be increased to take account of any commission payment not earned (as would, for example, be the case when calculating holiday pay).  Salary sacrifice schemes are also not included.  The payments to the employees will be subject to deductions for income tax and national insurance contributions in the normal way (except for employees who are not part of a business such as nannies or domestic staff).
  • Contractual enhanced payments for
    • maternity pay
    • adoption pay
    • paternity pay
    • shared parental pay
  • may also be claimed.  There are complex provisions covering these.

 

Are there any conditions?

  • The Treasury Direction states that the furlough must have been caused as a result of circumstances arising as a result of coronavirus or coronavirus disease.  There does not appear to be any process whereby HMRC will require evidence of that but it would be sensible for employers to keep records of decision making.
  • The minimum period of furlough will be three weeks. Claims may not be made for shorter periods.
  • The Scheme covers employees who were on the employer’s payroll on 19 March 2020.  Employees who were made redundant after 28 February 2020 will be covered by the Scheme provided they are rehired.  It also applies to employees who transfer to the employer under the Transfer of Undertakings Regulations 2006 (TUPE) after 28 February 2020 but who have continuity of service with their previous employer dating back beyond that date.

 

How long does the Scheme last?

  • The Scheme was originally stated to last until the end of June 2020. The Government has recently  announced that it will continue until the end of October 2020. 

 

Will there be any changes?

The payments under the Scheme will change after June 2020.

  • From the beginning of July - the requirement that furloughed employees do no work will be relaxed and they will be able to return to work on a reduced hours basis, so that the Government subsidy will only be available on the balance of their normal full time salary up to the 80% limit.
  • From the beginning of August - Employers will have to pay national insurance contributions and auto-enrolment pension contributions on furloughed salaries from the beginning of August.
  • From the beginning of September -  The subsidy percentage will decrease to 70% 
  • From the beginning of October – The subsidy percentage will decrease further to 60%.

This will mean that the maximum subsidy will decrease to £2,160 per month and then to £1,875 per month. Employers will be required to continue to pay national insurance and auto-enrolment pension contributions and also to pay employees the difference so that employees continue to receive the same amount throughout furlough.

  • From 30 June 2020 - The Scheme will close to new entrants.  Claims may only be made after that date for employees who have already been furloughed.  This will mean that, to comply with the three week qualification period, the latest date on which employees who are still working may be furloughed is 10 June 2020.
  • From the end of October - The Scheme will cease completely.

 

Can I impose this on employees?

  • The Government has said that the scheme is subject to current employment law and has stated that changes to employment contracts – which will be the case for furloughed employees unless the employer “tops up” salaries – should be made by agreement.  The Treasury Direction states that employer and employee have to agree in writing and the agreement must
    • Specify the main terms and conditions upon which the employee will be furloughed; and
    • be incorporated into the employee’s contract of employment
    • be retained by the employer for at least 5 years.
  • This will mean that furlough under the Scheme cannot simply be imposed on employees.  If it is done without their consent then claims of constructive dismissal may arise or affected employees may make claims for unlawful deductions from wages for the balance between their normal salary and the sums they receive under the scheme.  Further, claims will not be compliant with the direction and so will either not be paid or recovery proceedings may take place if HMRC subsequently becomes aware that employee agreement has not been given.
  • The Government has also stated that current consultation obligations applying to changing employee terms and conditions will continue to apply which will mean in practice that employers looking to furlough 20 or more employees may have to consult for 30 days (or 45 if 100 or more) with trade unions or, if none are recognised, with employee representatives elected for the purpose.  This may become important if the terms of the Scheme change in August as these consultation obligations may apply if the result of the changes is that employee consent will be required.

 

I still need most of my employees but I have less work for them.  Can I cut hours and pay?

  • Not without employee consent - cutting pay will almost certainly amount to a breach of contract. At the moment the Job Retention Scheme only applies to employees who do no work for their employer. Employees whose hours are reduced do not qualify for the Scheme. That will change from the beginning of July 2020.
  • Apprentices (which would include those on training contracts in professional services firms) may be furloughed but may continue training whilst on furlough provided the training is relevant to their job and they do not provide services to or generate revenue for the employer when doing so.
  • Employees who have more than one job may be placed on furlough for one but may still perform work under the other.  This does not apply, however, to a second job with the same employer or a linked employer.

 

Can I take employees in and out of furlough?

  • The only requirement under the Scheme is that a period of furlough must be at least three weeks long.  Payments will not be made for shorter periods. Guidance states that employees may be taken in and out of furlough so long as each period is a minimum of three weeks.
  • Employees who fall ill may be switched from furlough to sick pay.  If you do not pay company sick pay then this will be at the rate of Statutory Sick Pay (£95.85 per week) during their sickness absence.  The employee may then return to furlough pay when well again.  Given the low rate of SSP it must be unlikely that many furloughed employees will self-report as sick.

 

Can I top up employees’ pay where they are furloughed under the Scheme?

  • There is nothing to prevent you doing this; indeed it may be an effective means of securing consent from the employees.  Payments under the Scheme are however based on pay as reported to HMRC in February 2020 (or for employees with variable pay, an average of the twelve months prior to 1 March 2020 so no account will be taken of any salary increases from 1 March 2020 onwards. 
  • From 1 August the subsidy paid by the government will decrease to 70% then to 60% and it will be obligatory for employers who continue to furlough employees to make up the shortfall to 80% of pay.
  • Reimbursement for employer’s national insurance contributions and minimum automatic enrolment pension contributions will only be on the payments made under the Scheme, not on any top-up.  This will cease as of 30 June 2020.

 

What about holiday?

  • Guidance makes it clear that a period of holiday will not interrupt furlough and employers can claim for the whole period.
  • However, when an employee is taking holiday, payment must be made at the full contractual rate so that the employer must “top up” what is received from the Scheme.
  • Employers may require employees to take holiday in the normal way – by giving a period of notice twice the amount of holiday required to be taken.  Similarly employers can continue to refuse to allow holiday during furlough again by giving a period of notice twice the length of holiday sought.
  • Up to four weeks’ holiday may be carried over to the next two holidays where the reason it could not be taken is due to coronavirus.   
 

Does the Job Retention Scheme only apply to employees?

  • The Scheme applies to all employees – full time, part-time, agency. fixed-term, flexible or zero hours contracts.
  • As well as employees, claims may be made under the Scheme for
    • Office holders – this would include company directors (including non-executive directors
    • Salaried company directors so long as they are paid salary at least once each year
    • Salaried members of Limited Liability Partnerships
    • Agency workers
    • “limb (b) workers” – people who contract personally to do work for the employer but who do not operate under a contract of employment 
  • In each case it applies only where the individual is paid under PAYE.  Those who pay tax under self-assessment may be able to claim under the Self-Employed income Support Scheme

  • Employees with variable hours will be eligible for the Scheme.  Employers will be able to base their claim on earnings for the same month in the previous year or an average over the last twelve months, whichever is the higher. Zero hours workers will therefore be covered by the Scheme

 

What about self-employed people?

  • A separate scheme – the Self Employment Income Support Scheme (SEISS) – has been established for the self-employed – those who pay tax through Income Tax Self-Assessment..
  • To qualify the person must
    • Have submitted a tax return for any of 2016-17, 2017-18 and/or 2018-19
    • Traded in 2018-19 and 2019-20 and intending to continue trading during 2020-21
    • trading when the claim is made (unless prevented from doing so because of COVID-19
    • have lost trading profits because of COVID-19 (though no proof of loss appears to be required)
    • have trading profits of less than £50,000 and more than 50% of income coming from self-employment.
  • The grant (which will be taxable) is calculated as an average of trading profits for the last three tax years, and will be paid as a lump sum on a three month basis up to a  maximum of £7,500.  This will continue until October 2020 when it will cease.
  • HMRC will contact individuals direct starting in the middle of May 2020.

 

How do I decide who to “furlough”?

  • Employers are free to decide which employees should be asked to agree to furlough.  In doing so, however, Government guidance makes it clear that employers must observe equality and discrimination laws. 

 

Can I make my employees redundant regardless of the Job Retention Scheme?

  • Courts and Employment Tribunals would normally regard decisions on redundancies as being for employers to take and generally only concern themselves with the fairness of selection and the requirement for consultation.   Employers are, however, expected to consider alternatives to redundancy and so a failure to at least consider using the Job Retention Scheme could result in findings of unfairness.
  • When the Scheme ends  employers will have to decide whether employees can return to their normal duties.  If not, redundancy may have to be considered.  The mandatory minimum consultation periods should be borne in mind – 30 days where 20-99 redundancies are planned or 45 days for 100+.

 

How do I claim?

  • Claims are made by way of reimbursement through a portal that has been created by HMRC.  The portal opened on 20 April 2020.HMRC are intending to make payments on claims 4-6 working dates after receipt.
  • Employers can claim for payments due up to 14 days before their payroll date.
  • Employers may claim per pay period so on a weekly basis if that is how staff are paid.
  • The following information will need to be provided
    • details of the amount being claimed including the start and end date,
    • the number of employees furloughed,
    • the claim period
    • ePAYE reference number, bank account and telephone contact details
    • names, national insurance numbers of employees to be furloughed
    • Self-assessment UTR or Corporation Tax UTR or Company Registration Number
  • Note that HMRC are working on the basis of calendar days. Where claims are made for furloughed employees for a complete month no problem arises.  For shorter periods, however, this may mean that the amount of reimbursement is less than if the calculations were done on the basis of a working day which is usually calculated by employers as being 1/260 of annual salary.
  • The payment will be made by BACS transfer and employees must receive or have received the full amount claimed apart from tax and NI deductions – no fees may be charged and no part may be assigned to the cost of providing benefits.

 

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