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We provide Legal & HR advice to protect and support your business.

On the 20th March 2020, Chancellor Rishi Sunak announced “unprecedented” measures set to be implemented by the government to support people, jobs and businesses during these uncertain times. One of these measures is the Coronavirus Job Retention Scheme (“the Scheme”).

What is the Scheme?

Under the Scheme, UK employers will be able to continue paying a part of their employee’s salary for employees that would have otherwise been laid off during the crisis.

Who will the Scheme apply to?

The scheme will apply to all employees on PAYE, including those on zero-hour contracts.

It is unclear yet whether the Scheme will apply to employees that have voluntarily taken unpaid time off (e.g. for childcare) or employees that are working reduced hours. We would assume not, as the Scheme appears only to apply for employees that would have been laid off or made redundant. We anticipate that the government will publish further guidance on this in the upcoming days.

How much will employees be entitled to?

The government will provide a grant for all employers to cover up to 80% of the salary of “furloughed” workers, capped at a maximum of £2500 per month. This will be paid by the employer and reimbursed by the government.
The guidance states that this includes “all employment costs”, but there has been no confirmation from the government as to whether this sum is gross (including tax and national insurance contributions) or net.
The average salary may be difficult to calculate where there are zero-hour contract workers. We would recommend waiting for further guidance from the government before completing any calculations.
The employer, at their discretion, can fund the difference between this payment and the employee’s salary. They are under no obligation to do so.

Which employers can claim under the Scheme?

The Scheme is open to all employers. Examples provided by the Chancellor included small, large, non-profits and charitable businesses.

What is a “furloughed” worker?

The term has not been defined by the Government yet. Guidance on the government website suggests this is when an employee is kept on the employer’s payroll, rather than being laid off.
The employee will remain employed while furloughed and therefore we assume that they will retain their employment rights.

What period can the employer claim for?

The Government intends the scheme to run for a minimum of 3 months from 1st March 2020. This means that any claims can be backdated to 1st March 2020.
There has been no clarification on whether an employer could close the business and “furlough” employees from tomorrow for three months for example. At present, it is safer to assume the Scheme only applies from 1st March 2020 until further guidance is published.
The employer may decide to test out closing the business for a shorter period (e.g. 4 weeks or 6 weeks) with a view to extending this period further. Staff should be kept informed throughout this period.
The Chancellor confirmed in his speech that the Scheme may be extended beyond three months.

What about employees that have already been made redundant, placed on unpaid leave or laid off?

If the employer had been planning to take one of these steps before the Scheme was announced, they could instead change their approach and utilise the benefits of the Scheme. This would hopefully stop an employee losing their job, providing they agree to be “furloughed”.
However, where an employee has already had their employment terminated it is unclear whether they would be eligible under the Scheme. We would advise waiting on further advice from the government on this.

Are employees that have called in sick due to the coronavirus (COVID-19) eligible under the Scheme?

Please see our guidance for employers that explains how an employer should respond where an employee has called in sick for these reasons.
If they would otherwise have been laid off, they would be eligible under the Scheme.

How can an employer claim under the Scheme?

The first step is to decide which employees to designate as “furloughed”. They will need to be notified in writing of the proposed change to the terms and conditions of their employment. In this letter, it would also be useful to provide the employee with guidance on how long they will be placed in furlough for and whether (and how) this would be subject to review.
This change will need to be agreed with the employee. In normal circumstances, an employee would not agree to a reduction in salary. However, we suspect that when they are faced with the alternatives (i.e. redundancy, unpaid leave), most employees would agree to be placed on “furlough”.
The employer would then need to confirm the change in writing.
Following this, the employer will need to provide the appropriate information via a portal to HMRC. This has not been created yet and therefore the information needed is unclear.
To claim under the Scheme, the employee should not undertake work whilst they are “furloughed”.

When will it start?

No date has been set yet. The Government hopes to implement the scheme before April 2020.

Contact Us

It appears that the Scheme implemented by the government will go a great way to supporting both employers and employees during these uncertain times. We hope to receive further information from the government in the next few days with further details of the Scheme.
If you are a business looking for assistance in implementing this scheme or further advice on how to support your staff please contact our team of employment specialists today.

Coronavirus: Employer FAQs Part 2

Over the past few weeks we have been asked many questions by employers who are worried about how the coronavirus (COVID-19) pandemic will impact their business and workforce. 

We have already answered some commonly asked questions on our previous FAQ post, but considering the recent and forthcoming changes to employment law we have answered some more commonly asked questions below. 

Please note, the information below should not be misconstrued as legal or medical advice.

Do I need to keep my business open?

New legislation (The Health Protection (Coronavirus, Restrictions)(England) Regulations 2020) has been passed by the Government in response to the pandemic. The legislation sets out exactly which businesses and premises should be open during this time, and which ones should be closed. Further details can be found here

This means your situation will fall into one of the following categories.

  1. Your business is subject to restrictions or closure: This will undoubtedly leave you with the question – what should I do with my staff? Some businesses will need to have a reduced or amended service (e.g. takeaway businesses). This may require you to make changes to the hours your staff work, or the number of staff that you keep on. The answer will be dependent on your unique circumstances so contact us today for tailored advice.
  2. Your business premises can be kept open: Your staff will be expected to work as normal if the business premises are open. As an employer you will have to take measures to promote the health and safety in the workplace. A list of precautionary steps you can take are listed in our previous article
  3. Your business can continue but your premises must be closed: This may cause you some issues depending on the nature of your business. For example, if you own a construction business, it would be impossible in practice to keep working when you cannot access the project site. This will leave you with several questions as to how to manage your staff and keep your business healthy. Again, your next steps would depend on your situation so contact us today for tailored advice.

You may be able to arrange for staff to work from home (where appropriate). You will need to help facilitate this by providing them with the necessary equipment e.g. laptop, desk, chair. 

Our workplace is open. We have an employee that is concerned about their health and safety and they are refusing to come into work. What can I do?

You should discuss these welfare concerns with the employee and you should outline the health and safety measures that have been put in place by the business to protect staff. 

If your employee is still refusing to come into work it may be considered as an unauthorised absence and you may wish to start disciplinary proceedings. However, due to the sensitivity of the current crisis this is not likely to be advisable as it could cause unnecessary tension during a stressful time for all parties. 

From your discussion with the employee you should be able to ascertain the reasons behind the employee’s concerns e.g. they are high risk, they live with someone who is high risk, etc. If they believe there are suitable medical grounds to be off work you can suggest that they obtain evidence in the form of a doctors note. For the coronavirus, the employee can also contact NHS 111 or use the NHS 111 online portal and this would be sufficient. The employee would then be entitled to statutory sick pay, (or company sick pay under any existing scheme). 

What is the current situation regarding sick pay?

If an employee is off sick with the coronavirus they would be entitled to the same sick leave and sick pay as if it was any other illness (e.g. tonsillitis). This could include company sick pay. The employee should follow the company sickness policy to the best of their abilities as usual.

This period of leave may be for 2 weeks if they are self-isolating or recovering from the coronavirus. It may be extended if they are unfit to return to work. Some employees will need to be signed off for a longer period of 12 weeks if they are deemed as high risk by their doctor.

Under new government measures implemented specifically for the coronavirus, the government will meet the cost of coronavirus-related Statutory Sick Pay for small businesses with under 250 employees for 14 days. It is estimated that this will provide approximately £2 billion for up to 2 million businesses.

Employees off sick from work following medical advice (relating to the coronavirus) will be entitled to Statutory Sick Pay from day one, rather than day four under the usual measures.

Can I place my employees on “Furlough Leave”?

The government are implementing the Coronavirus Job Retention Scheme to support employers during this crisis. This will allow employer’s to reclaim 80% of an employee’s normal salary (capped at £2500) if they otherwise would have been laid off because of the crisis. Employers will be able to apply for a grant to cover the Employer National Insurance contributions and minimum automatic enrolment pension contributions on paying this amount. 

This scheme will be open for at least 3 months from 1 March 2020 for anybody employed through PAYE (including zero hour employees). 

It has been suggested in government guidance that this may be appropriate where an employee cannot work due to childcare commitments. 

During this period of Furlough Leave they will be retained as an employee and cannot work for the business. They may be able to undertake some training but further legal advice should be sought before allowing this. Recent guidance has suggested they can work for another business during this time.  

You can only be a part of this scheme if both you and your employee agrees to this change in their contract of employment. It is not something either party can decide on without express consent from the other party. 

Further details can be found on our post here.

Who can I place on “Furlough Leave”?

You can claim for employees that were on your PAYE payroll before or on 28 February 2020.  This includes employees that are on various employment contracts such as: full time, part time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed. 

Guidance has suggested alternative reasons where you can suggest Furlough Leave, not just where the employee would otherwise have been laid off. These include:

  • Employees that are shielding in line with public health guidance (or need to stay at home with someone who is shielding) if they are unable to work from home and they otherwise would need to be made redundant
  • Employees with caring responsibilities who are unable to work from home e.g. due to childcare commitments
  • Office holders e.g. directors and they can perform statutory duties but no other work for the company. If you are an office holder and contemplating furlough, please contact us

However, please remember that if someone is off sick with COVID-19 for the two week period, they will only be entitled to company sick pay (if applicable) or statutory sick pay. They cannot be placed on furlough leave until this sick leave period has finished.

Can an employee work during “Furlough Leave”?

An employee cannot work for the business whilst they are on Furlough Leave.

However, employees on Furlough Leave can work another job at a different company during this period of furlough leave, if they are contractually allowed to do so. This means they may end up earning 80% of the old salary and 100% of their new one. Previous guidance suggested this may not be possible. 

What payments to the employee can I reclaim from the Government under the Scheme?

Employers can reclaim 80% of an employee’s normal salary (capped at £2500).

You can reclaim 80% of the compulsory commission back from HMRC, in addition to basic salary. You can also reclaim 80% of “fees”, but not non-monetary benefits. 

Employers will be able to apply for a grant to cover the Employer National Insurance contributions and minimum automatic enrolment pension contributions on paying this amount. 

What is the minimum period an employee can be on “Furlough Leave” for?

The minimum period is 3 weeks (within the 3 month period starting from 1 March 2020). 

An employee can be furloughed multiple times within this period (i.e. they can return to work and then be furloughed again) as long as they are placed on furlough leave for a minimum of 3 weeks each time. 

Can I ask employees to take annual leave during “Furlough Leave”?

In any circumstance you can request that employees use their annual leave entitlement on or by certain dates. For example, if you wish to close the office over Christmas. 

Your employer will need to give you the prescribed notice, which is twice as many days before the amount of annual leave that they request you take. For example, if you had to use 2 days annual leave, they would have to give you at least 4 days notice to use this leave. 

I have an employee that wants to take “Furlough Leave” but she is off sick. Is this possible?

If an employee is off on sick leave they cannot be furloughed. They will instead receive their company sick pay or statutory sick pay entitlement. 

When they are fit to return to work they may be placed on Furlough Leave. 

What about employees taken on after 1st March 2020? Can they be put on “Furlough Leave”?

No, they are excluded from the scheme so you will be unable to place them on “Furlough Leave”. You will need to explore other options. 

They may be entitled to claim furlough leave from their previous employer and they should contact them where appropriate for further guidance. 

What about employees that we have already made redundant?

The scheme is backdated to 1st March 2020 to cover those who have already been made redundant. These people would need to be reemployed and then they would be eligible for the grant. 

I cannot afford to pay staff during Furlough Leave and wait to reclaim the money. What options do I have?

You may have to explore other options to reduce your workforce such as redundancy, or lay off/short time working (if the employee has the necessary clause in their contract). 

Other support that has been introduced for businesses include:

  • Deferring self-assessment payments 
  • Business rates holiday for retail, hospitality and leisure businesses
  • Cash grants for retail, hospitality and leisure businesses
  • Support for nursery businesses that pay business rates
  • Support for businesses that pay little or no business rates
  • The Coronavirus Business Interruption Loan Scheme 

How do I reclaim the money from the government?

The Government now expect the new online platform to be available on the 20th April 2020 with first payments made by the 30th April 2020.

You will require an ePAYE reference number. You can acquire this via the following link if you do not have one already. 

You will need the following information to use the platform: 

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • your bank account number and sort code
  • your contact name
  •  your phone number

Do I need to formalise the “Furlough Leave” arrangement with the employee?

You must as an employer have a Furlough Agreement in place between yourself and the employee. This should be kept on record for 5 years. 

Please contact us if you require a Furlough Agreement drafted by our team.

Our team of employment law specialists can provide you with tailored guidance to help your business during the crisis. For advice please contact us on 0330 221 0684 or by e-mailing info@klglaw.co.uk

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Tel: 0330 221 0684
Email: info@klglaw.co.uk

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