Emplaw Monthly - End of April 2020
NEW FROM OUR AUTHORS
Furloughing employees - FAQs for employers on the coronavirus job retention scheme
A useful resource from Emplaw authors, Lewis SIlkin, incorporating the latest updates (27th April) from the government on how furlough will work in practice under the new Coronavirus Job Retention Scheme
Insolvent Employers, Redundancy, and Covid 19
Emplaw authors Parklane Plowden set out what it means for employees when businesses fail, what are they entitled to, and how do they go about getting it.
Free webinar on The Job Retention Scheme - Pensions & Benefits Issues
Free online webinar to download - recorded 15th April - from Emplaw authors, Gowling WLG
FOCUS ON EMPLAW CONTENT
The Emplaw law card on the Written Statement of Employment Particulars has been updated by Emplaw authors Moorcrofts and explains clearly what information employers need to provide employees following the recent ERA Section 1 changes. This is part of the series of cards on Employment Contracts from Moorcrofts.
Employer/employee advisor need to know
Posted Workers (Agency Workers) Regulations 2020
The Posted Workers (Agency Workers) Regulations 2020 have been laid before Parliament and will come into force on 30 July 2020 and will expire automatically at the end of the Brexit transition period (currently 31 December 2020).
The purpose of the instrument is to transpose the revised EU Posting of Workers Directive 2018/957/ EU (the Directive) into domestic law. The Directive establishes the employment rights and protections that apply to a worker when they are ‘posted’ (sent temporarily to another EU member state, an EEA country or the UK).
The Regulations modify the Agency Workers Regulations 2010 to the effect that a hirer that posts an agency worker to an EEA country where the agency worker does not normally work will have to notify the agency of the EEA country of the posting and the date at which the posting will commence. The Regulations also enable a temporary work agency (TWA) to bring a claim in the employment tribunal against the hirer to recover any losses the TWA may suffer as a result of the penalties imposed by an EEA country for failure to comply with the provisions of the Directive or the Posted Workers Directive.
Modern Slavery Act 2015 – statutory guidance
The Home Office has issued statutory guidance on modern slavery aimed at staff in England & Wales. The guidance is aimed at ensuring a more consistent response to modern slavery victims to ensure they are identified and receive the available and appropriate support.
Changes to DBS checking requirements due to COVID-19
Temporary changes have been made to the requirements due to the COVID-19 outbreak to make the process easier for employers. The changes will enable:
- ID documents to be viewed over video link
- scanned images to be used in advance of the DBS check being submitted
Stopping the Spread - social distancing in the workplace and other practical guidance for employers
The general Guidance for employers and businesses on coronavirus (COVID-19) from BEIS together with Public Health England was last updated on 7th April . It includes guidance on Social Distancing in the Workplace. It also lists other good practice and recommendations including:
- Shift working or the staggering of processes (where it is not possible for work to be completed at home) which would enable staff to continue to operate both effectively and where possible at a safe distance (more than 2 metres) from one another
- Staff canteens and rest areas, stating that there are no practical alternatives, workplace canteens may remain open to provide food to staff with appropriate adjustments for social distancing but where possible, staff should be encouraged to bring their own food, and staff canteens and distributors should move to takeaway.
- Moving good and handling post or packages
Stopping the Spread - practical guidance for employees
The general Guidance for employees on coronavirus (COVID-19) from BEIS together with Public Health England was last updated on 7th April . It provides short, practical guidance on matters such as staying at home, sick pay and financial support available including claiming benefits and support for rent costs
Stopping the Spread - Guidance on shielding and protecting people who are clinically extremely vulnerable from COVID-19
This Guidance from Public Health England was last updated on 17th April . It is for the clinically extremely vulnerable who should have received a letter telling them they’re in this group or been told by their GP.
If an employer has an employee in this group, they are eligible to be furloughed for that reason.
Coronavirus Job Retention Scheme
We set out below an up-to- date and straight forward overview of what can be claimed and how, with links to the information which is not always easy to find on GOV.UK
Useful links on GOV.UK
Employees’ guidance on the JRS - Check if your employer can use the Coronavirus Job Retention Scheme
The ‘Check if your employer can use the Coronavirus Job Retention Scheme’ from HMRC was last updated on 23rd April. It is quite detailed guidance which includes:
- Information for specific groups such as agency workers and PAYE ‘workers’ who don’t necessarily qualify for full employment rights (limb b workers).
- An explanation of the rules about re-engagement and furloughing if an employee is made redundant or stopped working after 28 February 2020
- A link to report fraud to the HMRC if employees are concerned that their employer is abusing the scheme.
The guidance explains that employer must make the claim under the JRS; the employee cannot apply and reminds employees:
‘Both you and your employer must agree to put you on furlough - so speak to your employer about whether they can claim. Once agreed your employer must confirm in writing that you have been furloughed to be eligible to claim. Contact your employer if you do not receive confirmation.
If you are concerned that your employer has not claimed on your behalf, you should speak to your employer. HMRC will not be able to provide information about individual applications’.
Employers’ guidance on the JRS - Check if you can claim for employees’ wages through the JRS
This is the guidance from HMRC last updated on 23rd April which employers should consider first before working out what they can claim . It includes information such as
- The rules about re- re-engagement and furloughing if an employee has been made redundant or stopped working since February 28th
- Rules about employees working under fixed term contractors
- How to deal with employees who are self-isolating or on sick leave or become sick while furloughed
Employers’ guidance on the JRS : working out 80% of employees’ wages
HMRC has provided guidance, last updated on 27th April on how to work out 80% of an employee’s wages where they are claiming under the coronavirus JRS.
It includes guidance on what to include and what not to include in calculating the wage on which furlough pay is calculated and links to an online calculator
Employers’ guidance on the JRS - a step-by-step guide
HMRC has published a step-by-step-guide for employers to claiming for employees’ wages through the Coronavirus Job Retention Scheme.
It is a useful document to read after reading Check if you can claim for employees’ wages through the JRS and Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme (above) and before proceeding to Claim for wages through the Coronavirus Job Retention Scheme (below)
Employers’ guidance on the JRS- Claim for wages through the Coronavirus Job Retention Scheme
HMRC has provided guidance, last updated on 27th April on how to claim including a link to the online portal
Shortly before the JRS online claims portal went live, the government issued a Treasury Direction setting out the legal framework for the scheme and updated guidance. The Direction amounts to a legally binding order from the Treasury to HMRC, with which HMRC must comply. Legally the Direction trumps the government guidance published on GOV.UK but employers will no doubt argue that they can only reasonably be expected to rely on the guidance where there appears to be some inconsistencies between the two.
The Direction states that the exceptional purpose of the JRS is to reimburse employers for the costs incurred in respect of employees who are furloughed ‘arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease’. It is therefore clear that costs are only recoverable for furloughed employees if the furlough ultimately results from matters associated with coronavirus, whether health, social or economic.
A furloughed employee is one who has been instructed by their employer to cease all work in relation to their employment, where the instruction is given by reason by reason of circumstance arising as a result of coronavirus. The Direction states that such instruction will be valid, for the purposes of reimbursement under the JRS, only if employer and employee have agreed in writing that the employee will cease all work in relation to their employment. There has been some concern that this means that employers need a formal written agreement with employees that they would be furloughed and perform no work for the employer. This was particularly so as earlier versions of government guidance suggested that simply designating an employee on furlough was enough (although agreement would be needed to reduce wages). Anyway, the most recent government guidance, updated since the Direction, says
‘To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming through the scheme. Collective agreement reached between an employer and a trade union is also acceptable for the purpose of such a claim. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years’.
The government guidance on the JRS is clear that ‘workers’ are included. However the Direction refers to tax legislation (section 4 of Income Tax (Earnings and Pensions) Act 2003) which applies to those working under a contract of service.
For the purposes of calculating furlough pay, the Direction is clear that there is a distinction between a ‘fixed rate’ employee and other employees. Fixed rate employees are likely to be those with annual hours stipulated in the contract. Those with weekly or monthly hours of work are unlikely to be fixed rate employees. For fixed rate employees, the reference salary is the amount payable to the employee in the latest salary period ending on or before 19 March 2020.
For other employees, only ‘regular salary or wages’ can be included (using a countback or averaging period) to claim under the JRS. This excludes performance-related payments unless the payments are contractually due and certain and benefits in kind. Any part of a payment which is ‘conditional’ cannot be included and this has led some to argue that overtime cannot be included as it is conditional on working extra hours. However the recent government guidance, updated since the Direction, says that non-discretionary overtime is included. .
It appears that if a claim amounts to less than 80% of the employee’s reference salary, the whole claim must be disallowed so care should be taken when calculating the sum and ensuring that all allowable elements of wages or salary are included.
Emplaw overview of the Coronavirus Job Retention Scheme
Under the government’s job retention scheme, the government has agreed to pay 80% of an employee’s usual monthly wage costs (up to a maximum of £2,500 pm). This scheme started on 1 March 2020 and runs for a fixed period of four months i.e. to 30 June 2020 (subject to possible extension). It is only possible to claim for furloughed employees that were on the employer’s payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020. Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
The JRS claims portal went live on 20 April 2020. HMRC has said that it will pay claims within six days.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed. Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) and employees who are unable to work because they have caring responsibilities (such as child care) resulting from coronavirus (COVID-19) can be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
SSP or furlough?
The JRS is not intended for short term absences such as sickness so if an employee is on sick leave or self-isolating when they are furloughed they can claim statutory sick pay (see below). However, updated guidance from the government provides that ‘If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees’. In such a case, the employee would stop receiving sick pay and would be classified as a furloughed employee.
In contrast, if a furloughed employee falls ill, the updated guidance states that they retain their statutory rights to SSP. The employer can decide whether to place them on SSP or keep them on furlough pay. Employers can claim back furlough pay under the JRS and SSP under the SSP rebate scheme but not for the same period.
Who is covered under the JRS?
An employer must have a PAYE scheme registered on HMRC’s RTI system for PAYE on 19 March 2020. The government specifies that businesses, charities, recruitment agencies and public authorities are included.
With regard to companies in administration, administrators may access the JRS but only if there is a reasonable likelihood of rehiring the workers. The administrators must be comfortable that staff can be retained pending a sale or restructuring of the business. See the case of Carluccio’s Ltd, In Administration.
Public sector organisations may also access the scheme but only in limited circumstances: ‘the government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak’.
Employers can make claims backdated to 1 March 2020 and claims can commence from ‘the date that the employee finishes work and starts furlough, not when the decision is made, or when they were written to confirming their furloughed status’.
What are wages?
“…The amount you should use when calculating 80% of your employees’ wages is regular payments you are obliged to make, including:
- regular wages you pay to employees
- non-discretionary overtime
- non-discretionary fees
- non-discretionary commission payments
- piece rate payments
You cannot include the following when calculating wages:
- • payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
- discretionary bonuses
- discretionary commission payments
- • non-cash payments
- • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay …“.
How much can be claimed?
An employer can claim up to 80% of usual monthly wage costs up to a maximum of £2,500 per month per furloughed employee, including associated employer national insurance contributions and minimum automatic enrolment pension contributions. An employer can top up the amount due to the employee, if it wishes.
The process for claiming under the JRS
It is the employer’s decision whether to furlough employees. Employers should write to the employees who are to be furloughed to confirm their furloughed status (and keep records for five years). The Treasury Direction states that an employee is deemed to be furloughed if ‘the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment’ but most recent government guidance, updated since the Direction, says
‘To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming through the scheme. Collective agreement reached between an employer and a trade union is also acceptable for the purpose of such a claim. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years’. Hence, the employee’s written consent is preferable but the preferred view is that a valid claim will not be rejected if express written consent is not obtained, unless the terms of the employer’s furlough letter is otherwise flawed.
In any event, if an employee objects to being furloughed (for example, if they earn much more than the maximum £2,500 pm) the act of furloughing an employee may constitute a breach of contract. Clearly, it is preferable to negotiate with staff and secure their consent.
Holiday during furlough
Annual leave continues to accrue during the furlough period (see the Employee Guidance): “You can take holiday whilst on furlough. Working Time Regulations (WTR) require holiday pay to be paid at your normal rate of pay or, where your rate of pay varies, calculated on the basis of the average pay you received in the previous 52 working weeks. Therefore, if you take holiday while on furlough, your employer should pay you your usual holiday pay in accordance with the WTR. Employers will be obliged to pay the additional amounts over the grant,”.
Working during furlough
An employee must not work during the furlough period for any part of the business of the employer or any business which is connected with the employer. This includes providing services or generating revenue. However, employers are free to consider allocating any critical business tasks to staff that are not furloughed and employees may however undertake training and be paid the NMW for this.
Furloughed employees may volunteer provided any work done in this way does not generate revenue for the employer. If an employee works for two separate employers, they can be furloughed by one employer and continue to work for the other.
Acas guidance: advice for employers and employers during coronavirus
Acas has published advice for employers and employees during the CoVID-19 pandemic.
Statutory Sick Pay
If an employee becomes sick while on furlough, it is up to the employer to decide whether to move them onto SSP or to keep them on furlough
The government has published COVID-19 guidance (updated 27th April) on the eligibility criteria for the scheme to reclaim SSP paid for sickness absence due to COVID-19 which confirms that:
The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work on or after 13 March 2020 because they either:
· have coronavirus
· cannot work because they are self-isolating at home
· are shielding in line with public health guidance COVID-19 (a category added by The Statutory Sick Pay (General)(Coronavirus Amendment)(No.3) Regulations 2020)
Employers with fewer than 250 employees are eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
Employers should maintain records of staff absences and payments of SSP, but employees do not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an ‘isolation note’ online from NHS 111.
Meanwhile, the Statutory Sick Pay (Coronavirus) (Suspension of Waiting Days and General Amendment) Regulations 2020 suspended, with retrospective effect from 13 March 2020, the rule that SSP is not payable for the first three qualifying days of incapacity for work where absence is related to COVID-19. If the illness is not related to COVID-19, employees must have been off work sick for 4 or more days in a row (including non-working days) to get SSP.
Self-employment income support scheme
The coronavirus JRS does not apply to self employed persons. Such individuals may be able to qualify for support under the self-employment income support scheme.
This scheme allows self-employed persons to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 a month. It will be available for 3 months, but may be extended.
The online service to claim from the scheme is not available yet. The latest guidance (21st April) states that the HMRC will aim to contact individuals by mid May 2020, and will make payments by early June 2020
The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.
An individual can make a claim for Universal Credit while they wait for the grant. They should record the grant as part of their self-employment income, and it may affect the amount of Universal Credit they get. This will not affect Universal Credit claims for earlier periods.
If the self-employed person receives the grant they can continue to work or take on other employment including voluntary work.
A self-employed person or member of a partnership can claim if they:
- have submitted their Self Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when they apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have lost trading profits due to coronavirus
They will need to confirm to HMRC that their business has been adversely affected by coronavirus. HMRC will as usual use a risk based approach to compliance.
Trading profits must also be no more than £50,000 and more than half of total income for either:
- the tax year 2018 to 2019
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
AGM Online Voting Solutions in the time of Covid-19
Some useful information on suggested approaches from UK Engage
Dyslexic employee allowed extension of time to bring claim where dismissal letter was ambiguous
Mr Brophy who was severely dyslexic (and relied heavily on his brother) worked as a meter reading operative for Lowri Beck Services. Disciplinary proceedings were commenced against Mr Brophy in relation to a meter which had been left in a dangerous condition.
On 29 June Mr King telephoned Mr Brophy to tell him that he had been dismissed with immediate effect and that he would receive a letter to that effect.
Coronvirus Job Retention Scheme and Administration: are contracts adopted where the employees agree to go on furlough?
This case concerns the legal basis upon which administrators might place a large number of employees on "furlough" pursuant to the Government's proposed Coronavirus Job Retention Scheme (the "Scheme").
Coronvirus Job Retention Scheme and Administration: are contracts adopted after employees placed on furlough by company?
This case was heard shortly after the Carluccio’s case (above). It concerns an application by the joint administrators (the ‘Administrators’) of Debenhams Retail Limited (‘the Company’) for directions pursuant to paragraph 63 of Schedule B1 (Schedule B1) to the Insolvency Act 1986 (‘IA 1986’).