Coronavirus Q&A – Advice for Employers

Coronavirus Employer Q&A

We share our answers to some of the pertinent questions employers are asking in light of the current Coronavirus outbreak.

What evidence should we ask for if an employee is unable to work due to having Coronavirus symptoms?

A trustful approach should be taken by employers on this front. By law, medical evidence is not required for the first 7 days of sickness, and after this it is down to the discretion of the business. You can ask an employee to get an ‘isolation note’ by visiting NHS 111 online.

What about sick pay entitlement?

If a team member is sick or unable to work due to Coronavirus, they will be eligible to receive Statutory Sick Pay (SSP). SSP will now be paid from the first day of sickness. SSP is £94.25 per week and can be paid for up to 28 weeks. New measures have been introduced so that for businesses with fewer than 250 employees, the cost of providing 14 days of SSP per employee will be refunded by the government in full. This is on the basis that you don’t have a company policy. If you do have a company sick pay policy in place, that will take precedence.

We offer Company Sick Pay (CSP) on a discretionary basis in our employees’ contracts. Do we have to honour this?

Where CSP is offered on a discretionary basis, it may be withdrawn. This only applies where the employment contract specifically states that CSP is at the employer’s discretion. It is reasonable for the company to make this decision in order to try to maximise the longevity of people’s overall employment. The wider availability of SSP also means that the employees have some protection with regard to continuous earnings. However, there is obviously a significant gap (in most cases) between SSP and normal pay or CSP.

What about where employees need to look after dependents?

Employees with caring responsibilities which have arisen as a result of COVID-19 and who cannot work due to these responsibilities can be furloughed. This includes childcare responsibilities.

The “emergency dependants leave” legislation could also be engaged here. The statutory regime provides for a reasonable amount of unpaid leave to allow alternative arrangements.  This may be used if the minimum time period an employee can be furloughed (3 weeks) would be more time off than the employee needs.

Employers should allow WFH in these situations if possible, albeit the presence of children in the home may reduce productivity.  In these circumstances, employers are faced with a case of employees not working at all vs employees work from home in a non-conventional way e.g. flexible hours etc to accommodate childcare. 

Employees may choose to take this time off as holiday so normal processes and pay apply.

We recommend that employers look to be as pragmatic and understanding as possible and try to find something that works for both employee and employer.

What is the latest guidance around family leave?

The normal rules for all forms of family-related leave and pay apply irrespective of whether an employee has been furloughed (and furlough must end before the start of the leave). However, new regulations have been introduced which provide that where an employee was furloughed and then started a form of family-related leave on or after 25 April 2020, their statutory pay for that leave should be calculated based on the pay they would have received if not furloughed.

What financial support is the Government offering?

The latest support the Government is offering is called the ‘Coronavirus Job Retention Scheme’ (CJRS). This involves placing an employee on a ‘furlough’. The term means temporarily changing their status to ‘furloughed worker’, where they don’t work but are retained on your books to be brought back when you need them.

The Government is offering grants to cover 80% of furloughed employees’ wages, to a maximum of £2,500 per employee per month. Any employer can access this scheme, regardless of size or business type.

You need to get agreement from your employees before designating them as furloughed workers and submit that information to HMRC with each employee’s earnings. The first grants should be paid by the end of April 2020.

Any employee can be furloughed so long as they were on PAYE before 19 March 2020. So ultimately, it’s your choice who utilises the scheme and who doesn’t. You can’t make employees work while they’re furloughed, even if they’re on short time working.

For how long does the Job Retention Scheme run?

The Government has announced that the Coronavirus Job Retention Scheme will be extended until the end of October 2020. The Scheme will continue in its current form with no changes until the end of July. Thereafter, from August to October, the Scheme will continue but with greater flexibility to support a transition back to work. Employers will be able to bring furloughed workers back to work on a part-time basis.

From August the Government will ask employers to start sharing with the Government the cost of paying workers’ salaries whilst they are furloughed until the Scheme ends in October.

The overall level of support that workers can expect to receive whilst furloughed will not change. The Government has stated that workers will, through the combined efforts of the Government and employers, continue to receive the same level of support as they do now, at 80% of their salary, up to £2,500.

Full details of the changes to the Scheme which will apply from August will be made available by the end of May.

I hired an employee that started after 1st March, can I still furlough?

Yes! The eligibility date for furlough has been updated by HMRC. This means that you will now be able to furlough any employees who have been on your PAYE payroll on 19 March 2020. Unfortunately, you are not able to furlough employees who started working for you after that date.

What if the employee does not agree to be furloughed?

If the employee does not agree then you will have to proceed with a redundancy process, obviously considering all alternatives to redundancy before making a final decision.

If your employee(s) have less than 2 years’ service and are refusing to be furloughed, you could be able to end their employment without going through a consultation process, but you should seek our advice before proceeding with this approach.

Can employees on fixed term contracts be furloughed?

An employee who was on a fixed term contract can be re-employed, furloughed and claimed for if either: (a) their contract expired after 28 February 2020 and an RTI payment submission was notified to HMRC on/before 28 February 2020; or (b) it expired after 19 March 2020 and an RTI payment submission was notified to HMRC on/before 19 March 2020. If the fixed term contract has not yet expired, it can be extended or renewed, and they can be furloughed and claimed for under the CJRS.

What about employees transferred under TUPE?

Where employees transferred to a new employer via TUPE on/after 28 February 2020, the new employer can claim for those employees under the CJRS if the TUPE or PAYE business succession rules apply to the change in ownership.

Can I furlough myself as a sole director and/or other directors within the business?

Yes, you can be furloughed as a director in some circumstances. It is now confirmed that salaried company directors can be placed on furlough leave.  In order to place a salaried company director on furlough leave they need to be paid via a PAYE scheme.  In these circumstances the board of the company can make the decision to furlough.  Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where a director owes statutory duties to the company under the Companies Act 2006, they can carry out these duties while on furlough leave, however they should complete work which is reasonable to fulfil their statutory duties and not complete any work which would in normal circumstances generate comical revenue for the company.

These rules can also apply to salaried individuals who are directors of their own personal service company (PSC).

We would recommend having 1 director remaining on to run any operations, but you can rotate the directors being furloughed – it has to be a minimum 3-week period on furlough status. However, all directors can be furloughed, including those Limited Companies with only 1 director, but technically you can’t then work for the firm, other than to perform their statutory obligations as directors, eg, official legal filings.

Company directors paid annually can be furloughed and claimed for via the CJRS provided they meet certain conditions, including being notified to HMRC on an RTI submission on/or before 19 March 2020 in relation to a payment of earnings in the 2019/20 tax year.

Please contact us for further advice on this before proceeding.

If an employee has been furloughed but has holiday booked during their furloughed period, is the company obliged to give those holiday days back to the employee?

Current guidance states that furloughed workers can request and take their holiday in the usual way, if their employer agrees. This includes bank holidays. Furthermore, furloughed workers must get their usual pay in full for any holiday they take. Therefore, if your employee is on furlough and cancels their holiday, this will need to be added back to their allowance.

However, it is currently unclear whether a period of holiday will interrupt the 3 week minimum furlough period and therefore jeopardise funding for employers.

What should I do with holiday entitlement for my employees?

Employees and workers can carry over up to 4 weeks’ paid holiday over a 2-year period, if they cannot take holiday due to coronavirus. There may be concern about the impact of holidays when the business starts trading as normal, if your staff may want to take holidays at a time when you’re going to be busy. Remember, it’s up to you to authorise these holidays or decline them.

If an employee is off sick with coronavirus and has annual leave already booked, do we need to give them the annual leave back and put them on sick pay?

Yes, you should give them the leave back or at least give the employee the choice.  This is analogous to the existing position where sickness absence ‘trumps’ an employee’s pre-booked holiday. The employee may choose to keep their annual leave in so that they are receiving full pay for the period rather than their contractual or statutory sick pay.

Does self-isolation automatically mean absence, even if they are able to WFH? E.g. employee calls in to say they have some symptoms, but otherwise feel fine and well enough to WFH.

Employers should let the employee WFH where possible and give them full pay whilst doing so.  If they become more unwell and thus unable to work from home, then they will flip from full pay to SSP/ contractual sick pay (as applicable).

What about where employees are on basic pay + commission, and they have to WFH? Are we under any obligation to temporarily suspend commission targets or review this to ensure fairness?

This event is totally outwith the control of employers, therefore, employees should WFH with basic pay and are entitled to any commission they generate (or not, as the case may be) as usual. Whilst employees may be unhappy about this, there is unlikely to be an automatic entitlement to commission under the contract or policies. You should check the applicable wording very carefully.

The fact that working at home makes meeting targets more difficult is a feature of this unprecedented situation but the usual contractual principles will apply.

We are already considering cost cutting measures. When should we communicate this?

A good rule of thumb is to over communicate in these situations and it would be wise to do so. You may be able to take measures which would not be permissible in normal circumstances, such as:

  • Ask team members to take unpaid leave (they need to consent to it)
  • Adjust hours/salary temporarily with all team members’ consent to keep the business afloat
  • Short-term lay-off (if you have this clause covered in your contracts)

If you at least signpost these issues to your employees early, then you will keep the business ahead of the curve. It is better to be overprepared and have an action plan than to be on the back foot. 

Legal advice should be taken before any changes to terms and conditions are consulted upon or indeed any redundancies are envisaged. If you’re thinking of implementing any of the above, please contact us to discuss.

The new Coronavirus Job Retention scheme allows you to continue to pay employees’ salaries for those that would otherwise have been laid off due to the crisis. The Government has also announced that it will be offering additional loans to support small businesses during this time. For further information take a look at the government plans.

We are here to support your business and team so please contact us if you have any questions or require guidance with any of the above.

This post was updated on 12th May. Please be aware of any subsequent government updates.

Useful Resources

The Government launched a coronavirus business support finder tool on 20 April 2020 which uses an online questionnaire to identify whether a business or self-employed person could be entitled for support from various government schemes, including the CJRS. This can be accessed here.

GOV.UK:

https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses

NHS:

https://www.nhs.uk/conditions/coronavirus-covid-19/

Health Protection Scotland:

https://www.hps.scot.nhs.uk/a-to-z-of-topics/covid-19/

Helpful Resources for Mental Health and Wellbeing

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