Employers – Employment Law Updates

HMRC has tweeted that the online CJRS portal is going well.

In its full day of operation on Monday:

• 185,000 firms submitted claims
• 1,300,000 were employees reported as furloughed
• Total value of £1.5bn

With the HMRC online CJRS portal now up and running organisations will need to make sure they have the correct paperwork in place when claiming. The Treasury Direction to HMRC states there must have been a written agreement in place between the employee and the employer (see our update dated 16 April) prior to furlough leave commencing. It is currently unclear whether employers can claim under the CJRS for employees who have not specifically agreed in writing to being furloughed.

HMRC has also published two new guidance documents. The first  is a guide for how employers can claim under the CJRS. The second is a guide for calculating 80% of an employee’s wages. Links for the guidance documents appear below.

The HMRC’s guidance for employees has also been updated. This guidance clarifies the position in respect of those employees taking holiday whilst on furlough leave. However, employers can still rely on their right to refuse holiday leave requests in accordance with legislation.

The new guide enables you to calculate 80% of your employee’s wages, National Insurance Contributions and pension contributions if you’ve furloughed staff due to coronavirus (COVID-19). Access the calculator here

The government has now released a step by step guide to Coronavirus Job Retention Scheme. This guide explains the information that employers need to provide to claim for their employees’ wages.

View the guide here

More to follow but details likely to remain the same with this being a simple extension of the scheme, in addition to yesterday’s announcement regarding a change of date to the original eligibility criteria.

Chancellor of the Exchequer, Rishi Sunak, said:

We’ve taken unprecedented action to support jobs and businesses through this period of uncertainty, including the UK-wide Job Retention Scheme. With the extension of the coronavirus lockdown measures yesterday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.

It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.

The Treasury’s Direction to HMRC has now been issued. This contains authority and instructions for making payments under the Coronavirus Job Retention Scheme and is expected to be the definitive guidance on how the Job Retention Scheme works.

Key aspects of the Direction include:

• employees who were employed on 19 March 2020 are eligible for furlough – previously the cut-off date was 28 February 2020. However, the employer will have to prove the employee was on the payroll by that date.
• An employee can be furloughed if their dismissal was “by reason of circumstances as a result of coronavirus or coronavirus disease”  – this means it’s not limited to only those employees who were/would otherwise be made redundant.
• Furloughed directors can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company’s accounts or provision of other information relating to the administration of the director’s company.
• Employees will only be deemed “furloughed” if there is a written agreement that the employee will cease all work. Where there is no written agreement, it’s possible that the CJRS will not apply and accordingly employers will not be eligible for reimbursement.
• Performance related bonuses, discretionary payments, commission and any non-financial benefits must be disregarded for the furlough claim. However, it may be possible to claim for some deferred payments.

Any furlough agreement which makes the payment conditional on the CJRS paying out may disqualify the employer from claiming those salary payments under the scheme.

On 8 April 2020 HMRC gave a Parliamentary Select Committee an update on the online portal for employers to access  under the CJRS. Key elements of the update included the following:

1. The online portal is currently undergoing testing by a number of selected employers.
2. Further guidance on the scheme and portal use is to be issued next week (week commencing 13 April 2020).
3. The online portal, will be available to all employers on 20 April 2020.
4. The online portal is a self-service system but there will be a helpline for employers to call for help with the portal.
5. Payments will be made to those employers who have claimed using the portal by 30 April 2020.

The House of Commons Library has now issued helpful FAQs on the CJRS which can be accessed at  FAQs on the Coronavirus Job Retention Scheme.

The short answer to this question is that apprentices can be placed on furlough leave and still continue their training provided that they do not carry out any services which generates revenue for their employer during this time. However, the government has recently published further guidance in respect of furloughed apprentices. There are some key points for employers to be aware of which include:

• Implementing arrangements for the necessary training and assessment to take place – the government’s guidance is that, ideally, this is done remotely
• Extending the assessments timetable where necessary
• Ensuring national minimum wage compliance

The updated guidance also clarifies that the apprenticeship levy payments for employers will not be suspended during furlough leave periods.

The recent social distancing guidelines put in place by the Government have undoubtedly affected the way all industries are now working. One industry in particular has raised numerous questions and uncertainties about how future work and contracts will be affected.

As offices around the country close their doors and their employees move to remote working, many construction sites remain open for business as usual. This means that pressure is being placed on companies who find themselves torn between adhering to the government instructions and fulfilling their contracts with larger contractors.

The question that many UK businesses now face is ‘will I be subject to a claim for breach of contract and damages if we choose to stop work in light of the pandemic?’. Unfortunately the answer is not a straightforward one.

While many companies are taking a commercial view on contracts already entered in to in light of the climate we now find ourselves in, many businesses now face the threat of legal action, damages for breach of contract and the legal costs that are involved with it.

Every contract is different, the specific terms of the contract entered in to will be vital to ascertain your business’s position. It is therefore critical that you obtain the right commercially effective advice for your business, especially in the uncertain times we find ourselves in.

HMRC has published an updated guidance on it’s CJRS. There are many unanswered questions, however the updated guidance does answer a few.

This includes:

• An express allowance that employees can start a new job when on furlough leave – this means that they could, theoretically, receive a Furlough Leave payment for their old salary plus 100% salary for their new job.
• A clarification that employers can reclaim 80% of compulsory commission payments in relation to commission but cannot reclaim  for non-monetary benefits (e.g. the value of health insurance or a car).
• Company directors can be furloughed provided they perform only their statutory duties – although the guidance fails to specify what “statutory duties” includes.
• Employees can be furloughed multiple times which allows for the rotation of furloughed employees. 

The right to carry-over untaken holiday leave has been extended in the event leave was not been taken because of the COVID-19 pandemic.

The extension allows untaken leave to be carried over into the next two leave years. Equally, the right to a payment in lieu of untaken holiday on termination of employment is extended. But the extended rights apply only to 4 weeks of statutory leave.

Conversely, the employers right to refuse leave has been restricted. This new restriction has given a good deal of uncertainty as to when leave can be refused.

Full details here

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

The HMRC has just published guidance on the Coronavirus Job Retention Scheme, aka Furlough Leave. This guidance provides some detail on:

•         which businesses and employees will be covered;
•         what counts as ‘furloughing’; and
•         how employees’ wages will be calculated.

The guidance has confirmed the scheme, which it  expects to be up and running by the end of April, will be in place for at least three months from 1 March 2020. The scheme’s online portal will enable employers to reclaim:

•         wage costs – which is actual salary before tax and does not include fees, commission and bonuses
•         the employer’s NI contributions, and
•         the minimum automatic enrolment employer pension contributions on that wage.

The guidance also covers how to calculate the wage for those whose pay varies and reiterates that the employee must undertake no work for the employer whilst “furloughed”. However, training which does not bring in any money for the employer can be undertaken by employees whilst on Furlough leave.

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Find full details here

The Coronavirus Act 2020, which received royal assent on 25 March 2020, introduces a number of emergency measures in response the coronavirus pandemic. A number of these are the following employment-related changes:

• SSP is payable from the first day of sickness or self-isolation and can be funded by HM Revenue and Customs;

• ‘emergency volunteering leave’ is a new form of leave to enable emergency volunteers in health or social care to take unpaid time off work and receive compensation for loss of earnings.

There is still some uncertainty about these changes as both require secondary legislation, and so will only take effect on a date still to be decided.

What do we know now?

• coronavirus-related SSP, which is paid by the employer, will be funded by the state. Although, again, the requisite regulations for this state funding are still to be drafted  and there is uncertainty as to how this will apply. But it’s anticipated that the regulations will be along the lines of the Chancellor of the Exchequer’s 17 March 2020 announcement that funding would be available to employers with fewer than 250 employees and limited to two weeks’ SSP per eligible employee.

• Emergency volunteering leave is aimed at allowing workers to take unpaid leave from their employment and, instead, volunteer temporarily in the NHS or social care sector. Individuals seeking this leave must have received the necessary authorisation, given the applicable notice and certificate to their employer and take the leave in blocks of either two, three or four weeks in any 16 weeks’ voluntary period. Employees taking or proposing to take this leave will have additional and new employment law protections.

Given the economic impact the Coronavirus has had on businesses up and down the country, accounts of job losses and redundancies are sadly already being reported. Regrettably there are likely to be more, despite the Government’s measures to support people and businesses without doubt, this is a worrying time for both employees and employers.

With the inevitable slowing of recruitment, an extended time on the hands of those without jobs, and the abolition of tribunal fees, this may result in a sharp increase to employment tribunal claims.

Employers must take stock and ensure appropriate processes are followed ahead of making any headcount changes.

The importance of this has been made all the greater following the government’s introduction of the Furlough scheme. Final details are yet to be provided by the Government for this scheme, which will pay salaries of those businesses who’s otherwise lay-off/make redundant their staff as a result of Covid 19. More details below.

During the current economic environment company processes can be adapted to meet business needs whilst, at the same time, ensuring they can defend any changes that are pushed through thus leaving the business to focus on surviving and evolving once this pandemic is but a memory.

The significance of fairness and following the correct procedures cannot be underestimated in these challenging times.

There has been much criticism that the government has put in place financial assistance for the employed but has “forgotten” about the self-employed and those in the gig economy. In response to this, the House of Commons Public Bill Committee has proposed the Statutory Self-Employment Pay amendment to the Coronavirus Bill.

This amendment, if passed in its current form, will mean the introduction of Regulations whereby “freelancers” and “self-employed people” will receive guaranteed earnings of:

(a)  80% of their monthly net earnings, averaged over the last three years; or,
(b)  £2,917 per month

whichever is the lower.

Although the term “Freelancers” is yet to be defined, the proposed amendment offers some hope to many who had fallen between the gaps of the financial assistance schemes currently in place.

We will report more on this as and when the provisions become clearer.

In short, this is a Covid-19 job retention scheme that was introduced by the government on Friday. Details are a little sketchy right now and this article will be updated as we get more information about it.

Who can access this scheme?

All employers can access it.

What is it’s function?

To pay the salaries of those who would otherwise lay-off/make redundant their staff as a result of Covid-19

What do I need to do as an employer to take advantage of this scheme?

There are a number of steps that you need to take. They are as follows:

1. Designate your “furloughed” worker(s).

This is not a currently recognised concept. It references anyone who the company is asking to stay at home due to Covid-19

2. Identify if your contract allows the right to lay-off or provide short-time working to your furloughed worker(s).

Very few contracts include these clauses. If it doesn’t, you’ll need to agree the change in status with the employee. This can be achieved through a very short consultation exercise. It’s anticipated that agreement will be readily given by most.

3. Once a worker is designated a furlough worker (and they must be notified of this), provide HMRC with the requisite information.

This is to be done through a new, online portal which is still to be set up.

How much will HMRC reimburse an employer?

HMRC will reimburse 80% of a furloughed worker’s salary up to a maximum of £2,500 per month. It’s not currently clear whether the £2,500 cap is in relation to the amount HMRC will pay or whether it is the cap to be applied to all salaries so the reimbursement for a furloughed worker will be 80% of £2,500. It’s expected this guidance will be given shortly.

Can an employee work whilst designated a “furloughed worker”?

To qualify for the scheme the individual cannot undertake work for the employer at this time otherwise the employer is not able to access the scheme.

What about the remaining 20%?

The employer can top up the missing 20% not reimbursed by the government. If the employer chooses not to do so, it will need an agreement from the employee in this regard otherwise the employer faces the risk of unlawful deduction/breach of contract claims. Again, this is something that is expected and can be readily achieved through the consultation exercise.

One of the biggest considerations right now is remote working / home working, regardless of whether it’s part of minimising potential exposure for your employees, or part of a wider policy of self-isolating.

The Government is asking that employees work from home whenever they can (and it’s important to note that this is where reasonable and practical as opposed to a directive).

What should employers be doing?

Some may elect to put in place a temporary working from home agreement which covers all the salient points. Where these agreements are not in place it is worth checking that the following is sufficiently robust:

Contracts

Do place of work clauses include home addresses?
Are confidential information clauses sufficiently robust?
Are your home working policies and procedures GDPR compliant? (how is data secured, stored, encrypted etc whether online or offline, “hard copy” or “soft copy”)

Policies

Does your Electronic Communications Policy cover home working?
Do you have a “Use your own devices” policy?
Does your expenses policy need reviewing? (is it reasonable to offset additional lighting/heating costs for working from home, against a reduction in personal travel expenses?)
Health and Safety
Have the requisite audits been undertaken?
Review insurance cover for home working arrangements

Other

Make sure Communication plans are up to date
Implement appropriate supervision arrangements
Consider how you will deal with those employees who cannot work from home

• ACAS: Guidance for employers and employees from ACAS, the Advisory, Conciliation and Arbitration Service, an independent body funded by the Government, is available here
• NHS: Health-related guidance from the National Health Service is available here

Public Health Guidance:

Public Health England including, eg, specific guidance for employers, educational and health-related organisations, and an option to receive updates directly is available here

Statute allows time off for emergencies – this includes taking time to put in place longer-term arrangements.

Strictly speaking, this form of leave is designed to be short-term so typically 1 or 2 days at most. However, given the unprecedented position we all find ourselves in, employers are urged to be flexible in their approach in this regard and allow this form of time off to continue for longer than would ordinarily be the case.

This form of statutory leave is unpaid although some employers emergency time-off polices provide for this form of leave to be paid.

Alternatively, employees may be able to:

• Work from home where their job allows this. This may require some flexibility in terms of the hours they work to enable them to juggle both childcare and work. And employers are advised to have in place homeworking policies which cover the key aspects of homeworking  – not least data protection compliances; or
• Utilise holiday entitlements – pay and procedures should apply as they would in ordinary circumstances.

Should school closures continue for an indefinite period of time employers will need to contingency plan for voluntary leave options (this may be either/a mixture of paid and unpaid leave), short time working and lay-offs.

In the absence of an employer having a contractual right to implement any of these options careful consideration must be given to the appropriate processes that the business should follow. Even where your terms and conditions of employment already allow for these options, their implementation will still need careful handling to avoid costly claims.