As you will appreciate, I have had further calls about the impact of the Coronavirus on employment. I have put together a FAQ that I hope assists both employers and employees.
This information is correct at 12 noon on Monday 30th March 2020. Please note that this information is generic and should not be relied upon without taking further advice about individual circumstances.
If you have any queries or require additional support or advice, please contact me at amanda@pillingerandassociates.co.uk or 07764 764806.
Coronavirus Job Retention Scheme (JRS)
The JRS allows employers to designate employees as furloughed. The employer can then claim 80% of their salary (up to a cap of £2,500) from HMRC.
Any sums payable to the employee will be subject to tax and NI deductions in the usual way.
An employee who is furloughed must not carry out any work for their employer (although they can be required to carry out training).
In order to be eligible to reclaim the 80%, the employer must designate the employee as being furloughed for a minimum of 3 weeks.
It is possible to alternate furlough between different groups/ employees provided that each block of furlough is a minimum of 3 weeks.
Do employees need to consent to being designated a furlough?
Any employee who is designated as being furloughed will need to agree as there will be a variation to their terms and conditions of employment. No contract will have provided for furlough, given that it is a new concept. In particular, unless the employer agrees to top up the 20% balance of salary, there will be a reduction in salary.
Understandably, many employees will not be able to attend work to sign a hard copy of any agreement so acceptance by email/ WhatsApp is considered to be acceptable.
Can casual workers be designated as furlough?
Yes. Any person who was on the PAYE on 28th February 2020 can be designated as furloughed. For the purposes of calculating the 80%, the following calculations are made: –
- for salaried employees, actual salary before tax as it stood on 28 February 2020.
- for
employees with irregular earnings who have been employed for a full 12 months
the higher of: –
- the same month’s earnings from the previous tax year; or,
- the average monthly earnings from the 2019-20 tax year.
- for employees with irregular earnings who have been employed for less than 12 months an average of their monthly earnings since they started.
What happens if an employee refuses to be designated as furlough?
In the event that the employee’s contract of employment entitles the employer to lay employees off or introduce short-time working (with the statutory guarantee payment of £29 per day for 5 days in a 3-month period), they can rely on that clause. Alternatively, the employer may commence formal redundancy consultation.
How should employers choose who will be designated as furlough?
Given that an employee who is designated as furloughed cannot carry out any work, it is not possible to share a reduced workload between all employees at the same time. Employers may therefore only want to designate part of their workforce as furloughed. They can alternate between different groups, provided that a period of furlough cannot be shorter than 3 consecutive weeks.
There is no statutory procedure to be followed in making the selection, but employers should make sure that they follow a reasonable procedure and do not discriminate against employees.
Any employee who has been advised to shield is entitled to be designated as furloughed. Employers should ask such employees to provide evidence, such as a copy of the letter from the NHS.
Any employee with a disability should be prioritised, as designating them as furloughed may be a reasonable adjustment.
Many employers are then prioritising employees who live in the same household as people working in the NHS. This is a reasonable decision to protect both the NHS worker and the employer’s workforce.
Employers can then prioritise those who have been designated as vulnerable.
There is no obligation to designate any employee as furloughed and employees can not demand or apply to be furloughed.
What happens to holiday during furlough?
There is nothing in the guidance to suggest the contrary, so we assume that employee will continue to accrue holiday during furlough.
Employees can take holiday during a period of furlough and it is currently thought that such employees remain entitled to payment at the 80% rate (or the cap of £2,500). Clearly, employers can agree to top this up and, once any legislation is published, it may become clear that all employers should top up the salary during holiday. If that is the case, payments can be made retrospectively.
What happens if an employee is sick or self-isolating before being designated as furloughed?
In this case, the employee is entitled to SSP (or contractual sick pay) until they are ready, willing and able to return to work (ie the end of their sickness or self-isolation). They can then be designated as furloughed.
Can I work for another employer whilst designated as furloughed?
There are two scenarios to consider here.
If an employee already has another job, they can continue to work for the second employer if the first designates them as furloughed.
There is currently nothing in the guidance to prohibit an employee from taking on a second role (or increasing their hours in an existing second role) but this may change. There is a risk that employees who do take on a second role will have to pay back the furlough payment.
I am director. Can I designate myself as furloughed?
Yes, provided that you were on the PAYE on 28th February 2020. In contrast to those who are eligible for support under the self-employment support scheme, a director who is designated as furloughed must not do any work, other than statutory duties. HMRC have already said that they will investigate fraud and it is likely that these investigations will include reviewing email accounts and phone records.
When will the scheme be running and when will employers receive the grant?
It is expected that the scheme will be running by the end of April 2020. There is no timeframe for employers to receive grants, but we hope the payments will be made as soon as possible.
If employers are struggling to cover payroll, they can apply for loans. Alternatively, they can try to obtain agreement from staff to accept a delay in their salary payments until such time as the grant is available.
Can an employer make redundancies during a period of furlough?
Yes. Although the intention of the furlough scheme is to avoid redundancies, there are some businesses where they will be unavoidable. Employers must follow the usual consultation procedures and must take reasonable steps to avoid redundancies (which may include keeping an employee as furloughed for the duration of the scheme). Specific advice should be sought in the event that an employer wishes to make redundancies during a period of furlough as care must be taken in calculating notice entitlements and redundancy entitlements.
Can I reinstate an employee who was made redundant?
Provided that the employee was on PAYE on 28th February 2020 and was made redundant after that date, an employer can reinstate them and designate them as furloughed.
The employees can then be made redundant again at the end of the furlough period if their positions remain redundant, but employers should be consider any notice entitlement and the fact that employees will accrue holiday during any period of furlough.
I am aware that Martin Lewis is advising people to ask employers to reinstate them but there is no obligation on an employer to do so.
Can employees now carry holiday forward if they can’t take it due to the Coronavirus?
The Government has amended the Working Time Regulations to allow employees who have been prevented from taking their basic four-week annual leave entitlement to carry over that leave for up to two years. Where it is not reasonably practicable for employees to take their full entitlement this year, therefore, they will be able to defer their remaining leave to next year. This only applies to the first 4 weeks of annual leave. The additional leave of 1.6 weeks must still be taken in the current holiday year. The Regulations also make it clear however that the employer can only defer the employee’s request to take annual leave where it has ‘good reason’ to do so. While a rush in demand for leave towards the end of the year may well satisfy this requirement, the employer should make every effort to accommodate requests for leave where possible.
Attending work during “lockdown”
Contrary to many reports, all employees are permitted to attend work if their place of work remains open. Many people believe that only “key workers” are permitted to attend work. That is not the case. To date, the definition of a key worker has only been used to determine which employees are entitled to take their children to school, although this may change.
Employers have a general obligation to care for the health and safety of all employees. In addition, the government have published guidance on social distancing within the workplace.
If employees are concerned that their employer is not providing a safe place of work, they should follow the usual grievance procedure. This is likely to include raising concerns informally in the first instance.
Ultimately, if an employer fails to provide a safe place of work and fails to respond to a formal grievance, an employee could resign and claim constructive dismissal. The strength of their claim would depend on a number of factors including steps taken by the employer and whether it was reasonable or possible to make further adjustments. Specific advice should be taken.
If an employee refuses to attend work, purely due to concerns about the Coronavirus, they are not entitled to any pay. Arguably, they are absent without leave and this may be a disciplinary matter. In the circumstances however, I do not believe that dismissal for failing to attend work due to concerns about the Coronavirus would be within the band of reasonable responses. I therefore believe that dismissal in these circumstances would be unfair.
Please note that this information is generic and should not be relied upon without taking further advice about individual circumstances.
Amanda Pillinger
Pillinger & Associates
amanda@pillingerandassociates.co.uk
30th March 2020