Clocks change this weekend

Clocks spring forward this weekend

In the UK the clocks go forward one hour at 1am on Sunday 26th March 2023 when we move to British Summer Time (sometimes called Daylight Saving Time). Most people will miss when the clocks actually change, although there will no doubt be the brief moment of confusion in the morning when we try to work out what the time actually is.

For some, however, who work overnight, they will see and feel the effects of this. So, what should employers do for those that are working overnight between Saturday 25th March and Sunday 26th March 2023?

Impact on pay and working hours 

When the clocks change in October, employers are faced with concerns about working an extra hour and how to adjust pay for that time, especially for those paid minimum wage. In springtime, however, the concern is more likely to be that employees will technically be working an hour less in their shift as a result of the clock change; for example, an employee working an eight-hour shift will actually only work for seven hours.

Payment for this time will come down to what is written in the contract of employment. If it sets out that the worker is entitled to hourly pay, paid for every hour they work, then they will only receive payment for seven hours. If, however, the employee is salaried, they will more than likely receive their usual pay regardless of whether they work one hour less. This is because a salaried employee is more likely than an hourly paid employee to be required to work extra hours without additional pay and to be entitled to pay even if they work fewer hours.

Be consistent 

Subject to any contractual constraints, it is up to employers how they deal with this matter as long as they are consistent and fair in their decision. They may, for example, ask the employee to work an extra hour or simply “write it off”.

Be prepared 

Employees due to work when the clocks go forward should be reminded that this will happen and told how their employer will be dealing with it. In particular, those due to start work early on Sunday morning are most likely to be caught out, so a reminder of the rules on lateness would be appropriate, as well as encouraging them to prepare for the change.

National Minimum Wage, National Living Wage, SSP, SMP etc. 2023/2024 rate increases

National Minimum Wage, National Living Wage, SSP, SMP etc. rates 2023/2024

The Department for Work and Pensions has published its annual rate increases for 2023/2024.

The annual increase to the National Minimum Wage and National Living Wage are as follows:-

  • 23+ – £10.42 (previously £9.50)
  • 21-22 – £10.18 (previously £9.18)
  • 18-20 – £7.49 (previously £6.83)
  • 16-17 – £5.28 (previously £4.81)
  • apprentices – £5.28 (previously £4.81)

The accommodation offset will be £9.10 per day (previously £8.70).

The rate for Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), adoption pay (SAP), shared parental (ShPP) and parental bereavement (SPBP) pay will increase to £172.48 per week (previously £156.66). The rate for Statutory Sick Pay (SSP) will increase to £109.40 per week (previously £99.35).

These changes will take effect in April 2023.

Covid related sick pay comes to an end

In line with the Government’s strategy to “live with Covid”, in England at least, many of the Covid restrictions (and support) have come, or are coming to, an end. February saw the end of the legal requirement to self-isolate and the need for face coverings, and now March brings the end of special SSP rules.

Since 13th March 2020, employees off work due to Covid, either because they themselves had it, had symptoms, or had contact with someone who did, have been paid statutory sick pay (SSP) from day one of their absence (subject to the absence being at least 4 days in length).

The SSP rebate scheme, originally opened in March 2020, closed 30th September 2021 and reopened between 21st December 2021 and 17th March 2022, enabled employers to claim back for up to two weeks of these SSP payments per employee, relieving some of the burden of forced isolation and absence from the business.

What’s happening from 24th March 2022?

SSP Rebate Scheme

This is the last day eligible employers can make or amend claims for SSP paid for Covid-related absences between 21st December 2021 and 17th March 2022. Failure to submit a claim by the end of 24th March will mean employers will not be able to claim the rebate.

End of Covid-related SSP provisions

A number of changes were made to SSP rules in light of the pandemic. These come to an end on 24th March 2022. These include:

  • payment from the first day of the absence
  • payment for isolating due to Covid, Covid symptoms or contact with Covid, when the individual is not actually unwell.

What does this mean for employers?

This puts employers in a tricky position. In England the legal requirement to self-isolate was scrapped on 24th February 2022. As such, they will need to decide what to pay employees whilst they are off work following the guidance. As SSP rules are applied across Great Britain, it remains to be seen what will be put in place in Wales and Scotland, as self-isolation in Wales does not end until 28th March 2022, and advice in Scotland is still to isolate.

For many, they can return to home working temporarily. For those that are left too unwell to work due to the virus, they will get whatever sick pay would normally be due. The biggest problems arise for those that cannot work from home, but are well enough to work. In this case, employers may choose to extend sick pay to these people to reduce the risk of Covid transmission in the workplace.

Real Living Wage rates increased

Not to be confused with the compulsory National Living Wage (NLW), the Real Living Wage is voluntarily paid by nearly 9,000 UK businesses and is based on calculations of the cost of living covering everyday needs.

These are carried out by the Living Wage Foundation which has just made its annual announcement of the rates to be paid in 2021/22 by accredited employers – £11.05 an hour for London and £9.90 an hour for the rest of the UK.

Accredited employers should implement the rise as soon as possible and within 6 months. All employees of accredited employers should receive the new rate by 15 May 2022.

The Living Wage Foundation says almost 300,000 employees have received a pay rise as a result of the Living Wage campaign and the Foundation enjoys cross-party support. It has a broad range of employers accredited with the Foundation including half of the FTSE 100 and big household names including Nationwide, Google, Brewdog, Everton FC and Chelsea FC.

Katherine Chapman, Living Wage Foundation Director, said “with living costs rising so rapidly, today’s new Living Wage rates will provide hundreds of thousands of workers and their families with greater security and stability.

For the past 20 years the Living Wage movement has shaped the debate on low pay, showing what is possible when responsible employers step up and provide a wage that delivers dignity. Despite this, there are still millions trapped in working poverty, struggling to keep their heads above water – and these are people working in jobs that kept society going during the pandemic like social care workers and cleaners. We know that the Living Wage is good for businesses as well as workers, and as we rebuild our economy post pandemic, the real Living Wage must be at its heart.”

July furlough changes – what you need to know

A brief reminder of the changes to the structure of the Coronavirus Job Retention Scheme (furlough scheme) from 1st July 2021.

By designating employees as “furloughed”, organisations have been able to recover a portion of employee wage costs up to a £2,500 cap. As confirmed by the Government Budget delivered on 3rd March 2021, the scheme will continue to operate until the end of September 2021 with some adjustment to funding levels from July 2021.

Until the end of June 2021, the grant was 80% to a maximum of £2,500 per employee per month for hours unworked. Employees on full furlough (not working any hours at all), got 80% of their wages per month unless their employer decides to top it up to 100%. Where an employee is on flexible furlough (working only some hours), they were paid in full by their employer for the hours they work and the grant will cover 80% of pay for their unworked hours only, subject to a cap which will be less than £2500.

Now into July, for 1st July 2021, the Government’s grant will reduce to 70% of furloughed employees’ wage costs for their unworked hours at a cap of £2,187.50. Pay for furloughed employees must remain at a minimum of 80% at a cap of £2,500 which means that organisations must contribute 10% up to £312.50 from their own pocket. Further changes continue into August.

From 1st August 2021 until the scheme ends, the Government’s grant will reduce a final time to 60% of furloughed employees’ wages for their unworked hours at a cap of £1,875. With the 80% rule still intact, organisations will need to contribute 20% to staff wages up to £625. Therefore, from July through to the end of September, organisations will have to cover a portion of the employee’s actual wages, as well as the national insurance and pension contributions.

The furlough scheme has been somewhat of a saving grace for a lot of organisations whilst lockdown restrictions have been in place. As these restrictions are slowly eased, based on coronavirus data, organisations may find that they no longer need to make use of the scheme, or it may be that flexible furlough takes centre stage. Either way, organisations will need to consider how they can accommodate the upcoming changes with redundancy as a last resort.

Changes to the Furlough Scheme

From 1st May, there are to be a number of changes to how the Job Retention Scheme works. 

Eligibility for being furloughed

Currently, employees cannot be furloughed if they were not employed past 30th October 2020, and even then a PAYE Real Time Information (RTI) submission must have been made to HMRC between 20th March 2020 and 30th October 2020, notifying a payment of earnings for that employee.

This is to change. For pay periods that start on or after 1st May 2021, employees who were employed on 2nd March 2021 can be furloughed, provided the organisation has made a PAYE Real Time Information (RTI) submission to HMRC between 20th March 2020 and 2nd March 2021, notifying a payment of earnings for that employee. The shift in eligibility from 1st May 2021 onwards was confirmed in Government guidance on 3rd March 2021, presumably as a result of the extension of the JRS until the end of September 2021.

The knock-on impact of this is that organisations will be granted much more flexibility in furlough decisions in the future; they will be able to furlough those who were recruited between 31st October 2020 and 2nd March 2021, meaning the scope for furloughing staff is going to be wider.

Organisations will not have to have previously claimed for an employee before 2nd March 2021 to claim for periods from starting on or after 1st May 2021

Calculating claims for periods staring on or after 1st May 2021

Due to the change in eligibility highlighted above, the government is outlining updated guidance on how to calculate furlough pay.

It should be remembered that the government will still provide 80% of furloughed staff wages for the time they are not working in May and June 2021. They are not due to start reducing the amount they provide until 1st July 2021.

Claiming for staff previously made redundant

For periods beginning on or after 1st May 2021, organisations will no longer be able to furlough staff that were previously made redundant.

Furlough after TUPE

From 1st May 2021, organisations are able to furlough employees if they were included on a PAYE Real Time Information (RTI) submission to HMRC on or before 2nd March 2021.

Furlough scheme extended further

Chancellor Rishi Sunak has announced that the furlough scheme is to be extended until the end of April 2021 with the Government continuing to contribute 80% towards wages.

In a move to ensure firms can access the support they need through continuing economic disruption, Mr Sunak also confirmed that he would be extending the Government-guaranteed Covid-19 business loan schemes until the end of March.

These changes come ahead of the Budget, which the Chancellor has confirmed will take place on 3 March 2021.

This will, he said, deliver the next phase of the plan to tackle the virus and protect jobs, so the extensions to the business loan and furlough schemes enable businesses to plan with certainty and access support in the first few months of the New Year ahead of that further update on wider Covid-19 economic support.

The eligibility criteria for the UK-wide scheme will remain unchanged and these changes will continue to apply to all Devolved Administrations.

The Chancellor said he would review the employer contribution element of the Coronavirus Job Retention Scheme (CJRS) in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the New Year.

The Government will continue to pay 80% of the salary of employees for hours not worked until the end of April, he confirmed.

Employers will only be required to pay wages, National Insurance Contributions (NICs) and pensions for hours worked, and NICs and pensions for hours not worked.

The loans available until the end of March are the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme.

These had been due to close at the end of January.

The Treasury has pointed out that extending the CJRS until the end of April gives businesses certainty well ahead of the 45-day redundancy notice period, with the Budget setting out the next phase of support more than 45 days before the new end date of the scheme.

Furlough scheme extended

Only a few days ago we reported on the Chancellor’s decision to extend the Coronavirus Job Retention Scheme (CJRS) as a result of the Government’s decision to take England into a second lockdown.

On 5th November, the day the new restrictions came into force, Rishi Sunak was back in the House of Commons explaining to MPs that he was now planning to offer ‘significant extra support to protect jobs and livelihoods in every region and nation of the UK’.

The CJRS will now run until the end of March 2021 with employees receiving 80% of their current salary for hours not worked. In addition, the next self-employed income support grant will also increase, from 55% to 80% of average profits – up to £7500.

The Government will not pay the Job Retention Bonus in February, as previously announced, but instead redeploy a retention incentive ‘at the right time’.

There are currently no employer contribution to wages for hours not worked.

Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for 5% of total employment costs or £70 per employee per month.

It should be noted that the CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

The Job Support Scheme has been postponed.

CBI Chief Economist, Rain Newton-Smith, said: ‘Extending the tried and trusted Job Retention Scheme will give companies the certainty and stability they need to help safeguard thousands of jobs into March. Sectors and supply chains under the greatest strain may need more tailored support in the coming weeks.’

Avoiding furlough fraud: important details for organisations

The furlough scheme was put in place to support employers who were not able to operate as normal due to the pandemic. However, some organisations may have overclaimed, potentially unintentionally, and could face sanctions if this is not reported and rectified.

The government is committed to investigating situations where organsaitons have been overpaid grants provided as part of the Job Retention Scheme. Given the cost of the scheme, which continues to increase, it likely comes as no surprise that all organisations, large and small, potentially face high levels of scrutiny regarding their use of it.

The Government has explained that the following actions constitute an overclaimed furlough grant, and thus could lead to furlough fraud:

  • claiming any amount the organisation was not entitled to receive; or
  • claiming any amount the organisation was no longer entitled to receive, such as because the employee they are claiming for is no longer employed by them.

Employers will not be charged a penalty if they did not know of the overpayment at the time it was received, or at the time that their circumstances changed, and if it is repaid within the relevant time periods. Companies will have until 12 months from when their accounting period ends to rectify errors, and sole traders or partners will have until 31 January 2022.

On 1 July, HMRC updated its guidance on the furlough scheme to enable organisations who have overclaimed through the scheme to either correct this error in their next claim or make a payment directly to HMRC if they will not be making any future claims. Organisations will, however, first need to contact HMRC to receive a payment reference number before paying via bank transfer, online or telephone banking

Whilst errors can be rectified, failure to report this can incur such penalties as follows:

  • income tax charge – full overclaimed amounts may be recovered if HMRC make a tax assessment for the amount overclaimed, of which payment of the assessed amount will be due 30 days after the assessment (otherwise interest will be charged on the tax from day 31)
  • personal liability for company officers to pay the tax charged on overclaimed grants in the case of insolvency
  • a 100 per cent penalty for failing to notify HMRC, within the below notification period, that the organisation is chargeable for income tax on an overclaimed furlough grant.

Additionally, it has been confirmed that partners will be jointly and severally liable for any overclaimed grants repayable.

If organisations repay monies overclaimed, this will prevent any potential tax liability relating to the overpayment of the grant. Notification of any overclaimed furlough grant payments need to be made within any of the following notification periods: 90 days after receiving the overclaimed payment, 90 days after the day circumstances changed, or 20 October 2020.

Changes to the Job Retention Scheme

The Chancellor of the Exchequer, announced the following changes to the Job Retention Scheme.

The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June – this has now been extended until the end of October. There are key dates that are important for employers to understand.

10th June – This is the final date by which an employer can furlough an employee for the first time. (The full furlough scheme is due to close on 30th June, however there must be a full 3 week furlough period completed prior to this date to qualify. Records must be kept for dates of furloughing employees as evidence this was prior to the 10th June.

30th June – Until this date employers can continue to claim 80% of furloughed employees current salary, up to £2500, but the employee must not carry out any work for their employer. Employers are not required to contribute anything towards furloughed employees’ salaries for June.

1st July –  From 1st July the furlough scheme becomes more flexible – applying only for those previously furloughed – these employees can now return to work part time, but employers can still claim the grant for any normal hours not worked. The amount of working time and any shift patterns should be agreed with the employee.

1st August –  Employers will have to pay employee’s National Insurance Contributions (NICs) and pension contributions and can no longer claim a grant for these. This applies to both the hours worked and the hours not worked. Until 31st August the Government will pay 80% of furloughed employees wages up to the cap of £2,500 for hours not worked. Employers must pay their employees for the hours they work.

In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will also pay employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.

1st-31st October –  The Government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will also pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.