Furlough and Job Retention

Coronavirus – Furlough & The Job Retention Scheme

On March 20th the government announced plans for financial help to ease the strain on organisations and retain employees for an extended period of time. This is called the job retention scheme, as of now not much information has been given as to how it’s going to work. Here’s what we do know though!

What is the Job Retention Scheme?

The job retention scheme involves the organisation placing their employees on what the call “furlough” the term is foreign to the United Kingdom and we believe it originates from the USA. In a nutshell this means you place an employee on a temporary leave of absence, they do not have to work and receive no pay but are brought back in to work when needed.

Companies that do this will be given a grant from the Government that will cover 80% of the employees wages up to a maximum of £2500 per person per month.

 What companies is the job retention scheme available to?

The retention scheme is available to all companies and organisations there are no restrictions.

How do I get the government grant to pay staff wages?

You will first need to choose which of your employees are going to be furloughed and then submit their details to the HMRC with details of the employees earnings. You will then receive the grant to cover 80% of the employees wages. We are waiting for more information from the government about the online portal that is to be used to submit these details along with other information that may be required from you.

Rishi Sunak the Chancellor state that he hopes the first instalment of grants will be paid out to companies by the end of April 2020 and they are to be backdated to the 1st March 2020. At the moment we know that the scheme will run for 3 months with the room to be extended if needed and the coronavirus pandemic continues.

Which of my employees can be furloughed?

In most cases any of your employees can be placed on furlough. As long as they are on PAYE. The guidance states that the ability to place your employee on furlough depends on the employee contract. It is highly unlikely that your employee contracts have furlough clauses in them, however they may have the right to lay-off employees on no pay for a temporary period.

The only difference is that employees that are on layoff will get statutory guarantee pay (SGP) whereas the furloughed employees will receive the 80% of their wages. SGP is £29 per day up to a maximum of 5 days in a rolling 13 week term, this rises to £30 from the 6th of April. Furlough is a much more favourable option for employees.

If the employee contracts do not contain unpaid layoff clauses you can ask your employee to agree to be furloughed. 80% of their wages may not be as promising as full pay but it is better than making them redundant. In the wake of this COVID19 pandemic it may also be a better deal for your employees that are at present struggling with their childcare arrangements.

What if I have already laid-off some employees?

If you have done this it’s not too late to get in touch with your employees and ask them to agree to change their status from being laid off to being furloughed. This would be a simple process and involved changing their pay from zero to 80 percent of their wages, providing they haven’t already got alternative employment.

Do I need to pick certain employees?

It is totally your choice as to who you furlough. If you are not placing your whole work force on furlough you should choose wisely with careful consideration. It may be assumed that the best options are the employees in the high risk category and forcing them on to a furlough agreement without talking to them first, this could end up in a discrimination claim from your employees that claim they were forced because of their age, disability or even a pregnancy. Check out our legal implications of Coronavirus post for more information.

We believe you should ask for volunteers initially and any volunteers that come forward in the high risk category should be chose first. There is not at present a maximum number or a minimum of employees that can be furloughed.

Do I have to make up the missing 20% of the furloughed employees wages?

This is voluntary and down to you as a company to decide there is no requirement to do so.

How will the 80 per cent be calculated from a zero hour contract employee?

The Government have not given any insight to this just yet but the Chancellor stated that his intention was to try and cover as broad a group of employees as possible.

 

IR35 Postponed Coronavirus

IR35 Postponed in The Wake of Coronavirus Outbreak

Many will be breathing a sigh of relief after a year long delay has been announced to the roll-out of the private sector off-payroll rules.

This controversial change has been postponed as response to the Coronavirus.

In the House of Commons yesterday, Steve Barclay, the chief secretary to the Treasury, said that the IR35 changes that were due to come into force at the start of April 2020 are to be pushed back for a year and begin in April 2021. “This is a response to the ongoing threat of Covid-19 as a way of helping businesses and individuals” he said.

He also added that it was not to be confused with a cancellation and that the Government will remain committed to reintroducing the policy to ensure that people working like employees, in their own limited companies, pay the same tax as those who are employed directly.

Long before the postponement was announced, employers, recruiters and freelance groups had been calling for a delay, so it comes as a welcomed announcement.

The CEO of Morson Group, Ged Mason said that the delay has come at a “Poignant time” for UK industry. He said “Many businesses that rely on flexible talent and contractor populations will take a sigh of relief”

IR35 states that if a contractor is to carry out the same work, or similar work to a permanent staff member, the employer is required to take income tax and NI contributions like they were an employee. The new legislation was introduced to make sure that workers that undertake similar roles are paying the same tax amounts regardless of whether they were an employee or a contractor.

The changes will shift the responsibility of assessing which of the contractors come under this category to employers. These changes have applied to the public sector employers since 2017.

Head of the legal services department at Brookson Group, Matt Fryer, said “The delay will allow businesses that have not yet prepared for the change, more time to take action” “Hopefully some of the businesses that have implemented knee-jerk blanket bans on contractors will now have the time to reconsider this as their strategy for ensuring access to flexible expertise.”

He also added that employers should now have a clearer understanding and guidance from the HMRC than when the initial date for the rollout was set. ” Those end hirers that have invested in getting IR35 right are going to be well prepared for April 2021 and can now use this next year to consider how to accommodate for roles currently thought to be inside the regulations of IR35.

“We would advise businesses that do work with contractors to build IR35 compliance into their planning for the next financial year. Bearing in mind that it has taken many companies 6 months to prepare for the initial deadline”

Chief executive of the FCSA, Julie Kermode has said the delay would enable businesses to focus more on the immediate complexities of responding to the Coronavirus. Which is priority. ” I very much hope that some detailed analysis of the wider implications of this reform can be undertaken in the next few months in order to establish whether or not it should be scrapped entirely.”

The operations director at APSCo said “Many companies have already spent a large amount of their time and effort preparing and planning for the changes” “Nonetheless, many in the staffing and recruitment sector will welcome the change” “Now’s not the time to make flexible labour more expensive or the hiring of contingent labour more difficult, when our sector is facing unprecedented times.”

She also added that the delay could kick start the hiring of remote workers who operate through personal service companies, noting that some employers have had to put a blanket ban on using contractors as their response to the changes in IR35.

Andy Chamberlain the director of policy at IPSE also welcomed the delay. He said it was a “sensible step” to limit damage to self employed. “It’s right and responsible to delay the changes during the coronavirus, this will reduce the strain and income loss for self-employed businesses”

Chamberlain called on the government to do more to protect the income of the contractors. He said “They must create an emergency income protection fund to keep the UK’s crucial self employed businesses afloat”

 

 

Coronavirus Employer & Employee Rights

Legal Implications of Coronavirus for Employers

At present there seems to be a high possibility of a Covid-19 pandemic in the United Kingdom. Infection rates could be seen to rise to nearly 60% of the population, with 25% suffering from more severe symptoms and 2% will require treatment.

If the Cornavirus spreads like suspected it will have a number of knock on effects, transport, schools, working patterns and more.

As an employer it would be irresponsible to presume that these predictions are exaggerated because we have survived other high-profile diseases and they haven’t spread like we thought they may. Now is the time to take sensible precautions and to prepare yourself for the worst. This could protect you from financial losses and claims in the future.

Your obligations

Contracts of employment contain obligations for you to take care of the health and safety of all of your employees.

Any breaches of these obligations could potentially lead to constructive dismissal claims and employee resignations.

As an employer you also have to follow a common law duty that states you have to take reasonable care of the health and safety of your employees. This includes providing them with a safe place of work.

If the damage was easily foreseeable your employee could bring a personal injury claim against you.

As a business you are subject to a similar obligation found under the Health & Safety at work act(1974) any breaches of this could lead to a criminal prosecution against you.

So it is imperative that you plan and prepare for what could be ahead.

Am I allowed to discipline or dismiss someone who is not ill but is refusing to come to work?

Dependent on the circumstances, yes. First you must take into account any existing conditions that may contribute to irrational or increased anxiety issues.

Do I have to still pay my employee if this happens?

It may well be a good idea for you to do so as the employee has rights to contractual sick pay. However, if the employee is not ill this does not apply. As previously mentioned though, if the employee is suffering from anxiety about the current threat of coronavirus, then they are entitled to the sick pay.

What should I do if my employee comes to work after being in contact with a person infected with the Coronavirus?

To begin with you should make sure that there are clear instructions that staff should not do this and that they should contact you via telephone if they believe they have been in contact with an infected person.

If any of your employees ignore this instruction then you can ask them to go home or to work from home. It is a possibility that you may have to pay your employee should this occur.

Should I impose new safety rules on staff? Do I need to talk to them about the new rules?

If the number of confirmed cases continue to rise as quickly as it has then there will be a duty for you to do so. Even now some would argue that as an employer you have a responsibility to impose these new safety rules.

It’s good practice to consult with all of your management team withing your organisation and to consider your specific needs and operations.

What if my employee chooses to ignore new rules?

If this situation arises then you may be in a position to take disciplinary action. Dependent on the specific circumstances a warning should be implemented first.

Can I adjust working hours to reduce the number of my employees at work at the same time?

Perhaps a good precaution to take if you believe it may reduce a risk of the staff becoming infected. You should however consult with the staff first.

Can I lay people off work or reduce their hours if my revenue becomes affected?

Dependent on if you have stipulated this already in your employee contracts. A well worded disaster recovery plan may give you this right.