Covid-19 and employment law

12 November 2020

Updates to the scheme, announced on 5 November

The Government confirmed earlier this month that the Furlough scheme will be extended until 31 March 2021. Between 1 November and 31 January 2021, the Government will pay 80% of wages up to £2,500 per month. This will be reviewed in January with the possibility of employers being asked to make a contribution thereafter.

The main points to note in relation to the changes are:
the scheme is open to employees who were employed on 30 October 2020 and those who were made redundant on or after 23 September if they are then re-engaged;
employers do not need to have taken advantage of the earlier furlough scheme in order to claim under this one;
the scheme is flexible in that there is no maximum number of employees an employer can claim for and employees can be furloughed for any amount of time, with employers claiming for the hours not worked.

The Job Retention Bonus Scheme, under which employers could claim £1000 per employee they retained on furlough until 31 January 2021, has been withdrawn. Payments were due to be claimed from mid-February 2021 but now that furlough has been extended, this entitlement has been removed.

Further details and amendments in relation to the new rules are likely to be provided at the end of November and then again in January.

Guidance can be found at: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

and on the HMRC documents site.

3rd July 2020

Updates to the scheme, published on 29 May and 12 June

The Government has confirmed that the Furlough scheme will cease at the end of October
and employers will no longer be able to add employees to the scheme after 1 July. This
means the last date that employees could be put on furlough leave for the first time was 10
June. (Though note that this does not apply to employees returning to work after family-
leave such as maternity, paternity or parental leave, who can still be put on furlough for the
first time after 10 June.) Part-time working will be allowed for furloughed employees for the
first time from 1 July and there will be no minimum 3-week furlough period. Employers can
therefore start bringing their employees back to work by agreeing appropriate hours and
shift patterns and paying their wages under the terms of a new written agreement. Any
normal hours not worked by a flexibly furloughed employee can be recovered in accordance
with the furlough scheme.

Employers will have to make increasing financial contributions to those still on furlough,
starting from August, when they will be required to pay National Insurance and pension
contributions. From September, they will also have to contribute to wages, initially at the
rate of 10%, and from October at 20%, reducing the maximum Government contribution to
£2187.50 and £1875 respectively.

For the self-employed, support will be extended to a second and final payment in August,
capped at £6,570. The payment will represent 70% of average monthly trading profits over a
3 month period. Applications for the grant will open in August. Individuals do not need to
have claimed the first grant in order to claim the second.

Further details can be found at https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps

And https://www.gov.uk/government/collections/coronavirus-job-retention-scheme

3rd April 2020

The coronavirus pandemic has led to the Government proposing a number of significant changes to UK employment laws which are expected to be enacted soon. We summarise the key points below. The situation raises a number of issues for employers and employees in terms of rights and obligations in relation to travel to or for work, sick leave, health and safety, redundancy, furlough leave and discrimination.

If you are a business and would like any further advice on the new rules, including guidance on how to implement them, or drafting a coronavirus policy or furlough agreement, please contact us by email or call us.

If you are an employee whose job is being affected by the current situation and would like clarity around your rights and entitlements, please contact us by email or call us.

‘Furlough’: Under the Coronavirus Job Retention Scheme, all UK employers will be able to access Government financial support to enable them to continue paying part of their employees’ salary to those who would otherwise have been made redundant during this crisis.

HMRC will reimburse 80% of furloughed employees’ salary costs, up to a cap of £2,500 per month, initially for a 3-month period. The scheme is backdated to 1 March 2020 so as to cover those who were made redundant from that date; such employees can be re-employed and then furloughed. This mechanics of the repayment scheme require HMRC to design a new software portal which is hoped to be running in early April. In addition, the Government has said it will cover the NI and minimum automatic enrolment pension contributions that employers make for their furloughed employees. Employees themselves will pay tax and NICs on furloughed salary in the normal way. National Minimum Wage rates will not apply, so the 80% salary may fall below the statutory minimum wage amount.

To access the scheme, an employer will need to designate affected employees as ‘furloughed’ and agree the relevant changes to their contracts in accordance with normal contractual rules. In most cases, this will mean the employees accepting the reduction in their salaries and receiving written communications to this effect. Employers also have the option to continue to pay full salary whilst reclaiming 80% of it.

Employers can move employees on and off furlough, but they must spend a minimum of 3 weeks absent. Furloughed employees cannot undertake any form of work for that employer although they are allowed, if their employment contract permits, to do paid work for another employer during their absence. This is to help plug some of the labour shortages in particular sectors, such as crop production. They are also allowed to undergo training and to volunteer. Employees whose hours are simply reduced rather than removed altogether are not furloughed and so their employer will not be able to benefit from the repayment scheme.

If only some of the workforce is to be placed on furlough, an employer should consider an appropriate selection matrix, being alert to the usual potential claims in respect of discrimination.

Guidance is available at www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Lay-off and redundancy: Employers are still entitled to lay employees off if they have the right to do so under the terms of the employment contract. Employers are also able to make employees redundant in the normal way; if the numbers are sufficient to require collective consultation, this must still be carried out as far as is reasonably practicable, in spite of the special circumstances of the coronavirus. Furloughed employees can also be made redundant either during or at the end of furlough leave.

Health and safety legislation: This should also be borne in mind by employers during the current crisis. Employees are protected from detriment or dismissal in cases of health and safety concerns, for example, if an employee refuses to work because of a reasonable belief that s/he is, or would be, in danger by so doing.

Statutory sick pay (SSP): SSP is now available if an individual is diagnosed with Covid-19 and unable to work and needs to self-isolate, or because they live with someone who has the virus. SSP will also now be payable from day 1, instead of the usual day 4 for affected individuals. In an effort to keep Covid-19 contained, the Government has advised people not to visit their GP in person and isolation notes can be obtained online.

Holiday entitlement: If it is not reasonably practicable for a worker to take their statutory holiday in their leave year due to the effects of Covid-19, then it may be carried forward for up to two years.

Self-employed workers: The self-employed who make the majority of their income from self-employment will be entitled to a taxable grant worth 80% of average monthly income capped at £2500 per month. This will be assessed by reference to average income over the past 3 years as declared in tax returns and is available to those with trading profits up to £50,000. It is expected that payments will be made in June to those who are eligible, following application to HMRC. Unlike furlough, there is no requirement to cease any work.

Guidance is available at www.gov.uk/guidance/claim-a-grant-through-the-covid-19-self-employment-income-support-scheme