The government is starting to look at easing restrictions and as such we felt it would be timely to provide you with an update so you can start to look at some of the things that are essential to ensure the health, safety and well-being of your employees. We are as always here to support you.
CORONAVIRUS JOB RETENTION SCHEME EXTENSION
The scheme has been extended to all sectors until 31 October 2020 and from August 2020 the government intends bringing in rules to allow employees to return part time, with the employer paying that proportion of the wages that relates to their working hours and the Government funding 80% (capped at Â£2,500) of the balance. Further details are expected and we will bring this to you when we hear which is likely to be towards the end of May and unlikely to be before that time. However, the fact that it is the employerâ€™s decision about furlough has not changed and the anticipation is that many businesses which are able to open will start to return.
Non-discretionary payments & Non- Discretionary Overtime Payments
Only include payments which you have a contractual obligation to pay and to which your employee had an enforceable right. When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employeesâ€™ wages.
If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary. Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.
A new section has been included in relation to those qualifying for maternity allowance, making it clear that those in receipt of maternity allowance cannot be furloughed and must give the full eight weeksâ€™ notice to return early. The list of enhanced contractual family leave payment entitlements that can be claimed for has been updated to include parental bereavement pay.
The guidance makes it clear you can claim in respect of an upcoming payroll run, rather than having to wait until you have paid the wages before claiming, but as before there is only one claim per claim period and so all relevant employees should be included and that claim periods should follow one after another, with no gaps in between, where employees have been continuously furloughed.
It confirms â€˜The Coronavirus Job Retention Scheme forms part of a collective national effort to protect peopleâ€™s jobsâ€™ which, when coupled with the ability to re-employ those previously dismissed or who have resigned and their jobs have fallen through, re-iterates the fact that this is not just there to stop current employees being made redundant. The scheme is there to try and keep people in paid employment with a minimum salary and this must be remembered if you are making redundancies as failure to keep employees on furlough for as long as the scheme runs and where it is not costing an employer anything other than a top up to holiday pay, may be considered unfair in the context of dismissals as you have not done all you reasonably can to find alternatives and the world may look very different once the scheme ends. This is a possible risk, not a certainty, but one that needs to be balanced up by each company.
The most up to date government information on the CJRS can be found here;
HOLIDAY & FURLOUGH CONFIRMED
The Government has this afternoon published a paper confirming that employers can ask an employee to take holiday while on furlough, subject to the notice provisions (twice as much notice as holiday) although this must be paid at normal salary rates. It gives practical examples of when it anticipates holiday will be carried over under the new emergency legislation but says it does not expect those on furlough to be carrying over holiday for two years. The exception to this is where the employer cannot currently afford to pay the top up between furlough pay and normal pay.
This provision is unlikely to apply to furloughed workers, and is designed to help those unable to take leave due to working on the front line. By virtue of the fact that you can take annual leave on furlough, provided the employer manages that appropriately, there’s no reason why you wouldn’t be able to take it in the current leave year.
In addition employers are not obliged to allow this carry-over provision, but in all cases Employers may need to take an individual approach considering employeesâ€™ circumstances such as shielding etc.
TAXATION & WRITTEN AGREEMENTS TO REDUCE SALARY
There have been a number of articles from accountants in the media making the point that to prevent HMRC taxing the employee on their full salary there must be written agreement between employer and employee before the first reduction is imposed. However, given that the CJRS which is a reduction in salary does not need to have an agreement in writing by the employee to qualify, it would be a slight own goal for HMRC to then seek to tax the employee on their full salary for abiding by these rules. It would be even more of an own goal to then tell those still working who have agreed to a pay cut that they too will be taxed on their full salary if they have not agreed in writing. We remain hopeful that in these extraordinary times HMRC will accept a copy of the letter emailed to the employee which confirms the arrangements.
EMPLOYEES COMING BACK TO THE WORKPLACE
We are now entering the next phase and the government have recently announced small steps to lift some restrictions and the timing and nature of any relaxation of restrictions is uncertain, but it would be sensible for consideration to be given to all the options and then as a business you will have the capability to move quickly from one scenario to another.
In any of the current scenarios within business i.e. all staff are furloughed; limited trading with some employees furloughed and some working from home or in company premises or where only â€˜essentialâ€™ workers are currently in work; trading fully but all staff working from home, the same issues will arise.
It seems highly likely that there will be a requirement for some form of social distancing for some time to come and lockdown restrictions are being lifted incrementally with all staff who can work from home being expected to carry on doing so for the foreseeable future. Employers will need to consider detailed risk management approaches. Itâ€™s therefore essential that employers continue to base any plans for returning to the workplace on up-to-date Government and public health guidance in relation to COVID-19. The government has published advice and guidance relating to COVID-19 on its website which may be useful when considering health and safety measures and in particular risk assessments.
Communication is Key:
Tips to effectively manage this would be:
â€¢ Close collaboration with health and safety staff and OH provider to ensure you have the relevant and most up to date information to communicate to the workforce;
â€¢ Communicate with your workforce on a regular basis to reassure them that their health, well being and safety remains a priority.
â€¢ Make sure employees are clear about what procedure they should follow if they begin to feel unwell, both in the workplace and at home.
â€¢ Ensure that everyone is clear on the social distancing rules that you have implemented within your workplace and that these are clearly demonstrated to all employees.
â€¢ Do employees who have been working from home for a long period of time require re-inducting in terms of health and safety?
Consideration should be given to being prepared and cover all eventualities such as how will you manage meetings, interviews and other interactions? What about areas such as canteens or kitchen areas? Employees will be feeling uneasy about the changes that are occurring around them and if your business has an Employee Assistance Programme or access to Occupational Health advisers make staff aware of the services they can provide.
Managers may need to have an open discussion with every individual and provide adjustments and/or ongoing support they may need to facilitate an effective return to the workplace. This is especially important for those who have been furloughed, and should cover topics such as changes in services, policies or procedures, dealing with customers, changes in the supply chain as well as any changes to their work duties or tasks.
For those employees that have been furloughed it would be good practice to give them a reasonable period of notice to return to enable them to make any arrangements they may have such as childcare or other responsibilities.
A return to work can be notified to them via letter, email or text. If a return to work can be provided with all the governmentâ€™s recommended social distancing and health and safety practices and the employee refuses with no good reason too, then this could lead you to an unpaid leave situation or even disciplinary.
Youâ€™ll need to ensure that your payroll staff or provider are aware that furlough has ended for these staff and they should return to full pay.
Questions to consider:
Is it sensible to want all staff to return to work at your premises?
Would it be more appropriate to continue with some staff home working on a longer-term basis? If so, make sure you have a clear rationale as to why you need particular staff or roles to return physically.
Peopleâ€™s expectations around work, and how they fulfill their role, and reconcile work and domestic responsibilities, could have changed dramatically. This is an ideal time for employers to think more creatively about effective ways of working, and harness more agile and flexible working practices to meet individualsâ€™ changing expectations.
This approach could also help employers to develop more effective people management practices that are more productive for the organisation. This may require employees to review existing or produce new policies on flexible working;
1. What criteria will you use to recall staff?
2. Will it be simply business need?
3. Will you consider individual personal circumstances?
Remember not to use discriminatory criteria; be fair and inclusive and keep in mind your organisational values and any diversity and inclusion aims.
Short term working/redundancy:
When the government furlough scheme ends (currently set for 31 October 2020) your business may still not need to bring all its existing workforce back. In this case you have essentially three options:
â€¢ Agree reduced working hours with some or all staff
â€¢ Furlough staff for a further period, at your own expense
â€¢ Implement redundancies
Reduced working hours:
If your business has work for all its staff, but not at the level before restrictions, you may want to consider asking staff to reduce their working hours on a temporary basis. As with furlough, because this will be a temporary contractual change, people will need to agree to this change in writing. Youâ€™ll need to be clear about the reasons for reducing working hours and be prepared to respond to questions from staff. You also may need to consider how you â€˜sellâ€™ the idea when furloughed staff have been receiving 80% when not required to work – you may be asking them to do work and receive a smaller amount; and staff who have been working normal hours may feel demotivated at being asked to take home less pay when they have kept the organisation running at a difficult time.
It may be that you would prefer to keep some staff furloughed for a further period as you implement a phased return to normal working, this would be at your own expense and if your furlough letter to individual employees did not include a specific end date, then you can continue to keep staff furloughed on the same terms as the CJRS, although your business would need to bear the full cost of their 80% payment and other employment costs. It would be sensible to write to employees to explain that you are continuing furlough for them (with an estimate of how long for if you can give it) as many will expect the end of the government scheme to mean a return to more normal working.
If your furlough letter did include an end date or linked furlough to the CJRS, you will need to seek further agreement from staff to continue being furloughed. Again, you will bear any employment costs and it would be sensible to give an estimate of how long the further period is likely to be.
Some employers will have an unpaid â€˜lay-offâ€™ clause in their contract. If you do have such a clause, you will be able to use it provided staff are given correct notice (and since we will know the end date of the CJRS well in advance, there should be no reason why you cannot give people more notice than they contractually require). Remember, however, that unpaid lay-off still requires you to pay minimum guarantee payments for some of the period, and that an unpaid lay-off exceeding 4 weeks in length entitles an employee to consider themselves redundant and claim a redundancy payment from you, so this is only a short-term solution. Seek advice even if you do have such a clause.
Your business may not be able to continue trading, or you may only have enough business to require significantly fewer staff. In such a situation, the end of the CJRS may require you to make redundancies. While you need to follow the correct legal process take any steps you can to support employees through this process. Redundancy will be a crushing blow to many people, at a time when they have been through a very challenging time â€“ be very mindful of how you communicate, continue to support them and treat their health and welfare as a priority.
Key points when implementing redundancy:
You must consult with staff â€“ even if there is no option but to make redundancies â€“ before formally giving notice. This should include the reasons why they are being made redundant.
If you are planning to make 20 or more people redundant (but less than 100 people) within a 90 day period, you must start collective consultation 30 days before giving notice of the first redundancy. If you want to make this number of redundancies as soon as the CJRS ends in its current format you will need to start consultation no later than 31st May 2020. The government has yet to confirm on what any future funding will look like after the 30th June so timing will be key.
The legislation states;
That if you are making or proposing less than 20 people in â€œan establishmentâ€ then there is no set â€œminimum consultation periodâ€. However most companies would carry out 2 formal consultations meetings (can be done remotely) over a 2 week period;
If you are making between 20 and 99 roles redundant within a 90 day period, then the minimum consultation period is 30 days before any notice of redundancies can take effect (be issued);
If there are more than 100 then it is 45 days consultation period before the first redundancy notice can take effect.
While the relevant legislation does allow for these consultation periods to be reduced in â€˜special circumstancesâ€™, it is unlikely that you would be able to use this argument when the end date of the CJRS is known well in advance.
You must consider all the associated costs with redundancies i.e. notice (or payment in lieu); holidays and other contractual entitlements; and a redundancy payment if they are eligible (minimum 2 years service).
DEALING WITH OTHER GROUPS OF STAFF
Some of your staff may still be required to shield (currently for 12 weeks) because they are extremely vulnerableâ€™ and at particular risk from COVID-19 infection. Others may be very concerned because they live or care for someone who is classed as high risk. If individuals are still shielding as restrictions begin to be lifted, or the CJRS ends, you should: allow them to continue to work from home if this is not possible, look at other options to retain them such as a further furlough period.
OTHER ISSUES TO CONSIDER
Other non-COVID-19 issues that may affect your business still need to be planned for. For example, the UK is due to end its Brexit transitional arrangement on 31 December 2020. This will have major implications for businesses that trade internationally, or who currently employ EU nationals, or who may need to recruit from outside the UK.
Organisations should use this time to prepare and plan their next steps. Keeping your workforce informed of what and how the business is doing â€“ whether it is good or bad news for individuals will help them to make their own decisions and give them some degree of security in very uncertain times. Employees need to feel valued and supported and will feel anxious about their own health and safety when returning to work. Pay specific attention to staff who may be vulnerable (e.g. health issues, disability, childcare or other caring responsibilities) and they may need some reasonable adjustment before a return to the workplace.
Planning under uncertainty requires:
â€¢ Balancing short-term and longer-term considerations; and
â€¢ Using contingency plans and adaptive planning to adjust your approach as circumstances continue to evolve.
Planning for flexibility and agility:
Whether your organisation is having to reduce its workforce, adapt to different activities or respond to increased demand. You can think about flexibility in terms of:
â€¢ Redeploying people and skills,
â€¢ Contractual or numerical flexibility, to minimise redundancies; and
â€¢ Flexibility in both where and when people do their work, to minimise social contact and facilitate caring for family members.
Considering your resourcing options think about:
â€¢ Where you can quickly develop new skills;
â€¢ Bringing in people from outside the organisation
Paying careful attention to critical posts or job groups
If at all possible, ensure you retain the people in your critical job posts or groups whose skills you will need most when the economy starts to pick up. There may even be opportunities to recruit highly skilled people in your labour market who have lost work in self-employment or in sectors that have had to shed staff.
The materials in this guidance are provided for general information purposes and do not constitute legal or other professional advice. While the information is considered to be true and correct at the date of publication, changes in circumstances may impact the accuracy and validity of the information.