Employer guidance *updated*

Employer Q&A for COVID-19 (coronavirus)

This Q&A is a guideline and does not constitute legal advice. The guidance provided is correct as at 23 March 2020 and reflects provisions of the Coronavirus Job Retention Scheme (the Scheme), first announced by the government on 20 March 2020. The Scheme will enable all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during the coronavirus outbreak. It provides employers with an alternative to lay-offs/redundancies as well as financial support to achieve it.

At present, only an outline of the Scheme is available. The government has stated that HMRC will set out further details of the information required over the coming weeks. We are monitoring the position closely and will do our best to keep these bulletins updated as further information becomes available.

If you have any questions leading on from these Q&A guidelines, please contact a member of our Employment Team at emp@teacherstern.com.

1. What is the Scheme and who is eligible?

The Scheme is intended to start in April 2020 and be backdated to 1 March 2020. It will initially be open for at least three months and will be extended if necessary. Its purpose is to enable organisations to continue to employ individuals who would otherwise be made redundant because of the Coronavirus outbreak in order to protect their jobs.

All UK employers are eligible to take part in the Scheme.

Employers will be able to apply for a grant from HMRC to cover 80% of the salary of retained workers up to a total of £2,500 per month, per employee. It applies to those employees who have been asked to stop working, but who are being kept on the payroll. Such employees will be called ‘furloughed workers’. Note that this is not a term that is ordinarily used in UK employment law but we understand it to mean employees who are temporarily suspended from work for a period of time during which they are not paid. Accordingly, we do not think it will apply to employees who are able to and can continue to be required to work from home. Rather it will apply to employees, in any industry, who are asked to stop working because of the outbreak. Obvious examples are employees in the hospitality, retail and leisure industries where they have been forced to shut down, but it is not limited to them.

Employers can top up salaries but are not required to under the Scheme. For those employees paid up to £30,000, the Scheme would cover 80% of their salary. Employers can still request a grant for employees paid more than £30,000 but the Government will only reimburse 80% up to £2,500 per month. Employers will have to consider how much (if any) they would pay in addition to the amount covered by the Scheme.

It is not currently clear whether the £2,500 includes income tax and NI, pension payments etc. we hope that this will be explained by the Government quickly.

2. How will it work?

Employers will continue to pay furloughed employees. HMRC is setting up a new online portal for employers to submit information about furloughed employees and their earnings so that they can be reimbursed. Details on what information needs to be provided has yet to be shared.

HMRC is working urgently to set up the system for reimbursement and expects to be ready to pay the first grants within weeks and have the Scheme fully set up by the end of April.

Businesses requiring short term cash flow support in the meantime to make salary payments may be eligible for a Coronavirus Business Interruption Loan.

3. Do staff need to agree to be furloughed?

The guidance is clear that changing the status of employees to being furloughed remains subject to existing employment law and contracts of employment.

Employees on zero hours contacts are not entitled to any working hours or pay so their hours and pay can be reduced without consent. Otherwise, unless the contract has a lay- off or short-time working clause (most contracts do not), employees are entitled to be paid the minimum number of hours provided for in their contract even if the employer cannot provide work.

Accordingly, you need consent to reduce employees’ pay. If the alternative is redundancy, possibly in circumstances where the employer will not be able to meet their obligations to pay statutory or enhanced redundancy pay or notice pay, employees are likely to agree. They will continue to be entitled to any other benefits under the contract unless agreed otherwise. The discussion is likely to be around how much staff will be paid in addition to the sum covered by the Government.

4. What if staff have already been made redundant?

It is not currently clear if the Scheme is available for workers who have already been made redundant. Given the Government’s intention to keep people in employment we anticipate that the Scheme will cover any staff that were made redundant after 1 March because of the outbreak and are re-engaged in order to facilitate payment under the Scheme.

5. What about staff on zero hours contracts?

In the briefing the chancellor said the Scheme would cover everyone on PAYE if they have a set of regular earnings. He went on to say that the intention is that the Scheme will cover as broad a range of people as possible. This suggests that it would cover workers on zero hours contracts provided they have a set of regular earnings and would be based on average pay over a period, however, there is currently no guidance on this.

6. Does the Scheme apply to self employed staff?

The Scheme only applies to those on PAYE so will not apply to self-employed staff. The measures brought in to help self-employed staff are:

– Enabling them to access Universal Credit at a rate equivalent to Statutory Sick Pay for employees.

– Deferred self-assessment payments until January 2021.

– Postponing IR35 until 6 April 2021

7. Can we still make staff redundant?

If there is no work available at the place where the employee works (even temporarily as a result of the current crisis), that is a redundancy situation. Subject to consultation, the employer can make redundancies. The Government is not forcing employers to retain/furlough staff but is urging them to do so and has introduced the Scheme to help employers meet the cost of doing so.

If an employee qualifies as a furloughed employee but refuses the employer’s invitation to become furloughed, the employer should be able to terminate the employee’s employment by reason of redundancy (subject to the usual rules around this).

8. Can I still ask my employees to use their holiday?

Yes, employers have the right to tell employees and workers when to take holiday if they need to. If you decide to do this, you will need to inform your employees in advance at least twice as many days before as the amount of days they need people to take. Employees will need to be paid for this period subject to any agreement reached to the contrary.