As coronavirus (COVID-19) has spread the UK, it is impacting businesses and management of employees. With this in mind, we wanted to help by sharing a few of the answers we have provided to our clients, in response to questions about coronavirus.
The following FAQs are designed to be both practical and commercial but are based on our understanding at this point in time, on the information published so far. This furlough information is designed to give you an indication of how the scheme will work and should not be relied on as a substitute for advice. Should you need up-to-date advice on anything covered in this article, please contact us.
Coronavirus Job Retention Scheme and furlough
Q. What is furlough leave and how does it work ?
A: This scheme was announced by the government on Friday 20th March. It is open to all UK businesses and allow them to recover 80% of wage costs for PAYE employees up to a cap of £2,500 per month, plus (not including) employer NICs and minimum auto enrolment pension contributions. Fees, commissions and bonuses are not included.
It includes employees whose pay varies (employees on flexible and zero hours contracts) providing that they have been on your payroll since the 28th February 2020. For these employees you can claim from the government for the higher of either (a) the same month’s earning from the previous year (e.g. earnings from March 2019); or (b) average monthly earnings in the 2019-20 tax year.
Some of the detail surrounding the scheme is still unknown, however, it has been introduced as an alternative for employers who might have otherwise implemented redundancies, lay-offs, unpaid leave, short-time working or other measures for their employees. The scheme will be available for at least three months from 1 March 2020 and will be extended by the government if necessary.
Q: Can I insist on putting someone on furlough?
A: If you have a clause in your employment contracts that allows you to either introduce lay-off or short-time working, then the answer is yes. No consent is required.
If you do not have a lay-off clause in the contract, consent will be needed. This can be as simple as asking your employees to sign a letter confirming their agreement to be sent home. Jaluch can help support you with this and have template letters drafted and ready to go.
Q: What if one of my employee refuses consent to be sent home on furlough leave?
A: If one of your employees refuses to consent to be sent home then potentially they risk being made redundant as you have no other choice. You will need to follow a fair process to ensure you have selected the employee for redundancy fairly.
Q: I took drastic action and have already made staff redundant. Can I reverse this decision and place them on furlough leave instead ?
A: The scheme is backdated to 1 March 2020 and employers are being urged by the government to take back anyone they had already dismissed and convert them to this leave instead. This could also apply to employees who are on unpaid leave. Clearly if redundancy and notice payments have already been made these would need to be repaid in order to reinstate the employee.
Q: Is it possible to furlough one or two employees and keep everyone else working?
A: Yes, however selection for furlough leave should follow a fair process (in the same way as you would select for redundancy) and should be based on business need. Furlough leave should be used as an alternative to making employees redundant, i.e without this new employee retention scheme you would be considering either redundancy or lay-off.
Q: Can employers ask employees to reduce their hours/employee request a reduction and apply to HMRC to top up the remaining part of their wages?
A: Our understanding at this point in time is no, the scheme is designed to provide support to businesses who would otherwise have to make employees redundant, it is an employee retention scheme. If you do want to retain staff albeit on reduced hours you may be able to implement this if your contract of employment support this (i.e a short time working clause).
Q: Do employers have to top up the 80% wage to 100% for a furloughed employee?
A: No. This is optional. As an employer you can choose to do so but it is not a requirement. Potentially there could be a future risk of a claim for deduction of wages so it is important to gain written consent from employees for the 80% payment along with the leave.
There will be a cap of £2500 per month, which is the figure being paid to the employee, not the normal wage, plus (not including) employer NICs and minimum auto enrolment pension contributions. Fees, commissions and bonuses are not included.
A. If employees are on sick leave or self-isolating can employers transfer them to furlough leave instead?
If an employee is already receiving SSP as they are off sick or self-isolating they would not be able to be placed on furloughed leave and should continue on SSP, similarly staff who are on maternity leave, paternity, shared parental leave, adoption should continue and be paid the appropriate amounts for their leave. However, they can be furloughed when they would ordinarily return/ be fit to return to work and can also (giving the appropriate notice) return
For further furlough advice, supporting documents to give to employees or help with more complex issues please contact us.
Q. I heard the government is changing the law to allow teachers to look after more pupils and lorry drivers to do more hours. Can I do the same in my business to get staff to cover for other people’s absence e.g. require people to work through lunch breaks if we are short staffed or working longer days/shifts again because we are short staffed?
A. No. There is no legal way for you to force them to do this, the best approach is to ask/persuade your employees to defer their rest breaks or work the longer shifts. We recommend you consult with staff about what is needed, ask for their ideas and then try to work with them to implement an approach that is understood by everyone and works for everyone (insofar as that is possible). Forcing people to work when they don’t wish to could be considered to be a serious breach of contract and for some, potential discrimination.
Q. SSP – If our contract only requires us to pay SSP if someone is off sick is it okay to stick with this approach for quarantined staff (i.e. those who have the coronavirus, or are been in contact with someone who has it)?
A. Legally yes (although you will need to check your contracts of employment)! In terms of employee relations though you might need to consider how long someone can afford to be on SSP (around 80% of people in UK have less than £1500 in savings). If you just pay SSP but they then resent you for the financial hardship they suffer, then there may be a danger that they might resign in a few months’ time? We operate in a sardine tight labour market and you need to balance your commercial interests in respect of sick pay and cash flow against the needs to retain good staff.
Q. Company Sick Pay – in our contract we have very generous company sick pay terms. Can we now restrict what we pay during a time of challenging cash flow as our revenue is really impacted?
A. If there is a company sick pay contractual clause then you need to honour that otherwise you will be breaching the contract which could result in a claim at Tribunal (constructive dismissal possible, simply breach of contract or unlawful deduction of wages). If you are short of cash you should look to short term lay-offs or short-time working instead. If you need more information on lay-offs or short-time working call us on 01425 479888 or email our helpdesk.
Q. Our contract only requires SSP to be paid however we mostly pay full pay, can we now revert back to SSP only given cash flow challenges?
A. Unfortunately you have potentially created a situation where your actual practices have in effect overridden your contract. You have created a precedent and you could be in danger of a breach of contract/unlawful deduction of wages claim if you now revert to what it says in the contract. If your Company sick pay is truly discretionary, then you may have some room for manoeuvre. The lesson in this of course is to be very careful if your management practices day to day are contradictory to your written contract of employment.
Q. This whole situation has caused us to question our company sick pay policy. Can we change it and send out the amendment to staff? Do we need to give notice?
A. You can’t just give notice to change your contract of employment. You need to enter into consultation with staff about your intended change and only after that has completed can you begin to amend your contract, ideally giving staff 12 weeks’ notice of the change (too late probably for this virus outbreak). However, if staff disagree with your intention, even after consultation, it will be very difficult to force any contract change through – it’s a complex and challenging process which we can support with if you feel this absolutely necessary.
Q. I’ve heard about short term lay offs but never had to manage it. What is the approach?
A. First of all you need to check your contract of employment. Does it give you the right i.e. a specific clause, allowing you to make short term lay offs, if necessary. If you do, you need to begin a short period of consultation with staff about your intentions BEFORE implementing.
If you don’t have such a clause that’s a shame as that has now made your job a bit harder in an already tough time. Again, begin a period of consultation with a view to getting staff agreement on what you are suggesting. Learning point is check to see what other critical clauses your contract is missing that might protect your business.
Q. With short-time working do you actually reduce someone’s pay or just let them bank hours, working less now but then more later in the year?
A. Short-time working is a contractual clause that allows you to implement reduced hours on reduced pay for a limited period of time – provided you consult first.
However, you will also have read about various companies implementing a process of reduced hours now, maintaining pay, but requiring increased hours later in the year. This is also an option that can be taken after a period of consulting staff however just be clear how you will make any readjustment if someone then leaves before the period of increased working. No one likes a hidden surprise, on leaving especially if it involves their final pay check having unexpected deductions. Other potential areas of impact: maternity pay, pensions, bonuses, overtime thresholds … work through your planned changes before any implementation to ensure there are no surprises!
Q. If I think someone working from home is actually only working a few hours then putting their feet up for the rest, can I deduct pay?
A. It’s important that you continue to maintain discipline during this difficult and uncertain period. If someone is not working as you would expect then you should be ‘on them’. If you aren’t then other employees will be disaffected and lose trust in your ability to manage. You cannot simply deduct pay though unless someone has gone AWOL and you have investigated whether that was misconduct (i.e. deliberate and negligent) or just practical and for a sensible period of time (i.e. toilet or lunch break!) Be careful not to manage staff on the basis of guilty until proved innocent when working from home because you have trust issues. Try to work on the basis of innocent, until there is evidence or suggestion of guilt! For advice on this please do get in touch!
Q. I have a new employee starting next week (already signed their contract) but I’m beginning to think its sensible to delay their start date. Can I just do that without financial penalty or worst case, can I now say ‘no’ even though they have accepted our offer?
A. You can delay a start date if the new employee agrees with you. If they don’t agree to that then you might need to consider termination – even though they haven’t started yet.
You can give notice of termination of contract. The required period of notice is either as stipulated in the contract or as set out in law (no notice is required to be given by the employer if less than one month has been worked). If your contract provides 1 month’s notice from day 1 then you can give 1 month’s notice now but if you don’t want them to start you will then need to pay them 3 weeks’ pay if the original start date is just one week away from now.
Q. What are my options if an employee tells me that they are unable to work because their child’s school has closed due to coronavirus or they need time off to look after someone who is ill?
A. Employees are entitled to time off work to help someone who depends on them (a ‘dependant’) in an unexpected event or emergency. This would apply to situations related to coronavirus (COVID-19). For example:
- if they have children they need to look after or arrange childcare for because their school has closed
- to help their child or another dependant if they’re sick, or need to go into isolation or hospital
There’s no statutory right to pay for this time off, but some employers might offer pay depending on the contract or workplace policy. If an employee tells you that they are unable to work as they need to care for someone (e.g child off school or other dependent who is ill), then you will need talk to them to discuss the options, namely: they could take the time as holiday (if you allow it), request parental leave, have the time as unpaid leave, or depending on their role you may be able to discuss flexible working options e.g. alternative working hours, moving their hours, working from home and so on. You may also consider placing them on furlough leave if appropriate.
Q. What H&S measures do I need to take? Issue face masks and hand sanitiser?
A. Good luck with that as stocks of both are already scarce! In reality, the steps each organisation is required to take given their duty of care will be different. You need to make an assessment based on the organisation you are in and the roles people are carrying out. We suggest you carry out a risk assessment to look at things such as travel, risk of infection, home working, preventative actions etc. For some people and some roles face masks may be sensible but that will not be the case for everyone so be selective and try to avoid decisions made in a panic and that are not well thought through.
Q. Can I just change people’s contract of employment such as with hours, duties, location, travel etc to ensure the business continues to run at this time on the basis of its necessary for business continuity.
A. No. You have no right to unilaterally change people’s contracts of employment. If you want to change a contract you need to enter into a period of consultation and at the end of that you will typically give 12 weeks’ notice ahead of any contractual change taking place.
Q. What is most critical at this time for HR to focus on?
A. Whilst a short term focus on keeping people calm, communicating about self quarantine/managing remote working etc. is necessary be very careful not to lose sight of the medium to long term economic implications of this virus on the organisation such as supply chain disruption, decreased customer footfall, decreased order book etc. You might need to be focussing on likely resourcing needs/changes once this period of chaos is through.
Q. Do we need to be concerned about our workers and contractors?
A. You have no obligations in respect of their sick pay but you continue to have a duty of care towards them so be mindful of their needs. Also, we have seen in the past that protracted periods of low or no pay can cause the self employed to move back into full employment where there are opportunities for that. Enforced poverty tends to make people reassess their options. Be careful not to lose what you value.
Q. If people want to cancel their holiday as they can no longer travel – how much notice are they required to give?
A. Unless your contract of employment or handbook states otherwise, there is no legal requirement for an employer to agree to cancel annual leave that has been approved. It would be difficult to argue that your employer is being unreasonable in this instance, particularly as temporary cover may have been arranged to deal with your previously approved holiday.
On the flip side, an employer can cancel a period of annual leave, which is notice of at least the same length as the period of leave to be cancelled. For example, if an employee has booked a period of four days’ annual leave, an employer must give at least four days’ notice of cancellation.
Q. Is there an issue with cancelling holiday and other leave in order to bring staff back into the business to cope with increased demand (e.g. nursing or tech staff)?
A. Be careful to plan for a surge in holiday leave taken towards the back end of the year if you cancel holidays now. This winter coming is expected to be as disruptive for organisations as the current period so you need to plan resourcing properly rather than react to the situation now and store up problems for yourself further down the line.
Q. If an employee is actively refusing to do the right thing if they’re sick so as to not get ‘into the system’, can I notify the relevant authorities to give them their name and address?
A. Be very careful about use of data (such as home address) given GDPR restrictions. However it is expected that in any escalation of this crisis that it will become a criminal offence to not notify authorities/self quarantine as determined by the Government.
Q. What if I have an Employee Who is refusing to go to work ?
A. You will of course have some employees who may not want to go to work as they’re afraid of catching coronavirus. This could particularly be the case for those who are at higher risk. You should listen to any concerns staff may have and should take steps to protect everyone. If an employee still does not want to go in, you may be able to offer them the opportunity to take the time off as holiday or unpaid leave however you do not have to offer this. As a last resort if an employee refuses to attend work without a valid reason, it could result in you undertaking disciplinary action against them.
Helping your employees and business stay safe
If you’ve got any concerns about coronavirus, or require lay off clauses, short time working clauses, other employee documentation or advice on changing contracts of employment please do get in touch with us for fast and friendly support. We are also able to support with redundancy and other consultation exercises or even TUPE if you are taking this period of business upheaval to merge, acquire or sell! Please do get in touch or call us on 01425 479888.
If you aren’t a Jaluch client, no problem, we can offer pay-as-you-go (Ad-Hoc) advice or … for a monthly fee (from £150) we can provide unlimited telephone support, HR documentation (contracts etc.) and an annual HR audit.
Training for staff representatives being asked to get involved in lay offs or redundancies can be conducted using virtual classroom/web links. Please do get in touch.