Coronavirus (COVID-19) Q&As
Staff are now out and about and socialising - how does this affect SSP?
In one scenario we dealt with an employee visited a pub but heard the following week that some people who had been there at the same time had developed symptoms of Covid-19. This employee put himself forward for a test which was inconclusive and he was not ill. This employee doesn’t drive and was due to be collected by a driver. It then resulted in both the employee and the driver not coming into work for one day. Do you have to pay this employee under the amended SSP rules? The short answer is no.
The amended SSP Regulations which entitle employees to receive SSP from the first day are limited to a person being incapable of work because they were self-isolating to prevent infection or contamination from coronavirus where:
- They have symptoms of coronavirus and are at home for seven days.
- They live with someone who is self-isolating and are staying at home for 14 days.
- They are already self-isolating in accordance with point 2 but develop the symptoms of coronavirus, however mild, and are staying at home for seven days, beginning with the day the symptoms started.
1. Furlough Leave
There has been Government clarification for employers on aspects of corona related absences and employment law
Updated advice on Coronavirus Job Retention Scheme - April 14
What's the situation regarding employers only being allowed to furlough employees who were shielding if the employee was at risk of redundancy/lay off? This requirement has now been removed from the third version, therefore if you have employees who are shielding they can be furloughed irrespective of whether or not they are at risk of redundancy/lay off, meaning that even if you have work for them to do you can choose to furlough. Noting of course the potential health and safety risks.
Who can be furloughed? Anyone who is on PAYE and who was on the payroll on 28th February 2020 including company directors, workers on zero hours’ contracts, those on fixed term contracts, flexible contracts, agency workers and those who work via an umbrella company or through their own personal service company, provided they are paid through PAYE.
Apprentices may also be furloughed, but must receive Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training.
Any entity with a UK payroll can apply to put its staff on furlough, including businesses, charities, recruitment agencies and public authorities, however if a public authority receives public funding for staff costs then employees cannot be furloughed.
Those shielding in line with guidance from Public Health England and those with caring responsibilities (e.g. those with young children) are named in the guidance as categories of employee who would be suitable for Furlough Leave, if they were unable to work from home and otherwise may be made redundant.
Those with more than one job can be furloughed from both jobs (from the same or different employers), meaning that some high earning employees could receive up to £2,500 from each job.
How long can an employee be furloughed for? An employee must be furloughed for a minimum of 3 weeks. However an employer may prefer to rotate employees. The furlough agreement must be in writing to the employee and must be kept by the employer for 5 years.
What can an employee do whilst on Furlough Leave? An employee must not undertake any work for the business that brings in money or profit or provide normal services. Employees can however undertake training for the employer or take on volunteering work. If an employee undertakes training the employee must receive National Minimum Wage for all hours of training. If 80% of pay takes the employee below the National Minimum Wage, whilst this is fine on “normal Furlough Leave”, if an employee undertakes any training during Furlough Leave, wages should be made up to 100% of normal pay for time spent training.
An employee can also obtain work with another employer whilst on Furlough Leave from their original job. This is a significant clarification to the rules and we believe it was devised to help industries struggling for capacity, such as farming, distribution and food retail, to recruit employees for a temporary period during these difficult times. However the employee’s contract of employment may prevent them, or oblige the employee to seek the employer’s permission to take on additional work. We would advise that the employer reviews any such requests on a case by case basis, as whilst an employer may be willing for the employee to ‘help out’ the nation in this difficult time, an employer would be unlikely to be willing for a furloughed employee to obtain work with a potential competitor.
What if an employee is off sick when the Furlough leave scheme is applied in the workplace? An employee is entitled to receive SSP until they are well enough to return to work, after which time the employee may be eligible to be furloughed and if so to receive Furlough leave pay
An employee is still entitled to receive maternity pay, and if an employee is on maternity leave, and contractually entitled to enhanced maternity pay the employer can claim for any enhanced contractual maternity pay via the furlough leave scheme, albeit subject to the maximum payment of £2500 per month.
How much should an employee receive in Furlough Leave pay? 80% of an employee’s normal earnings, or salary up to a maximum of £2500 per month, for example if an employee receives £1800 per month, they will be eligible to receive 80% of £1800, if the employee receives up to £37,500 per annum they will receive 80% of their monthly salary, however if the employee receives more than £37,500 per annum they will still only receive 80% of £37,500, because furlough leave is capped at £2,500 gross per month. The employer should still pay its National Insurance and Pension contributions on wages, but this is reclaimable along with the 80%.
If an employee’s earnings vary and an employee has been employed for more than 12 months they should receive
the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If an employee has been employed for less than 12 months, they should receive 80% of their average monthly earnings since they started work.
If an employee started work in February 2020, 80% of their pro-rata earnings so far (subject to the £2,500 gross per month cap).
An employee should receive contractual commission, overtime and other regular payments that they would normally receive as part of wages, but this does not include tips or discretionary bonuses.
An employee will have the normal deduction for tax, employee national insurance and pension contributions taken from their furlough leave pay
Furlough leave payments cannot be used to fund redundancy payments.
An employer can require employees to take holiday during Furlough leave, subject to giving the appropriate notice which is twice as much notice as the holiday e.g 10 days’ notice to take 5 days’ holiday. A recent amendment to the Working Time Regulations gives an entitlement to carry over 4 weeks of unused holiday, for up to 2 years, if an employee is unable to take it during the current holiday year.
Advice from March 2020
My business is struggling because of the Coronavirus crisis – how can I deal with staff? You currently have three main options
Redundancy and if the business fails, they may have to wait several months for redundancy money from the Redundancy Payments Office; or staff are sent home and receive no wages; or operate a furlough scheme and they receive 80% of wages for being at home. However during this period no work can be done at all for the company and the Government retain the right to retrospectively audit all aspects of the scheme to recover erroneous claims
What is Furlough leave? Furlough leave is a new concept in employment law and prior to the Chancellor’s recent announcement was unknown in employment law. Now it is here, Furlough leave is to be used in circumstances where employees would otherwise have been laid off or made redundant.
How does furlough work? Employers can use a portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020 and can be used at any time during the current crisis. Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
An employee must not undertake work for or on behalf of the business when furloughed and this includes providing services or generating revenue. Their wage will be subject to usual income tax and other deductions.
Who applies for furlough? Any business can apply, whether they have 2 or 2,000 employees, all forms of businesses, recruitment agencies, (agency workers paid through PAYE) and charities. Employers should designate affected employees as Furloughed employees and notify them of their new status. The Government guidance for employers details that the changing status of the employees is subject to employment law and therefore in contracts where there is no express lay off clause, the Furloughed employee needs to agree to this change of status.
How does Furlough work? Once employees are designated as Furloughed employees, the employer is to submit details to HMRC about the employees that are Furloughed and the HMRC will then reimburse the £2,500 per month per employee through an online portal backdated to 1st March 2020. Employers can choose to fund the difference between 80% and the normal wage but does not have to.
Which staff can be furloughed?
You can claim for a variety of staff as many businesses work in flexible ways but all furloughed employees must have been on your PAYE payroll on 28 February 2020. You can however claim for full and part-time employees, those on agency contracts and those employees on flexible or zero hours contracts.
How do I implement furlough leave? Be aware when deciding which staff to furlough that equality and discrimination laws will apply in the usual way. Business owners or your HR team should write to their employee confirming that they have been furloughed and keep a record of this communication.
I have staff on sick leave and undertaking isolation, is it relevant to them? If you have staff on sick leave or self-isolating they should get Statutory Sick Pay, but can be furloughed at a later date.
Do furloughed staff have employment rights? All your staff have the same rights as they did prior to the coronavirus changes and that includes furloughed staff. Their rights include Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Can furloughed staff return to work if required?
To qualify for the payment, an employee must be furloughed for a minimum of three weeks. They can then come off furlough. This means that employers cannot rotate staff weekly between furlough and non-furlough, but can return them to work as needed after three weeks.
I employ staff on zero hour contracts, can I claim for them? All temporary contracts, those workers in the gig-economy are covered by the scheme, again in the same way as furloughed employees paid 80% up to £2,500 a month as long as they are paid through the PAYE scheme.
Is it a Government scheme? Furlough leave is designed to avoid the need for laying staff off and/or making redundancies. It is a completely new route to help businesses retain workers in these unprecedented times. The employer would ideally have an express lay off clause in the employment contract to be able to use Furlough leave, but of course staff are unlikely to object to being furloughed when the alternative is likely in the vast majority of cases to be redundancy. Furlough leave should be agreed in writing with the employee.
What are lay off and short time working options? They are derived from statute in the Employment Rights Act 1996 and provide for guaranteed payments of £29 per day (increasing to £30 per day from 6th April 2020) but are limited to 5 days guaranteed pay in any 3 month period. Under normal circumstances, for an employer to be able to rely on the benefits of lay off or short time working, there must be an express contractual right in the employee’s employment contract or it must be in an industry where lay off/short time working is seen as custom and practice. However, in these unprecedented Coronavirus times lay off may be able to be used more widely, where agreement is obtained, as the alternative is unfortunately likely to be redundancy.
My business has been struggling and is administration – what happens to my staff? In these cases the administrator will be able to access the Job Retention Scheme.
Where can I get more advice for my business? The Government is helping all businesses in a variety of ways whether they have 5 or 5000 staff. The self-employed are also given assistance. There are easy to read websites and our team are happy to advise further.
2. The Self-Employed
I am self-employed – what help is there for me? There is support for the self-employed and this is via the Self-employment Income Support Scheme (SEISS). The scheme is only open to those who make the majority of income from self-employment.
Basically the SEISS will support self-employed individuals (including members of partnerships) who have lost income as a result of the coronavirus (COVID-19) pandemic.
How much is available to me? It will allow those who are self-employed to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months and income will be calculated by taking the average of income over the last three years. As always new information is coming through all the time and we will endeavour to keep our clients up to date on this.
However, it is only available to those with trading profits of up to £50k, roughly equating to 95% of self-employed people. If you earn more it is not available to you.
Do I have to shut down my business to make a claim? No not at all, self-employed people can claim these grants and remain in business, it is not the same as being furloughed.
How do I access it? You do not have to initially do anything, HMRC will contact eligible self-employed people directly The money is then paid straight into your bank account once you have completed an online application form.
Who gets help? If you are self-employed and have submitted a tax return for 2019 you will get assistance - this is to minimise fraud. If you did not submit a tax return by the due date of 31 January 2020, and have not yet submitted one, you can still submit a tax return for 2019 for a further four weeks from the end of March 2020
Cash flow is important to me, will I get help straight away? As with all the new Government measures there is so much to set up that I would imagine delays are inevitable and it is not anticipated to be up and running before June, immediate cash flow may be an issue.
How long will I get help?
The SEISS is available at present for at least three months.
There is wide variety of help available from the Government including:
- a Coronavirus Job Retention Scheme
- deferring VAT and Self-Assessment payments
- a Self-employment Income Support Scheme
- a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
- a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
- the HMRC Time To Pay Scheme
3. Withdrawal of Job Offer
I've recently been offered a job which I accepted, I handed my notice in at my current job but I have now had my offer of new employment withdrawn. I've challenged this as it's a breach of contract and have received an email back with an offer to pay one week’s wages.
Do I have a case?
The employer may wish to withdraw an offer of employment for a number of reasons, for example, because:
- Its business requirements have changed.
- It has unexpectedly received information about the applicant which casts doubt on the desirability of employing them.
- One of the matters on which the offer was expressed to be conditional, such as receipt of satisfactory references, has not been fulfilled.
You could ask the potential employer the reason for the offer being withdrawn. If you believe that their reason could be for a potentially discriminatory reason, i.e. because they became aware you suffered from a medical condition and did not want to take you on because of that, then you may potentially have a claim for unlawful disability discrimination, however you would need evidence to support your allegation.
If on the other hand, the employer’s business requirements have changed, subject to your potential employer paying you the notice you would have been entitled to receive had you started work for them, then that would be the entirety of your claim.
Unless an employee has previous relevant continuous service (e.g. with the same or an associated employer) the employee will not have sufficient continuous service to bring an ordinary unfair dismissal claim. However , there are exceptions, e.g. claims for automatically unfair dismissal, where an employee does not need to fulfil any qualifying period of service to bring an unfair dismissal claim, i.e. if the reason for the offer being withdrawn is a discriminatory reason.