Government confirms that furlough rules do not leave employers at risk of breaching minimum wage rules

The Government has confirmed in its guidance for the operation of the Coronavirus Job Retention Scheme (CJRS) that employers will not be at risk of breaching minimum wage rules where they opt not to top-up the wages of furloughed employees.

The CJRS was announced by the Chancellor shortly before the Stay at Home rules came into effect and enables employers to apply for a grant in respect of 80 per cent of the normal wages of a ‘furloughed’ worker, plus the cost of Employer National Insurance Contributions (NICs) and employers’ minimum auto-enrolment pension contributions on this amount.

Where a furloughed employee is paid the relevant rate of the National Minimum Wage (NMW) or National Living Wage (NLW) or near to those rates, the Government has confirmed that you may still reduce their pay the 80 per cent rate, without breaching minimum wage rules.

The guidance states:

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80 per cent of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80 per cent of their wage that will be subsidised.

Complicating matters, the rates of the NLW and NMW change today (1 April 2020).

However, it is unclear whether this means that the value of the grant for workers on either NLW or NMW and who were furloughed in both March and April will vary in line with the increased rates.

The changes are as follows:

  25 and over 21 to 24 18 to 20 Under 18 Apprentice
March 2020 £8.21 £7.70 £6.15 £4.35 £3.90
April 2020 £8.72 £8.20 £6.45 £4.55 £4.15

Latest Family Q&A on COVID-19 measures

As we enter an intensive phase of the UK government’s containment measures for the COVID 19 outbreak, many couples and families now facing extended periods of social distancing and isolation. This will place a heavy burden for couples undergoing separation and divorce, often requiring full attention to childcare duties while schools remain closed.

Our family team answer some Q&A’s around this topic and things to consider:

I have been cohabiting with my partner for over a year and am worried about my situation should there be a break down in our relationship. We have always been focused on our jobs but the current situation presents a challenge as we are now both forced to spend a lot more time together than before. Should I worried about my rights?

We continue to campaign for the need to have urgent reform for couples who have lived together for a period of time, to enjoy certain right, as the position under English law is very different for married couples. The lack of legal protection is now accentuated when couples are confined to living under strict government restrictions.

We offer a full range of services to provide protection to those couples who wish to enter into agreements to regulate what happens when they live together and if their relationship ends

For further information please visit our cohabitation services page

Advice for people cohabiting who do not currently have a Will? 

 Many cohabiting couples do not fully understand their legal rights should their partner pass away. A cohabitee living with their common-law partner does not automatically inherit the property if the one of them die. The concept of ‘common law marriage’ is not recognised under English law. Cohabiting couples have very limited legal rights when it comes to claiming a share of their partner’s assets upon death. In fact, the only way a surviving common-law partner can inherit a shared property in the deceased’s sole name is if the deceased has clearly stated in their Will that the property will pass to their surviving partner when they die.

Statistically, very few people have a will. Those that do usually have a ‘home-made’ wills, with no proper legal advice, which can then give rise to legal disputes between family members about their validity.

When people do have a will and their relationship has broken down, they need to think about adjusting their living arrangements. If the property is in joint names they need to sever the joint tenancy.

My partner and I are separated with children. Can my partner still insist on spending time with children during this pandemic?

Children of separated parents can move between households during the coronavirus lockdown but it is best to get bespoke advice depending on the circumstances of each situation. It comes after minister Michael Gove reportedly “U-turned” on advice given to families following the introduction of strict new laws designed to keep people indoors (read full story here)

For further guidance, please visit Cafcass COVID 19 guidance or contact a member of our team today.

My son is on holiday with my ex-wife and is now stuck due to travel restrictions. What can I do?

This is a very difficult situation for the many UK citizens that are stuck abroad and unable to return home to the UK. The government has now announced that foreign office officials are working with major airlines, to arrange commercial flights to bring home UK citizens stranded in different parts of the world.

For further information on this please check the Foreign office’s latest travel advice

Use of video-conferencing and delays to the court system? How will this work with deadline? What is our advice to clients or those looking for help?

The systems being put in place can work if people are prepared to adopt them, although there is an element of them being voluntary. Litigants in person without legal representation may find this more difficult without easy access to technology. Digitalisation is feasible and the outcome of this crisis is that a number of previously largely untested processes such as Court videoconferencing are likely to be adopted on a permanent basis.

As a firm, our ability to provide a good service has not been affected, as we have the access facilities to allow our team to continue working remotely.

Do I have to continuing paying child maintenance and support?

The government has not provided further guidance on how this will work so it’s difficult to predict yet what approach will be adopted in the current situation.

Many may find  protection through the Government’s financial packages, which although not universal and may not cover a full salary or earning, should be sufficient to cover basic expenses during the current period of isolation and social distancing from others.

Parents will need to work together to ensure that their children are best looked after.

Advice for couples now forced to stay indoors?

Whilst the current situation is particularly challenging, many understand the need to work together in this difficult time and help respect each other’s privacy. Finding amicable solutions to differences with your partner could significantly improve the prospects of success of such arrangements.

This situation is unique. People have never been restricted to this extent during peacetime. Parents are being encouraged to use technology to allow their children to have regular time with other children and for parents to share home schooling ideas with other parents. Greater use of video conferencing and social media tools is a practical application of government advice that people need to communicate more and stay in touch.

Use of a family therapist could be considered, to help outline a home working arrangement, allowing both to be able to work and exercise in the same space. We work with many therapists.

We are fully operational remotely and are working hard to provide the best possible service for our clients. Most courts are still open and dealing with cases so it will not stop any ongoing proceedings but action may be needed to ensure that they are heard remotely. For further information on the above and all family issues, please contact a member of our team.

Coronavirus (COVID-19) more FAQs for Employers

Hayley Trovato, Senior Associate in our Employment team, has answered some more questions employers may have around coronavirus (COVID-19):

The Coronavirus Job Retention Scheme – What is it and How do I apply?

This was announced by the Chancellor on 20 March 2020. Under this scheme any employer can obtain a grant to cover 80% of the salary of employees who would otherwise have been laid off, up to a total of £2,500 a month for each retained employee. This will cover the cost of wages backdated to 1 March 2020 and initially is open for at least 3 months unless extended further by the chancellor.

The scheme is open to those on PAYE. This means it will cover many workers as well as employees.

What do employers need to do?

To obtain a grant the employer has to designate the affected employee as ‘furloughed’ and notify the employee of the changes. They then have to submit  information to HMRC about the furloughed employees and their earnings through an online portal. There is no further information about the portal available as yet.

What does “Furloughed” mean ?

This is not a word that many people will have come across until a few days ago, although it is a commonly used expression in the United States where it relates to the temporary leave on an employee due to the special needs of a company or employer due to economic conditions. However, there is no legal definition in Employment Law nor is there any definition or guidance provided on its meaning by the government

The concept of furlough is similar to a lay off, in the sense that the employee must remain an employee and remain on the payroll and is not provided with any work. However, unlike a lay off where the employee is provided with no work or pay, furloughed employees will receive some of their pay.  Employees who are furloughed must not complete any work for their employer during this time.

Do employers have to provide a top up of the 80%?

This is  up to the individual employer to decide. It is also important to note that the scheme specifically refers to it being “subject to existing employment law.” This means an employer cannot just inform or compel an employee they are being furloughed, this has to be agreed with them. However, if the alternative is redundancies then it is likely an agreement will be reached without much resistance.

For the full details please refer to:

HM Government: Business support: Coronavirus Job Retention Scheme

What if I am self employed?

The House of Commons Public Bill Committee has proposed an amendment to the Coronavirus Bill 2019-2021 which would require the government to introduce “statutory self-employment pay” for the “self-employed” and “freelancers” equivalent to furlough leave for employees and workers. The amendment proposes that individuals who are self-employed or freelancers would receive a “top-up” to ensure that their net monthly earnings do not fall below the lower of:

  • 80% of their monthly net earnings, averaged over the last three years.
  • £2,917 per month.

There has been considerable pressure placed on the government to provide a scheme of relief for the self employed and it has been promised that help for self-employed workers will come very soon. This was announced yesterday – for full details see www.gov.uk/coronavirus.

What assistance is  government offering for the self employed ? 

The government announced a new Self-employed Income Support Scheme on 26 March 2020. This will provide cash grants to the self employed of 80% of the average monthly trading profit over the last three years, up to £2,500 a month. The scheme will run for an initial three months and will be extended if required.

To be eligible, the following requirements must be met:

  • trading profit must have been less than £50,000 in the 2018/19 tax year, or the average trading profit over the last three tax years , this must be less than £50,000 a year.
  • More than have of the income must have come from self-employment during the the period above.
  • You must already be in self employment.

HMRC will contact those individuals they consider eligible and they will calculate their grant using the average of trading profits form their tax returns from the last 3 years. It is hoped that these payments will be made from the beginning of June.  We are expecting to receive further details of the scheme from HMRC shortly.

What about employees who have already booked annual leave and are now layed off, are they permitted to take this leave?

On the basis that the employment contract continues during the lay-off then the employees rights in terms of their annual leave will be unaffected.

What if employees are not able take all of their annual leave due to the impact of COVID-19 ?

The Working Time ( Coronavirus ) ( Amendment ) Regulations 2020 SI 2020/365 have been brought into force with immediate effect. They means that any untaken annual leave not take due to the COVID-19 can be carried over into the next two leave years. This new rule applies only to the four weeks of annual leave provided for by Regulation 13 Working Time Regulations, but not the additional 1.6 weeks which is subject to different rules on carry-over.

Can an employer withdraw an offer of employment for new starters in the light of the COVID-19 pandemic? 

Consideration must be given as to whether a contract of employment has been entered into with the new starter. If there is a binding contract of employment then instead of withdrawing the job offer, giving rise to a potential breach of contract claim, the employer could give the employee notice of termination and pay them for their notice period. In doing this it is important that the employer ensures the reasons for the decision are well documented to avoid any allegations of discrimination.

The existence of a binding contract also means that any change to the start date would be a change in contractual terms. This means that an employer could only change the start date with the agreement of the new starter or if the contract gives them a right to do so. Even if such a right exists in the contract then an employer should ensure that this is exercised reasonably and also ensure they give consideration to a possible discrimination issues.

What issues should be considered if we need to ask all our employees to work from home in the light of the government’s announcement on 23 March 2020?

Employers should refer to The Acas, Working from home guidance which sets out the following issues to consider, including:

  • Supporting employees to adjust to home working.
  • Employers and employees’ health and safety responsibilities, including looking after mental and physical health
  • Equipment and technology.
  • Ongoing assessment of home working systems and arrangements.
  • Setting clear expectations.
  • Keeping in touch.
  • Pay and terms and conditions of employment.
  • Working from home and childcare.
  • Expenses.
  • Insurance, mortgage or rent agreements.

For further information, please do not hesitate to contact me by email or on 020 8349 5487.

Eligibility restrictions for small businesses – Enterprise Finance Guarantee scheme

The Enterprise Finance Guarantee (EFG) supports small businesses by providing finance to smaller businesses that cannot obtain finance from their lender because of insufficient security. The British Business Bank has now announced that a number of eligibility restrictions are in place because of the European Union’s (EU) state aid rules.Continue reading

OGR Stock Denton – Coronavirus Precautions

We are committed to containing and delaying the spread of Coronavirus in the UK and are following government advice to ensure we protect our staff, clients and contacts from the COVID19 outbreak and to help prevent the spread of the disease.

We already have contingency plans in place to try and ensure that the essential services we provide will not be affected.

Thanks to the technology we employ within our practice, we are still open for business, with the majority of our staff working remotely from home and doing more meetings by telephone rather than face-to-face.

We understand that this is a difficult time for many of us and appreciate your understanding. We kindly request that should you be required to send us any information, that you do so electronically wherever possible rather than post anything to our offices (please note that we continue however not to accept service by post without our prior authorisation).

If you have any queries regarding our procedures for the Coronavirus or if we can assist you in anyway please do not hesitate to contact us. 

Coronavirus (COVID-19) FAQs for Employers

Hayley Trovato, Senior Associate in our Employment team, has answered a number of questions employers may have around coronavirus (COVID-19):

Can an employer refuse to allow an employee to work from home if they will also looking after children whose schools/nursery have closed?

Normal circumstances would dictate that it is not appropriate for an employee to work from home while they are providing childcare. However, with the escalation of the COVID-19 virus, a more pragmatic approach should be adopted by employers. It seems likely that in the next few weeks this is likely to become a reality. In these circumstances imposing a ban on employees working from home while looking after their children is likely to exclude a large proportion of the workforce from carrying out their job. In these unprecedented times, a more relaxed and flexible approach needs to be adopted.

Do employees have the right to be told if a colleague develops the virus?

Information about an employee’s health is defined as a ‘special category of personal data’ by the Data Protection Act 2018. This means it can only be processed by an employer in restricted circumstances. You must notify your employees of the risk of infection as soon as possible however it is important to ensure that the identity of the individual is not disclosed. Best practice is to say an employee who has been in the workplace has been infected and so all of the usual precautionary measures should be taken. On 12 March 2020, the Information Commissioners Office (ICO ) confirmed it would take a pragmatic approach to enforcement in the light of the pandemic. It has issued ICO: Data Protection and Coronavirus: what you need to know, where it confirms that you can disclose to colleagues if an employee has contracted COVD-19, on the basis that they do not provide more information than is necessary.

In an effort to keep their businesses afloat can employers reduce their employees hours of work? 

We are entering a period of economic uncertainty and most businesses regardless of their size will suffer. Immediate consideration will be given to where costs can be cut and businesses might have to consider laying off staff as it comes down to a question of survival and being to stay afloat.

Laying off employees means that the employer provides the employees with no work ( and no pay) for a period while keeping them as employees. Short time working means giving your employees less work and so less pay for a period while keeping them as employees. These are temporary solutions to the problem where there is no or less work. However, if there is no contractual right and employers are laid off or put on short-time working then the this may entitle the employee to resign and claim constructive dismissal.

However, in the current climate, the above options are likely to be a more attractive alternative to employees than redundancy meaning it is likely employees will consent to a period of unpaid leave, particularly if this option is presented as an alternative to the risk of redundancy.

At the time of writing, we are awaiting news of what financial assistance the government is going to be offering UK businesses in addition to those measures announced by the Chancellor in the recent Spring 2020 budget.

For further information, please contact us and/or refer to the following sources of advice: