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.