In these uncertain times, we thought that it was important to update you as to the common questions we have been asked surrounding COVID19, furlough and the Good Work Plan. At this time of year, we are usually gearing up for the normal changes such as rates of the national minimum wage, maternity pay and statutory sick pay for example.
However, the outbreak of COVID19 has taken the world by storm and has led businesses to re-assess their position and to make decisions that they had never anticipated.
We have decided to put a fact sheet together with some frequently asked questions and answers. The full guidance has yet to be confirmed so we will continue to update this as and when we are aware of any further clarity and information.
What is Furlough leave?
It is effectively an option to lay staff off from work. Employers can claim back 80% of the employee’s salary if they are ‘furloughed’. It is understood that this will be reimbursed to the employer so the employer will still need to pay their staff. It should be noted that if someone is off work because they are sick or pregnant they cannot be furloughed as the reason they are absent is not due to a lack of work.
Do I have to ‘Furlough’ everyone?
No. You may have staff members or a department that needs to continue to work to keep the business running, for example a finance department. It is up to the business to decide which staff to ‘furlough’.
How do I make someone a ‘Furlough’ employee?
If you have a ‘lay off’ clause in your contract of employment, then you would have the right to ‘designate’ them as a ‘furlough’ employee.
Are there any specific criteria?
Yes, you can claim for the following staff members:-
The staff member must have been employed on 28 February 2020 to qualify and the minimum amount of time you can furlough a member of staff is 3 weeks.
What if there is no lay-off clause?
Importantly, if there is no express ‘lay-off’ clause in the individual’s contract of employment, you would need to obtain their consent and agreement to furlough them.
Do I have to ‘top-up’ the salary?
If you are in a position to do so financially, then you may choose to do so, however, you do not have to.
If you choose not to pay the 20% to top up the salary, you would also need the individual’s consent to only pay them 80% of their salary on a temporary basis, as you are effectively cutting their pay
How long will this be paid for by the Government?
We understand it is initially proposed to be 3 months, backdated from 1st March 2020. However, the Government has said that it could be extended.
Can the employee work during furlough leave or partially work?
No, the employee is either on furlough leave or at work – there cannot be a mixed approach.
What if an employee refuses to accept ‘Furlough’ status?
In the current climate, it would be surprising for an employee to refuse to be asked not to attend work and be paid 80% of their salary (subject to the maximum £2,500) to be at home and not work. If they refused, then you could look at other options such as redundancy or asking them to take unpaid leave, which would require their agreement.
Can I decide who to put on furlough leave and who to keep in work if I need them?
Yes, it is the employer’s decision as to who they furlough and who still needs to come to work.
How do I claim the 80% wages back?
Employers will need to designate affected employees as “furloughed employees”.
Once they are designated, employers need to submit information (details of the furloughed employees and their earnings) to HMRC via an online portal which has not been set up yet.
HMRC will cover up to 80% of earnings subject to a cap of £2500 (national median salary). At the moment it isn’t clear whether this is net or gross income. At present, Government guidance is that the money will be reimbursed to the employers. Therefore, you should continue to pay your employers until the funds are available from the Government retention scheme.
The Government guidance can be found at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Let’s not forget that there are some significant Employment Law changes which also come into effect from 6 April 2020 and some which have yet to be given a roll-out date. We cannot highlight the importance of these changes as when we get back to normal (however that will look) these changes will need to be followed to ensure that businesses are fully compliant.
In April every year, there are usually changes to statutory rates of maternity pay, sick pay and adoption pay. However, this April, there will be a number of changes which will have a significant impact on employers and employees.
Change to Contracts of Employment
A major change will extend the entitlement to receive a statement of ‘written particulars’ (on basic employment terms and conditions) to include workers as well as employees and make it a day one right. At present, employers have two months to provide employees with their statement of terms.
However, from 6 April 2020, this will have to be provided on the first day. It is therefore important that employers have the contracts prepared in advance of the start date, but preferably at the point of offer. The information to be included is as follows:-
Changes for Agency Workers
In the ‘Good Work plan’, the government stated that they would close the loophole known as the ‘Swedish derogation’ in the rules governing the use of agency workers. Under this rule, agencies could opt out of equalising the pay of agency staff with the permanent workforce when they had been with the same employer for more than 12 weeks, provided they paid the agency workers between assignments. However, this will be abolished from 6 April 2020.
Changes to how pay is calculated
The ‘reference period’ for calculating holiday for employees and workers will now change from 12 weeks to 52 weeks. This is primarily aimed at those who work varied hours so that their holiday pay is calculated over the full year. The reason for this is that if their work fluctuates and they have a great six months which then declines due to a reduction in work, their holiday pay will reflect a full year as opposed to being based on only the last quarter.
Right to request for predictable and stable hours
Employees who have been with a company for 26 weeks and who work varied or flexible hours will have the right to request more ‘predictable and stable’ hours. This could include confirmation as to the number of hours or the days worked each week.
The government is also lengthening the reference period for determining an average week’s pay from 12 weeks to 52 weeks from 6 April 2020. This means that if a worker’s pay fluctuates, their pay will now be calculated on the basis of a 12-month period.
Key Facts for Agency Workers
“Key Facts” for agency workers also comes into force. This means that agency workers have the right to details such as pay, holiday entitlement, who they will be employed by, who they will be paid by and when.
Change to IR35 rules for self-employed workers
The IR35 rules prevent contractors working through a Personal Service Companies (PSC), who carry out similar work to the employees, which usually leads to a reduction in the amount of tax and NI which is paid. Initially, contractors determined whether IR35 applied to them but, in April 2017, public sector employers were tasked with making this decision. From 6 April, this responsibility applies to all private-sector employers in a tax year with:
* PLEASE NOTE THAT THIS BEEN PUT BACK UNTIL APRIL 2021 FOLLOWING THE COVID-19 OUTBREAK
Change to leave for parents who lose a child
From 6 April 2020 employees who lose a child under the age of 18, or suffer a stillbirth from the 24th week of pregnancy have the right to two weeks’ leave as a ‘day one’ employment right. The leave, which can be taken as one block or as two one week blocks, will be paid at the same statutory rate as other family-friendly rights.
Employed parents are already entitled as a day one right to take a reasonable amount of unpaid time off to deal with emergencies involving a dependent, including dealing with a dependent’s death.
The Good Work Plan made a number of recommendations surrounding employee engagement and fair treatment.
Information and consultation arrangements
At present, workers have a legal right to be informed and consulted about decisions which affect them where there are 50 or more employees. Employees can request a formal agreement which sets out the process of this but this has to be requested by 15 employees or 10% whichever is greater. This will be lowered to 2% of employees but with a minimum will remain in place.
At present, the test for whether someone is an employee or worker or self-employed is focused around control, i.e. whether that person is told what hours to work when to attend, what they should wear and the work they should do. There is also another test as to whether that person can send a substitute to perform their tasks if they are unable to. The Good Work Plan highlights that this test is rarely used and that more emphasis should be placed on control.
Modernising the Employment Tribunal System
There are recommendations that there should be the Tribunal should become ‘digital and that Tribunal Bundles should be electronic in format. There is also a recommendation that judgement obtained through tribunals should be easier to enforce when employers have to pay the compensation awarded against them. There are also recommendations for penalty payments to be awarded if payment is not made within 28 days which could be a further 50% of the original amount.
There are also plans to increase the number of additional penalties from £5,000 to £20,000. There are also recommendations for additional sanctions where employers are guilty of the same breaches.
The use of Umbrella Companies can sometimes cause uncertainty as to who the employer actually is. The Good Work Plan proposes to extend the remit of the Employment Standard Agency to cover umbrella companies and the ability to impose sanctions where appropriate.
If you would like any further guidance on any of the topics covered in this months HPC Law Updates, please contact using our socials below
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