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HRLaw news from Fox Williams: Weathering the storm
To assist employers and employees weather the storm, this week we report on the government’s updated guidance on the Job Retention Scheme, consider who is allowed to go to work and who is not, and remind everyone of other employment law changes.
- Government clarifies many aspects of the Job Retention/Furlough scheme (“the Scheme”)
- Common questions from employers on the Job Retention/Furlough Scheme
- Who is allowed to go to work and who is not?
- Other changes to employment law coming into force on 6 April 2020
In last week’s edition we set out our understanding of how the Scheme works based on the information then available from the government.
Many detailed questions remained unanswered. The government updated its guidance on 4 April (see here) to provide answers to some of these.
Maternity leave, adoption leave, paternity leave and shared parental leave
- Furloughed employees are permitted to work for another employer if “contractually allowed”; the existing employment contract may already permit this, or the employer may agree to amend the contract to permit this during furlough. This means some employees could profit from furlough at the expense of the government. We wonder whether this aspect of the guidance will be revised!
- Past overtime, fees, commission, bonuses: “Regular payments” employers are “obliged to pay their employees can be claimed for”. “This includes wages, past overtime, fees and compulsory commission payments.” This would seem to cover any payments that the employer is contractually committed to pay including overtime and commission payments earned before furlough, but not commission payments that the employee would have earned had they been working.
- Discretionary bonuses (including tips) and commission payments are excluded.
- Benefits in kind are not included; this also applies to benefits provided through a salary sacrifice scheme. Some employment contracts allow employees to switch out of a salary sacrifice scheme if there is a “life event”. HMRC agrees that Covid-19 counts as a life event.
- Government grants cannot be used for redundancy payments.
- The Scheme does not apply to employees working reduced hours.
- Employees made redundant or who stopped working after 28 February can be re-employed and brought into the Scheme.
- The Furlough Scheme was introduced to protect jobs where there was no or reduced work; but it has been expanded to cover employees who are shielding in line with public health guidance (or who need to stay at home with someone who is shielding) and those who cannot work because of caring responsibilities resulting from COVID-19 such as those looking after children.
- Employees on fixed term contracts can be furloughed; their contracts can be renewed or extended during the furlough period without breaking the terms of the Scheme. But the guidance also says “Where a fixed term employee’s contract ends because it is not extended or renewed the employer will no longer be able to claim a grant for them.” We are not entirely sure when an employer may extend and obtain a grant and when they would be expected to terminate the contract. Caution should be exercised, in particular, when a fixed term contract would definitely have come to an end absent the pandemic.
- Office holders, salaried members of LLPs, agency workers and limb (b) workers are covered if they fall within the PAYE system. As with employees the decision to furlough them must be properly documented.
- Directors can carry out statutory, but not commercial duties, and this also applies to salaried individuals who are directors of their own personal service company.
- Apprentices can be furloughed and they can continue to train while furloughed and furloughed employees can engage in training, but the minimum wage rules still apply.
- Where a company is in administration, the administrator can access the Scheme but only where there is a reasonable likelihood of rehiring the workers.
- Where an employee is on maternity leave, adoption leave, paternity leave or shared parental leave a claim can be made through the Scheme in respect of enhanced (earnings related) contractual pay. The normal rules for maternity and other forms of parental leave and pay apply. Does this mean that every employer can reduce some of the cost of these payments through the furlough scheme? We think further confirmation of this point by the government would be helpful before an employer places reliance upon this aspect of the guidance.
We are continuing to receive many detailed questions from employers. The most common are:
- Can employees take paid holiday whilst on furlough leave?
As things stand there is nothing in the guidance from the government stating that holiday pay can be funded under the Scheme, so our view remains that this is not covered by the Scheme. We think that employees can be furloughed for the minimum period of three weeks and then allowed to take holiday at their employer’s expense. We think they can then re-enter the Scheme.
The practical difficulty is that employees on furlough leave are both accruing and saving holiday entitlement for when the lockdown ends. Of course, everyone will want to go on holiday when it’s possible to travel in and outside the UK, meaning that employers could face staff shortages just when they need staff to ramp up their operations. Government guidance on this point may change.
Some holiday can be carried forward two years (see here) and employers may wish to allow this carry forward for all annual leave.
One option that employers may wish to consider is whether to ask and agree with employees that a period of annual leave is taken either side of furlough leave. If agreement is not obtained from employees, employers can require the employee to take annual leave providing that the statutory minimum notice under the Working Time Regulations is given.
Any arrangements between the employer and employee as to the holiday and furlough leave should be clearly documented in the furlough agreement.
- How long will the Furlough Scheme be available? Will an extension be granted before 18 April 2020?
Employers need to know this by 18 April 2020 since if employers are forced to make redundancies of 20 or more employees, a collective consultation period may need to commence on 18 April. Government is aware of the significance of this date and further updates are awaited.
- Can an employer access finance to pay wages before it obtains government grants under the Scheme?
See Fox Williams’ guidance notes on the financing of business and access to government help during lock down.
We consider this to be one of the more confusing aspects of the current situation; and so we’ve set out below our understanding of the current rules.
We consider there are three broad categories of employers:
- organisations that have been instructed to close by the government owing to the risk they would pose to public health if they would remain open. The list of organisations falling into this category is to be found here. They include cafes, pubs, restaurants and hairdressers.
- other organisations which are permitted to remain open but must operate under altered operational rules reflecting general government guidance as to measures to be taken by everyone to slow down the spread of Covid-19.
- essential service providers, some of whose employees are deemed “key workers”
The overarching government guidance to organisations is that they should remain open, save for those in category 1, which have been expressly ordered to close.
Taking a more detailed look at the organisations that are remaining open:
Category 2: Organisations that are permitted to remain open but are not essential service providers
- Employers who fall into category 2 should be encouraging their staff to work from home “where possible” and should take “every possible step to facilitate this” including providing suitable IT and equipment, and following the health and safety guidance on home workers issued by the Health and Safety Executive (see here).
- The government guidance gives the following as examples of workers who might have to travel to work: “workers who operate machinery, work in construction or in manufacturing”.
- This guidance does not prohibit other workers, (e.g. office workers) from attending their work place, but employers should not require this unless attendance at the work place is necessary for the organisation to function.
- No employee should travel to their workplace if they have a new, continuous cough or a high temperature; they must remain home and initiate household isolation (see here).
- Employees who fall into the “shield” category, (those over 70 or with specific health conditions which render them vulnerable to Covid-19), should be strongly advised by their employers to follow the general social distancing guidance. This is new territory, but we consider that employers may be in breach of their health and safety obligations to require this vulnerable group to attend their workplaces. This week the government has clarified that employees in this group can be furloughed and, as we reported last week, there is specific health and safety legislation which would protect such a worker from being dismissed (see last week’s article).
- Employers who do have people in their offices or onsite should ensure that employees are able to follow Public Health England guidelines (see here) including, where possible, maintaining a two metre distance from others, and washing their hands with soap and water often for at least 20 seconds (or using hand sanitiser gel if soap and water is not available).
The Health and Safety Executive has the power to enforce the Public Health England guidance and will consider a range of actions ranging from providing specific advice to employers through to issuing enforcement notices, including prohibition notices.
Category 3: Essential service providers
- Although the same guidance for category 2 workers technically applies to employees in category 3, it is widely appreciated that they will be unable to work from home. The Public Health England guidelines continue to apply, where possible, and there will be some sector-specific health and safety guidance (e.g. PPE for healthcare workers and see below for construction workers).
- The government has made special provision for the children of key workers to remain in education. The list of “key workers” is in fact only set out in the context of specifying who is entitled to send their children to school. (see here).
- The following sectors employ key workers:
- health and social care
- education and childcare
- key public services
- local and national government
- food and other necessary goods
- public safety and national security
- utilities, communication and financial services.
- On 31 March 2020, Alok Sharma, Secretary for State at BEIS issued a letter of support (see here) for workers in the construction industry. This recognised the special value of these construction workers to the UK economy, and confirmed that they can continue to travel to work (e.g. construction sites). Specific Site Operating Procedures apply, which align with the latest guidance from Public Health England (see above).
The Covid-19 special measures are overshadowing other important changes which came into effect on 6 April 2020 including:
- Changes to Section 1 written statements of employment particulars
Workers as well as employees must now be given a written statement of employment particulars (generally within a formal employment contract) and this must be provided to them before their first day of employment, not within one month as is the case at present.
- Changes to holiday pay calculations
When calculating one week’s holiday pay, employers will need to use a reference period of 52 weeks rather than the 12 week period previously used; if the worker has been employed for less than 52 weeks, the actual number of weeks completed should be used.
The government has published further guidance on how such calculations should be made including a number of useful examples. This guidance can be accessed here.
- Statutory payments
As usual statutory payments have been revised from 6 April 2020:
- the maximum compensatory award for an unfair dismissal claim will increase from £86,444 to £88,519
- the maximum amount of a “week’s pay” for redundancy pay calculations will be increasing from £525 per week to £538 per week, which means that the maximum amount of a statutory redundancy payment is now £16,140
- the statutory guarantee payments (for statutory lay-offs) will be increased from £29 per day to £30 per day (this is still subject to a five day limit)
- the weekly statutory sick pay rate is increasing from £94.25 to £95.85
- Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Shared Parental Pay increased from £148.68 per week to £151.20 per week.
- Parental bereavement leave and pay
There is a new right for all employed parents to take two weeks' leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy.
This can be taken as either a single block of two weeks or as two separate blocks of one week (each taken at different times in the first year following their child’s death) at the employee’s election.
Employees with at least 26 weeks' service and whose weekly average earnings are over the lower earnings limit of £118 per week for 2019/20 will also qualify for statutory parental bereavement pay at the rate of £148.68 per week (for 2019/20) or 90% of average weekly earnings, if this is lower.
Articles and commentary by our legal experts on the impact of Covid-19 are all available here.