Following the flurry of announcements from the Government last week we have had a little time to digest the information and speak to many of our clients. There is a significant level of misunderstanding which is not at all surprising. We thought it may be helpful to have another review of the employee related announcements to answer the common questions we are hearing. We are sure you will understand that the guidance is changing rapidly, and this update is correct to the best of our knowledge at this time. It should be read in conjunction with our detailed guidance referred to in Update no. 7 and no.5 and the government official guidance.
The Corona Virus Job Retention Update: Furlough Scheme.
For full details please refer to : https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
The intention of the furlough provisions is to enable the Employer to maintain the work force when, in any other circumstance, the employer would make redundancies.
We strongly recommend that employers take Employment Law advice. Notification to the employee must be done in writing and, depending on the employee’s employment contract, this may require employee agreement and consultation.
The employer can claim the lower of 80% of an employee’s regular wage or £2500 per month PLUS Employers National Insurance and minimum auto-enrolment employer pension. Details of how to calculate variable wages can be found in Update 7. Exclude fees, commission and bonuses. Employees must have been in employment by 28th February 2020.
The employee must do NO work. In essence, these employees would have been made redundant in any other circumstances. In order to allow employees to return to work there is a minimum furlough period of 3 weeks.
There is some debate over directors, many of whom take low salaries and higher dividends. It is clear that there is no support for dividends. The provisions do apply to directors paid through PAYE but as with any other employee, they should do NO work. We do not know yet the extent to which minor directorial duties would be disregarded, or whether the requirement that a furloughed employee should do ‘no work’ would prohibit this. We would advise caution, in assuming a successful claim, at this stage until more clarity has been issued.
Employees who have been advised to shield should be furloughed. This is not the same as ‘vulnerable’. See below.
The HMRC portal to make the claim is expected in late April. One submission can be made every three weeks, being the minimum furlough period.
You are able to pay your employees in excess of the 80% the business can claim. Full, part time, flexible, zero-hour contracts and agency workers are all eligible.
If an employee is working reduced hours or for reduced pay the scheme cannot be used to ‘top up’ or contribute. The employee must do NO work for the business to be eligible to claim.
Employees rights remain the same. Including holiday, SSP maternity and rights against unfair dismissal.
Time to pay arrangements which will cover PAYE and NIC can be arranged with HMRC where difficulties in payment arise from the Coronavirus pandemic.
Public Health England has written to approximately 1.5 million individuals who they consider are at very high risk of severe illness. People falling into the extremely vulnerable category include:
- Solid organ transplant recipients
- People with specific cancers
- People with severe respiratory conditions
- People with certain rare diseases
- People on immune suppressants
- Pregnant woman with specific heart issues
These people and members of their households should be furloughed.
Statutory sick pay (SSP)is available for those employees who have coronavirus, have symptoms, someone in their household has symptoms, or they’ve been told to self-isolate by a doctor or NHS 111.
If someone has symptoms and lives alone, this applies for 7 days. Everyone else in the household should self-isolate for 14 days and is also entitled to SSP. SSP will apply from day 1 and businesses with less than 250 staff will be reimbursed for the first 14 days.
Usual company policies apply, and an employee can self-certify for 7 days. Online sick notes are available from NHS 111.
SSP is not available for those choosing to self-isolate because they are considered vulnerable.
Anyone who chooses not to come to work, and is not included in the SSP or Shielding groups above, are not entitled to SSP. In these cases, the employee’s time off would be unpaid, or they could utilise their holidays. This also applies to employees who are no longer able to work due to childcare issues following the closures of school. All businesses have been advised to make provisions to enable employees to work from home to facilitate the Government guidelines on social distancing. There is an expectation that employees will need the support of the employer to adhere to the recommendations to stay at home, however this is not always possible, and in that case essential travel to work is allowed. Currently the work itself does not have to be essential. This is clearly an area of potential dispute and disagreement and changing guidance. Full guidance can be found at:
We hope that you find this useful. Again, we would like to reiterate that we are here to support you. Please do not hesitate to contact us should you wish to discuss anything at all. We are very happy to help you even just as a sounding board.
With very best wishes from all the team at Geens. Stay safe.