COVID-19: FAQs for employers

Posted on 11 March 2021

This page was last updated on 11 March 2021

In this note, we set out the most frequently asked questions, with our answers, taking into account the latest Government advice. We intend to keep these FAQs updated in light of any new concerns raised by our clients and rapidly changing government guidance.

What are the rules about working before the anticipated relaxation of lockdown restrictions on 29 March 2021?
What are the rules around working from home?

During the lockdown period, in England, individuals should not leave or be outside of their home without a "reasonable excuse". From a work perspective, leaving home for work will only be a "reasonable excuse" if an individual can cannot reasonably work from home. Where it is not reasonably possible for an employee to work from home, an exception applies enabling them to travel to their workplace.

What about businesses that have been ordered to close?

Employees must not attend their place of work if it has been ordered to close. 

What about employees who cannot work at all from home?

If it is not reasonably possible for an employee to work from home, and their place of work has not been ordered to close, they should they should go to their place of work. If employees who cannot work from home are continuing to attend the workplace, employers should follow the industry specific COVID-19 Secure guidelines. See "Health and Safety & Risk Assessments" for further information.

What about clinically extremely vulnerable people?

See "What about clinically vulnerable and clinically extremely vulnerable employees?" below for further details.

What about employees who cannot work, or whose work is impacted, by childcare issues arising from school closures?

See "Caring for family" below for further details.

Can an employer dismiss, or refuse to pay, an employee who does not come to work because of COVID-19?

In theory, yes, but if the employee reasonably believes that the threat posed by COVID-19 is serious and imminent, and that it cannot reasonably be controlled, then any dismissal or detriment is likely to be unlawful.

These cases will be fact-dependent, and automatically unfair dismissals may occur in cases where employees are 'extremely vulnerable' or 'vulnerable', or if the employee lives with someone in that category.

How long will these restrictions last?

The Government has set out a four stage roadmap out of lockdown for England, under which restrictions will be progressively eased. Step 1 starts on 8 March. See below for detail on the lifting of restrictions.

What support is available to employers during the national lockdown?

Please see "What financial support is there for employers and employees who are unable to work due to Covid-19?" for further information.

 

What will happen after the anticipated lifting of restrictions on 29 March 2021?
Will employees who can work from home be able to return to workplaces after 29 March?

From 29 March 2021, the restriction on leaving home without a "reasonable excuse" is expected to end. However, the Government has said that employees who can work from home should continue to do so beyond this date.

Under the pre-national lockdown rules, an employee will be deemed able to work from home if their employer, in consultation with the employee, judges an employee can carry out their normal duties from home. It is anticipated that any guidance will remain broadly similar after 29 March 2021

What about employees who cannot work effectively from home after the national lockdown?

Under the pre-national lockdown rules, the Government left it to employers and employees to determine whether an employee is able to work effectively or not from home. If an employee was not able to work effectively from home, then they could work in the office or relevant workplace. The Government did not set out what considerations should be taken into account when deciding whether an employee should work from home, but these factors could range from whether an employee's mental health is suffering whilst they are working from home, to whether there are practical difficulties preventing the employee from working effectively from home. It is anticipated that any guidance will remain broadly similar after 29 March 2021.

Will the rule of six apply at work after the national lockdown?

Before the national lockdown rules came into force, The Health Protection (Coronavirus, Restrictions) (No. 2) (England) Regulations 2020 meant that it was against the law to meet in a group of more than six, indoors or outdoors. However, the rule of six did not apply to gatherings which were reasonably necessary for work purposes.

The guidance also stated that where a group included someone who is working, they would not be counted as part of the gatherings limit. For example, a tradesperson could go into a household of six without breaching the limit, if they were there for work. It may be that these rules will come back into force once the national lockdown is lifted. It is anticipated that any guidance will remain broadly similar when the rule of six is progressively reintroduced, first outdoors at Stage 2 and then also indoors at Stage 3 of the four stage roadmap out of lockdown in England.

Can I be fined if an employee comes to work when they are supposed to be self-isolating?

Employers can be fined up to £10,000 for forcing, or allowing, employees to attend a workplace whilst they are required to self-isolate. Directors can be personally liable for this fine.

 

Health and Safety & Risk Assessments

Whether employees are working from home or attending their workplace, employers must take reasonable steps to set up, and implement, a safe place and safe system of work so that it does not breach its statutory duties. Failing to do so could amount to a criminal offence and an unlimited fine (although Sentencing Council guidelines suggest this will not exceed £10 million, which would be reserved for the most serious breaches). Directors and officers can also be criminally liable for breaches of Health & Safety obligations.

These obligations apply in relation not just to an employer's employees, but also those not in their employment (such as members of the general public) who may be affected by their business.

Employers are also required to undertake a risk assessment of their business, which must be regularly updated to reflect any change in circumstances and to consult with their employees (see below).

What Government guidance is currently available to employers?

Before the national lockdown, the Government published sector specific guidance for employers aimed at assisting employers making appropriate changes to the workplace. The Government also set out five practical steps for businesses preparing for staff to return to work including re-designing workspaces to maintain social distancing and enhancing cleaning processes. This guidance continues to be relevant both during and after the national lockdown. You can find the link to the guidance and the relevant guides here. Employers should download the notice included in the applicable guide to demonstrate that they have followed the guidance and they are taking reasonable steps to ensure a safe system of work.

However, it is important to remember that this guidance does not replace an employer's legal obligations. The Government has made it clear that the majority of the guidelines only hold the status of non-statutory guidance. Compliance with this guidance in itself will not therefore necessarily mean that an employer is complying with its full legal obligations in respect of Health & Safety – but a failure to comply with the guidance is likely to indicate that the employer is also failing in their statutory duties.

What should an employer consider when carrying out a COVID-19 risk assessment?

The Health and Safety Executive ("HSE") sets out guidance for carrying out a risk assessment here. Employers need to bear in mind what they can do to avoid employees risking infection, such as allowing people to continue to work from home where possible.

Where employees need to attend the workplace, employers should consider how they can best adapt their workplace to abide by social distancing measures and reduce the risk of a virus outbreak. The Government published workplace specific guidance on 11 May, and this was updated on 24 June to help businesses prepare their workplaces so that they can operate safely.

Employers must consult their workers or trade unions to establish what guidelines to put in place (see below). If possible, employers should publish the results of their risk assessments on their website and the Government has stated that it expects all businesses with over 50 employees to do so.

Do I need to consult with employees in relation to health and safety measures in the workplace?

Employers have a duty to consult their staff on health and safety. Employers must consult with the health and safety representative selected by a recognised trade union or, if there isn’t one, a representative chosen by workers - employers cannot decide who the representative will be. Alternatively, an employer can consult with the workforce as a whole if no trade union is recognised.

Employers must provide such information as may be necessary to enable employees or their representatives to participate fully and effectively in any consultation process.

Can we require employees to submit to COVID-19 testing?

Employee consent will be required in order to administer any testing, including taking temperatures. To proceed without consent could amount to a repudiatory breach of contract and potentially assault if a temperature check is carried out against an individual's will.

Employers also need to give consideration to the personal data they are storing about their employees.

Can we require employees to have the COVID-19 vaccination?

At present, employers who would like their workforce to be vaccinated should encourage their staff to do so. Employers face substantial risks if they try to force the issue, or if they treat unvaccinated staff detrimentally. Doing so raises significant employment law issues, not least discrimination and unfair dismissal.

Despite this, it may be a reasonable management instruction to require staff to be vaccinated, where this is necessary for them to do their job. Whether it is necessary is a fact-sensitive assessment, which can change as the COVID-19 situation continues to develop. However, at the current time, it is very unlikely to be a reasonable management instruction to require typical office-based staff to have the jab.

The COVID-19 vaccine roll-out also raises a variety of employee relations and compliance issues. Given the sizeable number of people with vaccination concerns, an employer should sensitively handle the messaging about vaccinations and about how staff will be treated. What is important is that the employer's vaccination approach is properly thought through. This includes addressing issues ranging from the simple, such as whether to grant paid time off for vaccination, to the complex, such as ensuring that monitoring who has had the jab complies with data protection law.

If I have done a risk assessment, consulted with employees and issued guidance to employees, is that enough to satisfy my Health & Safety obligations?

No. Employers should remember the ongoing nature of their duties, and keep their procedures under review, making any changes where necessary.

Simply issuing guidance to employees is unlikely to amount to providing a safe system of work: the employer must also provide the resources necessary to carry it out.  For example, if an employer instructs employees to wash their hands regularly, it should also provide the appropriate amount of washbasins, soap and hand drying options throughout the workplace to enable employees to comply.

Employees must also be trained on any process or guidance which is introduced, to ensure that they are aware of what is required of them and the steps they need to take to protect themselves and others.

Practical health and safety changes an employer might have to make to the workplace

The following is a list of suggestions of steps an employer might consider taking, depending on the nature of the business and taking into account Government guidance.

Hygiene

  • Provide adequate volumes of hand sanitiser, and disinfectant wipes for computers and phones
  • Ensure strict cleaning rules are adhered to, and that deep cleans are carried out regularly
  • Consider providing personal protective equipment ("PPE") to employees
  • Do not allow 'hot desking'
  • Have a dedicated phoneline/email where employees can alert the employer if they are displaying symptoms of COVID-19, and which colleagues they have been in contact with recently
  • Consider how waste disposal will work, particularly in relation to PPE

Entering and exiting the workspace

  • Checks at the entrance to the workspace, such as taking employees' temperatures
  • Limit the number of people allowed in lifts and encourage use of stairs
  • Stagger start, lunch, and finish times to avoid overcrowding in the workspace
  • Ensuring physical distancing between employees in the workspace
  • In office spaces, ensure that desks are at least two metres apart. If this means reducing the number of desks available, consider rotating staff who work in the office (but note that hotdesking is not advisable). If certain members of staff can work from home, allow them to do so
  • In other workspaces, such as retail, limit the number of staff allowed in certain areas, such as at till kiosks or serving areas
  • Limit the number of people allowed in confined spaces, such as meeting rooms, and the time employees can spend in these places
  • Establish a one-way system of movement for employees where possible

Communal spaces and facilities

  • Strictly limit the number of people allowed in communal spaces, such as canteens and kitchens
  • Shut down other communal facilities, such as gyms
  • Prohibit the use of shared equipment, such as cutlery, crockery and stationery

Non-employees in the workspace

  • Limit clients entering the workspace to essential visits only, and hold meetings virtually if possible
  • In retail spaces, limit the number of customers allowed in to the workspace at one time
  • Have appropriate signage asking non-employees to respect social distancing measures
  • Encourage greetings other than handshakes
  • Provide appropriate PPE to non-employees
  • Consider installing screens at service points

How should an employer monitor the effectiveness of its measures?

  • Regular surveys allow employees to make suggestions on the adequacy of current measures, and suggest improvements going forward
  • Consult with representative bodies (staff consultative committees, recognised trade unions), where appropriate, before re-opening and on a regular basis after re-opening
  • Set up a dedicated email/telephone for employees to contact if measures need to be addressed urgently
  • Provide assurances that employees raising concerns will be free from reprisal, and publicise (and introduce, if necessary) a whistleblowing policy
  • Review policies and risk assessments on a regular basis

 

What do employers need to think about with regard to employee health data?

Employers will need to be careful about the way in which they obtain, process and store information relating to their employees' health during the pandemic – particularly as businesses start to reopen.  Further details are available here.

What aspects of employment law do I need to think about?
If an employee has had COVID-19, are they likely to be disabled under the Equality Act 2010?

Whilst medical evidence on COVID-19 is still developing, the virus itself is unlikely to constitute a disability.  However, the long-term effects of the virus on people who have suffered severe cases (i.e. those hospitalised and/or admitted to intensive care), or who suffer from the effects of 'long haul' COVID-19 may lead to long-term impairments amounting to a disability under the Equality Act 2010.

As a result, the employer should be careful to make reasonable adjustments for employees that have ongoing complications arising from COVID-19. Dialogue between the employer and employee should help identify what measures, if any, are appropriate for the individual employee's current condition (for example, a gradual/phased return to work). They should keep arrangements under review in case any problems arise in the future.

What are an employer's obligations towards pregnant women?

Pregnant women are in the 'clinically vulnerable' category. As such, employers should follow the guidance for 'clinically vulnerable' people, (please see 'How should an employer support employees who are considered 'clinically vulnerable'?' above).  Of course, the usual rules relating to the treatment of pregnant women will also continue to apply.

We have imposed a recruitment freeze, but can we also stop those we have already offered jobs from joining us when we re-open?

If a new joiner is not needed at the current time, you may decide to defer the start date. If a specific start date has already been confirmed in the contract then the change should be agreed with the employee.

If a job offer has been made but not accepted, the employer can normally change it unilaterally or withdraw the offer altogether without obligation, provided this is communicated before the individual purports to accept it. However, if the employee has accepted the offer a contract will usually have been formed and so if the employee does not agree to defer the start date, or if the business decides to dispense with the role completely, it needs to terminate the contract. In most circumstances, this can be done by paying the notice under the contract.

Can we postpone pay rises and bonuses?

Pay rises are rarely contractual and even if notified, unless a pay rise has already been agreed, deferring it should be straightforward. Many bonus schemes are discretionary and the clauses governing such schemes normally give the employer absolute discretion both over the amount of bonuses and whether they are paid at all. Even contractual schemes may contain provision for the employer to terminate or amend the scheme, so it may be worth checking the precise wording of the scheme rules. Where payments are contractual then reducing or deferring will need to be agreed with the employee.

Can we force employees to take holiday?

Yes, but you are normally required to give double the amount of notice as the amount of holiday you wish them to take. For example, if you want them to take one week's holiday, you need to provide a minimum of two weeks' notice. Please see the section entitled "Annual Leave" below for further information.

We need to accommodate employees who cannot work from home in the workplace, but we do not need our employees to work full time. Can we bring them back part-time and reduce their hours and pay?

It is unlikely that your employment contracts contain a right to do this, and so these changes have to be agreed with employees. Some may be willing to agree, particularly if the change is not significant (a four day week for example) and/or is agreed for a short period of time. Others may be reluctant or simply unable to agree because of their personal circumstances.

In order to push through a contract change, you would need to consult with employees and, if there is still no agreement, dismiss and offer re-engagement on the new terms. You would need to show sound business reasons for pushing through a change of terms (for most, the current crisis will be the reason) and pay notice. If there are 20 or more employees at risk as a result of these changes, further obligations apply (see 'If we need to reduce the hours for a large number of people, is the process the same' below).

You may also be able to use the flexible mechanism within the extended Coronavirus Job Retention Scheme so that employees work some days but remain furloughed when they are not working. See our employer FAQs.

If we need to reduce the hours for a large number of people, is the process the same?

If you are proposing that 20 or more employees could be dismissed as a result of this process, then you will also need to go through collective consultation with specially elected employee representatives (or the union or an appropriate representative staff body if there is one) for at least 30 or 45 days (depending on the numbers).  

We have been forced to consider redundancies as a last resort. What are our obligations?

If you need to consider dismissing employees by reason of redundancy, you should seek specialist advice as soon as possible.

 

What financial support is there for employers and employees who are unable to work due to COVID-19?
The Government has announced that it has extended the Coronavirus Job Retention Scheme, is my business eligible?

Yes, all UK employers are eligible, including charities and not for profit organisations.

How long will I be able to claim for?

The scheme is currently due to come to an end on 30 September 2021.

What has happened to the Job Support Scheme?

The Coronavirus Job Support Scheme was due to be come into effect on 1 November 2020 in place of the Coronavirus Job Retention Scheme which at the time was due to expire on 31 October 2020. It is currently unclear whether the Job Support Scheme will come into operation after the Coronavirus Job Support Scheme ends on 30 September 2020.

What about the Job Retention Bonus?

When announced, the Job Retention Bonus was intended to be paid to employers in early 2021. Employers were due to get a bonus of £1,000 per previously furloughed employee who was still employed in January 2021. It is unclear whether the Job Retention Bonus will be re-introduced following the expiry of the Coronavirus Job Retention Scheme on 30 September 2021. If the same rules apply to the Job Retention Bonus following the expiry of the Coronavirus Job Retention Scheme on 30 September 2021 as originally applied when it was due to end on 31 October 2020, a bonus will be payable to employers in January/February 2022, for previously furloughed employees who remain employed until December 2021.

What payments are available under the extended Coronavirus Job Retention Scheme?

The Coronavirus Job Retention Scheme enables all UK employers to apply to the Government for a grant towards employees' salary costs for those employees who are furloughed (on a leave of absence) as a result of the COVID-19 pandemic, but only up to a cap of £2,500 per month for each employee. This effectively means that for anyone on a salary above the national median income, the proportion of pay that the Government will contribute will decrease – the higher the salary the lower the percentage contribution.

The Government contribution will remain at 80% until 30 June 2021. From 1 July 2021 to 31 July 2021, the Government contribution will reduce to 70% (and employers will be required to pay 10%). From 1 August 2021 to 30 September 2021, the Government contribution will reduce to 60% (and employers are required to pay 20%). This means that at all times, the sum payable under the Scheme to furloughed employees is 80% of salary (subject to the £2,500 cap), even when employers have to start contributing more towards the cost of the Scheme from 1 July 2021.

At all times, employers remain responsible for employer NICs and employer pension contributions.

Will my claim under the Job Retention Scheme be in the public domain?

HMRC publishes names of companies and Limited Liability Partnerships (LLPs) and the company registration number of those employers who have made claims under the scheme since December 2020, as well as at least an indication of the value of the claim made by reference to banded ranges. Further detail is available here.

Do I have to pay the difference between what the sums payable under the scheme and the employee's full salary?

No. The employer can choose to fund the difference but does not have to.

Do I have to pay national minimum wage?

No. This means that even if an employee's reduced salary would fall below the NMW you would not have to top up their pay. However, if they are undertaking training during the leave then you would need to ensure that the furlough payment is sufficient so that NMW is paid for the time spent on the training.

How do I calculate pay for zero hour workers?

If an employee on variable pay, such as a zero hours or casual employee, has been employed for 12 months, you can claim the higher of: the same month's earning from the previous year, or average monthly earnings from the 2019/2020 tax year. For those who have been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

Can I apply for payments for all my employees?

No, the scheme only applies to those on PAYE, including zero-hours and casual employees, office holders such as salaried company directors and salaried LLP members (apprentices are also included).

Employers can claim for anyone who was employed on 30 October 2020, as long as a PAYE RTI submission was made to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

Employees do not need to have been previously furloughed under the Job Retention Scheme in order to be furloughed under the extended scheme.

Payments will also not be available for employees who continue to work for your organisation (other than unpaid voluntary work and training) during any periods which have been designated furlough periods (whether as part of a full- or part-time furlough arrangement).

More details on eligibility are contain in this guide.

Is flexible furlough still available?

Yes, employers can furlough employees on a part-time or flexible basis, while still claiming under the scheme for the normal hours not worked (though employers can still furlough employees on a full-time basis should they wish). There is also no longer a minimum period for which an employee must be put on furlough (as mentioned above, before 1 July 2020 the minimum period was three weeks).

Can employees refuse to be designated as furloughed workers?

It depends. The Government has said that this change in status is subject to existing employment law and the individual's employment contract. If there is already a contractual right for the employer to lay off, or otherwise reduce the employee's working hours (and, accordingly, their pay) unilaterally, the employee is not entitled to refuse (in any event, being designated a furloughed worker and paid at least part of salary under the scheme is more beneficial for the employee than traditional unpaid lay off). Most employers will not, however, have such clauses in their contracts. If so, designating someone under the scheme and reducing their pay involves a change to their contract and so would need to be agreed. Where the alternative is redundancy such agreement may be more likely to be forthcoming.

Can employees demand to be put on furlough leave?

No, it is for the employer to designate. It is not clear what process employers will need to follow when designating/selecting employees for the leave, and whether there needs to be some form of selection similar to a redundancy exercise, though it is unlikely that anything as formal as that would be required. In any event, care should always be taken to ensure any process does not discriminate against those with protected characteristics – equality and discrimination laws will still apply.

Is lay off and redundancy the same thing?

No, the term "lay off" is not the same as redundancy. The two terms are often used interchangeably but have different legal meanings. Where an employee is redundant, their employment is terminated because their employer no longer has a requirement for that particular work, for example where a business or part of it is closing or reducing the amount of work.

Lay off is where an employer has a contractual right to put employees on unpaid leave where there is a temporary cessation of work. During this time employees are still employed and their continuity of service is preserved. Short time working is a variant of lay off, where the employer has the right to reduce employees' hours and pay for a period of time to deal with a reduction in work. Lay off and short-time working clauses giving employers the right are relatively rare and have traditionally been used mostly in industries such as construction and manufacturing. Without such a clause, an employer would need the consent of its employees. Securing such consent is how some employers have dealt with the immediate reduction in work caused by the crisis.

Can I re-employ an employee who has already left and put them on furlough?

The guidance states that if an employer made an employee redundant, or they stopped working for you on or after 23 September 2020, the employee can be re-employed and put on furlough. This applies as long as the employee was employed and on your PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.

Can I make furloughed employees redundant?

Employers can make furloughed employees redundant, provided they comply with their statutory and contractual obligations. Employers can continue to claim for a furloughed employee who is serving a statutory notice period, however grants cannot be used to substitute redundancy payments.

The Government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and has stated that it will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.

As per the Government guidance, statutory redundancy and statutory notice pay should be based on employee's normal pay rather than the reduced furlough pay.

What about those employees who are on sick leave?

You can furlough employees on sick leave. Short term illness or self-isolation should not of itself be a reason to furlough but if there are business reasons then employees on sick leave can be furloughed along with other employees. If so those employees should not receive sick pay but furlough pay instead. Employers can equally decide to furlough employees on long term sick leave. An employee on furlough who becomes ill is entitled to receive payment equal to at least SSP but the employer can choose whether to continue to furlough and pay furlough pay. Those employees who are self-isolating in line with public health guidance, because they themselves are vulnerable, can be put on furlough.

What happens to holiday for employees on furlough leave?

Holiday continues to accrue in the usual way during furlough, and your employees can take, or be required to take, holiday in the same way as if they were working normally. However, the guidance now makes it clear that employees will be entitled to their full pay for any periods taken as holiday, so if you agree to or require holiday to be taken during furlough leave you would have to top up the furlough pay to full pay for that period.

We have employees who are currently on maternity and shared parental leave – can they be furloughed?

Employees on statutory family leave will continue to receive their statutory payments in the normal way (for example statutory maternity pay at 90% of salary for the first six weeks of leave, followed by 33 weeks at the statutory flat rate). If you offer enhanced contractual pay for maternity and other forms of statutory family leave, this can be claimed through the scheme as wage costs. They will be treated as still on statutory family leave alongside furlough leave, with the various rights that that entails, but employers can claim a grant in relation to 80% of any enhanced contractual pay. An employee who returns from maternity leave or other statutory leave will be entitled to be paid furlough pay based on the pre-leave salary, not the reduced pay, if any, they received before the return. Note that employers can furlough those who return from statutory family leave after 10 June, even if they were not previously furloughed

How do I apply?

To access the scheme, you will need to:

  • designate affected employees as ‘furloughed workers,’ and notify the employees of this change in writing. You will have to seek employees' agreement to reducing their pay under their employment contract, unless you choose to top up, and to varying any other terms needed for furlough; and
  • submit information about the employees to HMRC through an online portal. This will include your PAYE reference number, number of employees furloughed and the period for which you claim, along with a calculation of the amount.

In addition, please note the following:

  • Employers must report and claim for a minimum period of 7 consecutive calendar days.
  • Employers will need to report actual hours worked, and the usual hours an employer would be expected to work, in a claim period.
  • For hours worked, employees must be paid by their employer and employers will be responsible for paying the tax and NICs due on those amounts.
  • Each claim period must start and end within the same month.
Is there a deadline for submitting my claim to HMRC?

Yes, employers need to submit their claims by deadlines set out in the following table. HMRC may accept a claim made after the relevant deadline if you had a reasonable excuse for failing to make a claim in time and you then claimed without delay after the excuse no longer applied.

Claim for furlough days in

Claim must be submitted by

February 2021

15 March 2021

March 2021

14 April 2021

April 2021

14 May 2021

May 2021

14 June 2021

June 2021

14 July 2021

July 2021

16 August 2021

August 2021

14 September 2021

September 2021

14 October 2021

 

When will I receive the money to pay my employees?

HMRC has committed to pay within six working days of a claim being submitted according to the Claim Guidance.  HMRC has asked employers not to contact unless they have not received payment more than ten working days after submitting their claim.

Business has reduced significantly but some of our team are still busy. To make it fair, can I furlough half the team for a period and then rotate with the other half?

Under the original scheme, employees had to be furloughed for a minimum period of 3 weeks at a time. Since 1 July 2020, there has been no minimum period for which an employee must be furloughed. Therefore, provided employees are eligible to be placed on flexible furlough, and subject to obtaining the employees' agreement in relation to their working arrangements, teams can be rotated and otherwise asked to work flexibly without limitation.

Will our share plans continue as normal when employees are furloughed?

Some HMRC tax sponsored share plans require that employees satisfy a minimum working time commitment. This is particularly relevant for Enterprise Management Incentives (EMI) which are popular with high growth entrepreneurial businesses. Since a furloughed employee may no longer meet the working time requirement, there is a risk that their outstanding EMI options will be disqualified. Representations are being made to HMRC to provide a concession given the circumstances, to ensure these options continue to benefit from the tax incentives.

Questions also arise for Save As You Earn (SAYE) and Share Incentive Plans which operate through deductions from salary. As a furloughed employee will have a reduced salary, the employee may want to adjust the contributions they make to the plans. This will be problematic under SAYE where contributions must be made at a fixed rate throughout the savings period and so cannot be changed. As an alternative, a SAYE participant may be able to take a savings holiday for up to 12 months. We are liaising with HMRC on how participation in these types of plans are impacted by furloughing and whether additional flexibility can be included during this period of uncertainty. We will provide an update here when we have more information.

How do I end employees' furlough?

If a furlough agreement is in place, the employees' furlough ends in accordance with the terms of the agreement. If there is no agreement in relation to how to end furlough, by giving notice to the employee that they are required to return to work and when. Notice should be reasonable and in writing and employers should consider if any associated requirements are necessary such as health and safety consultations, reasonable adjustments etc.

What happens to an employee's pay when their furlough ends?

Employees' pay and other conditions should return to normal i.e. the same as they received pre-furlough. If employers wish to provide anything less than full pay, they should consult employees and reach a written agreement.

How do I choose who should return to work in due course?

Asking for volunteers might be the best option but if there are not enough volunteers, or not enough volunteers in the different functions that may be required to run the business, you might need a mandatory selection system. You should consider potential discrimination or procedural/fairness issues when selecting which employees will return to work and think about allowing vulnerable employees or those with caring responsibilities to continue working from home or to remain on furlough if appropriate.

 

Statutory sick pay
Do we have to pay statutory sick pay to people who have COVID-19?

Yes, employers must pay SSP to employees who are unable to work because of illness.  This includes employees who are off sick due to COVID-19 or COVID-19 symptoms, such as a persistent cough or fever.

Do we have to pay SSP to people who are self-isolating?

Employees who self-isolate but who are not ill would not previously have qualified for SSP – however, the Government has introduced new rules which mean that employees who are self-isolating to prevent the spread of COVID-19 will be entitled to SSP if they "by reason of that isolation, are unable to work".  This includes employees self-isolating because someone in their household has COVID-19 or COVID-19 symptoms; or they have been told to self-isolate by a doctor or NHS 111.

This advice is published under the Government’s ‘stay at home’ guidance and is available on gov.uk website.

Do we have to pay SSP to employees who are self-isolating but able to work?

If the employee is not unwell but self-isolating due to Government guidance and able to work remotely, they will not be entitled to SSP but their usual pay.

At what point does SSP become payable?

SSP relating to COVID-19 is payable from the first day of incapacity. 

When can we ask for evidence of an employee's illness or reasons for self-isolation?

Employees can self-certify their sickness or self-isolation absence for the first seven days off work in the usual way. After seven days' employers may ask for reasonable evidence of incapacity from the employee. 

On 20 March 2020, the Government announced a new online isolation note service which the employee can access on the NHS website and NHS 111 online.  They can then use the note received to send to their employer as evidence.

When do we have to pay company sick pay?

Company sick pay is only payable to employees if the employer has a company sick pay policy and gives its employees sick pay over and above the SSP amount.  Whether company sick pay is due to self-isolating employees will depend on the policy.  Some policies will be linked to SSP and the same rules will apply. However, others may require the employee to actually be unwell to receive enhanced pay – no doubt never envisaging a situation like the one we have now.  Employers should be as flexible as they can, particularly if there is otherwise a risk that employees will come into work putting themselves and others at risk.

Can employers get help with paying SSP?

Employers with fewer than 250 employees will be able to reclaim SSP paid in respect of the first 14 days of COVID-19 related sickness absence per employee under new legislation.

 

Other absence and pay
Do we have to pay employees if we have closed the office or asked staff not to come to work?

An employer will usually have to keep paying their employees full pay if they decide to close the office or tell staff not to come into work.  For those who can work from home this should not pose a problem, but as a general rule, even if employees are unable to work remotely but are willing and able to work, they should still be paid their normal pay (unless there is a right to lay off, see section on "Is lay off and redundancy the same thing?"). Depending on the circumstances, the employer may be able to take advantage of the new job retention scheme (see first section on "Coronavirus Job Retention Scheme")

Do we have to pay employees who are abroad on work trips and cannot get home?

Yes, if the employee is trapped abroad because of work related travel, it is best practice to continue paying the employee full pay.

Do we have to pay employees if they are legally obliged to stay at home due to compulsory quarantine?

Under new regulations, there are powers to compulsorily detain people for testing and isolation and to place restrictions on travel.  If an employee was quarantined under the regulations, it would illegal for them to come into work.  This means that they would not be regarded as “able” to work and they would not have an implied right to receive their pay (providing they could not work remotely from quarantine). It is likely that in such a case, the employee would qualify for SSP. 

 

Annual leave
Can we ask employees to take their holiday allowance?

Yes, providing they are not sick. Employers can ask employees to take holiday at a particular time, provided they give sufficient notice. Unless this is specifically dealt with in the contract, it should be at least double the amount of holiday leave the employee is asked to take.

Can we ask sick employees to take their holiday allowance?

Employees who are on sick leave (including those who are at home due to self-isolation) cannot be compelled to take their holiday allowance.  However, they can ask to take their holiday allowance if they choose to.

Can an employee ask to take holiday when they are receiving SSP?

Yes, an employee can choose to take holiday during a period when they would otherwise be receiving SSP, but cannot be compelled to do so.  Holiday pay should be paid for any period allocated as holiday, rather than sick pay. 

An employee's holiday flight has been cancelled, do we have to let them cancel their pre-approved holiday request?

When an employee has to cancel their holiday plans and wants to retract their request to take the holiday another time, the employer can choose whether to allow them to do so. Many employers prefer for employees to take as much of their holiday as possible during the crisis when there is a reduction in work and would have the right to refuse a request to cancel the holiday,

Can we refuse to cancel a holiday request if the employee is unable to travel because they are self-isolating?

If an employee has to cancel their holiday because they are sick, or because they have been advised to self-isolate, the position is different. In such a case, the employee has the right to postpone the holiday.

We have had to ask employees to cancel their pre-booked holidays and to work overtime because of increased demand on our business. We don’t know if we can manage all the accrued holiday when this is over, as there may not be enough time for employees to take it before the end of our holiday year - what can we do?

The Government has addressed this concern in new emergency regulations which provide an exception to the bar on carrying forward untaken holiday. The regulations provide that, where it has not been reasonably practicable for a worker to take some or all of their annual leave as a result of the effects of COVID-19 (whether the effects are on the worker, the employer or the wider economy or society), the untaken leave may be carried forward and taken in the following two holiday years. The regulations apply to the minimum four weeks annual leave, not the full 5.6 weeks or any additional contractual holiday, though as an employer you can agree for this to be carried forward in any event (and many employers already provide for some carry over in their contracts and policies – the emergency regulations will not change those arrangements).

 

Caring for family
Do we have to give employees paid time off to look after children or a sick family member?

Employers should check the employment contract and their workplace policies.  The employment contract may provide for a contractual right to paid time off in certain circumstances. In the absence of a contractual right to paid time off, there is no statutory right to paid time off to look after dependents, but unpaid leave is available (see below).

An employee who is working from home is now also providing childcare, can I stop them working from home?

With schools closed to all children except those of key workers, many parents will have no choice but to look after them at home. While normally, you would not have to permit homeworking for parents providing childcare, in these extraordinary circumstances employers may have to be more flexible. In any event, requiring employees to come into work unless necessary would be contrary to current Government advice on social distancing. Discussing with the employee whether some work can be done outside core hours, for example in the evening after children's bedtime, and/or carried out in shorter bursts throughout the day may be a solution. The most recent guidance states that employees who are unable to work because of childcare, presumably even if there would otherwise be work for them to do, can be furloughed (see section above on the Coronavirus Job Retention Scheme).

What about employees who are not able to work because they have no available childcare?

Employees are entitled to take reasonable time off for dependants. Employers do not have to pay employees for such periods of leave. Employees do not have to give advance notice, and this type of leave is designed to help parents deal with emergency situations. However, it is not designed to allow employees time off in the medium to long term.  Alternatives, including taking annual leave, should be discussed with the individual.

Employees are also entitled to take up to 18 weeks of parental leave per child. Employers do not have to pay employees for periods of parental leave. However, advance notice is required.

Employees are protected from detrimental treatment by their employees because they have sought to take time off work in circumstances where they have a statutory entitlement. A return to work policy which places a group of employees at a particular disadvantage (such as, for example, women) may constitute indirect discrimination.

Can employees take unpaid leave to look after dependents?

Employees have a statutory right to a reasonable amount of unpaid leave in order to manage emergency situations involving their dependents.  This would include situations where an employee has to care for a family member who has COVID-19, or to look after their children because of school closures. Unless their employment contract provides otherwise, the right is only to "reasonable" time off and the employee is expected to arrange for alternative care if possible so this right is limited.  Employees with children may also be entitled to unpaid parental leave in certain circumstances, which can provide for longer periods of leave. With either type of leave, employers are encouraged to be more flexible than they would perhaps be in normal circumstances. 

 

What about clinically vulnerable and clinically extremely vulnerable employees?
What about clinically extremely vulnerable people?

During the national lockdown period, the government has advised clinically extremely vulnerable people that, if they cannot work from home in accordance with the Government's guidance, they should not attend work. The Government's advice recommends that such people speak to their employer about taking on an alternative role temporarily to enable them to work from home where possible. If such alternatives are not possible, the Government has suggested that those employees should be furloughed under the Coronavirus Job Retention Scheme. Alternatively, the Government has confirmed that the formal shielding letter clinically extremely vulnerable people will receive will act as sufficient evidence for employers and the Department of Work and Pensions that that person is eligible for Statutory Sick Pay or Employment Support Allowance. See "What about clinically vulnerable and clinically extremely vulnerable employees?" for further details.

The Government anticipates that it will no longer be necessary to advise shielding beyond the end of March 2021 and will issue new advice in due course.

If an employee wants to remain at home because they live with a 'clinically vulnerable or 'clinically extremely vulnerable' person, what should the employer do?

The employer should allow this, at least in the short term, if other arrangements are not possible. If an employer dismisses an employee because they refuse to come to work in this situation, it may give rise to an automatically unfair dismissal.

Consider each case on its merits. For example, one employee may be able to isolate him/herself from the vulnerable person if they return to work, and significantly lower the risk of any infection, but this may be impossible for other employees. Particular attention should be paid to people who live with 'clinically extremely vulnerable' individuals.

How should an employer support employees who are considered 'clinically extremely vulnerable'?

The Government outlines those classed as 'clinically extremely vulnerable' here, and employees falling in this category may well also be disabled under the Equality Act 2010. Compelling a 'clinically extremely vulnerable' employee to come to the workplace at the present time could potentially lead to claims under both discrimination and/or health and safety law.

How should an employer support employees who are considered 'clinically vulnerable'?

'Clinically vulnerable' people are listed here. They are distinct from those considered 'clinically extremely vulnerable'.

However, a 'clinically vulnerable' employee may also be disabled under the Equality Act 2010. Consequently, employers should talk to an impacted employee, undertake risk assessments and (if needed) obtain relevant medical evidence to identify reasonable adjustments that can help an employee safely return to work. The Government has advised 'clinically vulnerable' (but not 'clinically extremely vulnerable') individuals to take extra care in observing social distancing and employers should help them to work from home, either in their current role or in an alternative role. If 'clinically vulnerable' individuals cannot work from home, they should be offered the option of the safest available on-site roles, enabling them to stay 2m away from others. If they have to spend time within 2m of others, employers should consider whether this involves an acceptable level of risk and should consider their specific duties to those with protected characteristics, including, for example, expectant mothers who are entitled to suspension on full pay if suitable roles cannot be found.

What is the Government's guidance on social distancing and vulnerable employees?

The Government has published guidance on ‘social distancing’, which advises for everyone to practice social distancing but for those who are at an increased risk of severe illness from COVID-19 to be particularly stringent in following social distancing measures, including avoiding public transport and remaining at home if possible.  This vulnerable group includes those who are over the age of 70 or under 70 with an underlying health condition, including those who are pregnant or those who have a chronic long term respiratory disease or a weakened immune system.

Employers should allow any employees who fall into the high-risk groups to work from home if possible.

Do employees social distancing qualify for SSP?

It is clear that those employees who are required to self-isolate and are unable to work will qualify for SSP.   The Government’s advice on social distancing does not currently go as far as to recommend full self-isolation.  Technically, SSP does not extend to vulnerable employees who are social distancing.  However, we expect that the rules on self-isolation, and therefore SSP, will be interpreted to capture vulnerable employees.

What duties do we have to vulnerable employees?

Employers have health and safety obligations to all employees, including those who are particularly at risk.  Vulnerable employees should be allowed to work from home if at all possible.

Should we ask pregnant employees to work from home?

Yes, pregnant employees should work from home wherever possible.

What if a pregnant employee cannot work remotely?

If a pregnant employee cannot do their role remotely, employers should assess whether there is suitable alternative work available which the employee could do from home on a temporary basis.  If no such alternative work is available, the employer should consider suspending the employee on medical grounds on full pay for as long as necessary.  Maternity leave will be triggered if the period of suspension continues into the fourth week before the expected week of childbirth.

 

Reducing business costs
We have imposed a recruitment freeze but can we also stop those we have already offered jobs from joining us?

If a new joiner is not needed at the current time, you may decide to defer the start date. If a specific start date has already been confirmed in the contract then the change should be agreed with the employee.

If a job offer has been made but not accepted, the employer can normally change it unilaterally or withdraw the offer altogether without obligation, provided this is communicated before the individual purports to accept it. However, if the employee has accepted the offer a contract will usually have been formed and so if the employee does not agree to defer the start date, or if the business decides to dispense with the role completely, it needs to terminate the contract. In most circumstances, this can be done by paying the notice under the contract.

Can the business postpone pay rises and bonuses?

Pay rises are rarely contractual and even if notified, unless a pay rise has already been agreed, deferring it should be straightforward. Most bonus schemes are discretionary and the clauses governing such schemes normally give the employer absolute discretion both over the amount of bonuses and whether they are paid at all. Even contractual schemes may contain provision for the employer to terminate or amend the scheme so it is worth checking the wording. Where payments are contractual then reducing or deferring will need to be agreed with the employee.

Can we make employees take unpaid leave to save costs?

Unless there is a lay off clause in the employment contract (and such clauses are rare, see section on "Is lay off and redundancy the same thing?"), an employee can't be forced to take unpaid leave. Such a measure must therefore be agreed with your employees. Under the new retention scheme, if an employer can't afford to retain staff, a better option would be to designate such employees as "furloughed" so that the employer can get reimbursed up to 80 per cent of their salary costs (up to a cap of £2,500 per employee per month). For further detail on furloughed leave see first section on "Coronavirus Job Retention Scheme".

We still need our staff to do some work, can we reduce their hours and pay?

Again, it is unlikely that your employment contracts contain a right to do this, and so these changes have to be agreed with employees. Some may be willing to agree, particularly if the change is not significant (a four day week for example) and/or is agreed for a short period of time. Others may be reluctant or simply unable to agree because of their personal circumstances. In order to force through a contract change, you would need to consult with employees and, if there is still no agreement, dismiss and offer re-engagement on the new terms. You would need to show sound business reasons for pushing through a change of terms (for most, the current crisis will be the reason) and pay notice. It is not clear if the job retention scheme (see first section on "Coronavirus Job Retention Scheme") may then apply at this point – if so, consideration will need to be given as to how to deal with those employees who have agreed to continue working for less, while some of their colleagues receives pay, perhaps even a similar amount, for being on leave.

If we need to reduce the hours for a large number of people, is the process the same?

If you are proposing that 20 or more employees could be dismissed as a result of this process, then you will also need to go through collective consultation with specially elected employee representatives (or the union or an appropriate representative staff body if there is one)  for at least 30 or 45 days depending on the numbers. It may be possible to argue that this period can be reduced or dispensed with because of the extreme circumstances businesses are facing - this so called "special circumstances" defence has in the past been extremely difficult to rely on so this may be a risky strategy however.

We have been forced to consider redundancies as a last resort, what are our obligations?

First, consider the Coronavirus Job Retention Scheme (see above) as a way of avoiding immediate redundancies. In circumstances where redundancies become necessary, the key obligations are summarised below.

Employees with more than two years' service have the right not to be unfairly dismissed. To ensure a fair dismissal for a genuine redundancy, e.g. where there is a cessation or diminution in a certain type of work, an employer will first have to consult with employees at risk, and apply a fair selection process based on objective criteria. Redundancies shouldn't be confirmed until consultation has taken place and once confirmed, all employees should be given their contractual notice (or payment in lieu of notice) together with a statutory redundancy payment (for those with more than two years' service).

Where you are proposing to make more than 20 employees redundant then you should also conduct collective consultation with elected representatives of the employees, for at least 30 or 45 days depending on the numbers (see 'Collective consultation for redundancies' section below).

Collective consultation for redundancies

When are employers required to undertake collective information and consultation in respect of potential redundancies?

When a business is proposing to dismiss as redundant 20 or more employees in one establishment within a period of 90 days or less. 'Redundant' for these purposes is broader than the usual meaning of redundancy and includes situations when employers want to dismiss and re-engage employees on new terms and conditions. An 'establishment' is generally understood to be the "unit to which workers made redundant are assigned to carry out their duties" but is often fact dependent.

When must collective redundancy consultation commence?

If you are proposing to make employees redundant, you must collectively consult in "good time" and at least 30 days before the first dismissal if there are between 20 and 99 affected employees, or 45 days if there are more than 100 affected employees, unless there are special circumstances. It is possible that the special circumstances defence could apply in light of the pandemic but care should be exercised before relying on this defence, and it does not in any event dispense with the obligations altogether.

Who must be consulted in collective redundancy consultation and can it be done during furlough?

Employers need to consult "appropriate representatives" which may be trade union representatives or employee representatives. Employers will need to consider the additional complications in relation to how to successfully consult remotely. Although the Treasury Direction governing the job retention scheme requires that employees undertake no work at all during furlough, the Government guidance says employees can be made redundant while on furlough and being the subject of consultation is unlikely to constitute work. Similarly, employee representatives who are on furlough are generally thought to be permitted to carry out their consultation duties.

What are the consequences of failing to comply with collective redundancy consultation?

Employers can be liable for a protective award of up to 90 days' pay per affected employee. The award is penal in nature so is based on the seriousness of the employer's failure rather than loss suffered by the employees.

If an employee's employment is terminated following lockdown, will they be entitled to redundancy pay?

If an employee has at least two years' continuous employment and their employment is terminated by reason of redundancy as a result of lockdown, and subject to them not refusing suitable alternative employment with the employer, if any, they will be entitled to statutory redundancy pay based on their pre-furlough pay.

Employers should be aware that the Government's guidance indicates that furlough grants can be used to pay employees during the consultation period. Notice periods may also run during furlough leave. However, the grant cannot be used to substitute redundancy payments.

 

Immigration issues
Can I put my employees with Tier 2 or Tier 5 visas on a period of unpaid layoff?

Currently, with the exception of some forms of statutory leave, an employer is required to stop sponsoring an employee if they are absent from work without pay for 4 calendar weeks in a year or more. So placing a sponsored employee on a layoff totalling 4 weeks would not be permissible. Right now, a better option may be to designate such employees as "furloughed" if they otherwise qualify, and subject to any further guidance on this that is still awaited.

However, it is possible that the government may relax the rules on unpaid leave for sponsored employees in light of the current situation.

Will I be allowed to reduce the salary of employees with Tier 2 or Tier 5 visas?

Yes, but the rules are different dependent on whether the reductions are permanent or temporary.  

Any permanent reductions in salary should not be below the appropriate rate detailed within the Immigration Rules, and it should be reported to the Home Office. The 'appropriate rate' will depend on the specific role of a sponsored employee.

In light of the current pandemic, a sponsor can make a temporary reduction of up to 80% or £2,500 per month (whichever is lower) of an employee's salary, as a company-wide measure avoid redundancies. Salaries in this instance can be below the appropriate rate detailed within the Immigration Rules and should be reported to the Home Office. Once the measure has been lifted, the salary must be increased back to the original salary.

Right now, a sensible option would be to review the appropriate rate for each of your sponsored employees, and then formulate what, if any, permissible salary reductions could be made.

Are we still required to complete Right to Work (RTW) checks during this period of remote working?

Yes. However, from 30 March the Government introduced a relaxation of RTW guidance including the temporary acceptance of photocopies of the required documents to obtain a statutory excuse against a Civil Penalty for Illegal Working. See our full guidance here.

How should I now complete RTW checks during this period?

Employers should follow 3 steps:

  • Step 1:  Ask the individual to submit a scanned copy or a photo of their original documents by email or using a mobile app.
  • Step 2:  Arrange a video call with the individual and ask them to hold up their original documents to the camera, so that they can be checked against the soft copy documents that you have already received.
  • Step 3:  Record the date that you complete this check and note on the individuals documents, "online RTW check completed on [insert date] due to COVID-19".

If your new employee has status under the EU Settlement Scheme or a BRP card, employers should use the UKVI Online Right To Work Service to verify the immigration status of a new employee and combine this with a video link to assess if the individual in question is the same person on the photograph as on the online RTW service. See our full guidance here.

The link to the UKVI online check is here.

Despite completing an online RTW check, once you are able to bring your employees back to their place of work, employers will be required to complete a further RTW check in person.

Can we require our employees who hold Tier 2 or Tier 5 visas to work from home?

Generally the Government (specifically the Home Office) require all Tier 2 and 5 Sponsors to report any change of work location for sponsored employees via the Sponsor Management System (SMS). This report should be filed within 10 working days. Failing to report the change in work location may expose your business to a sponsorship compliance breach.

However, from late March the Government has relaxed this position and confirmed that all employees who hold Tier 2 or Tier 5 visas will be permitted to work from home during the lockdown period. Furthermore, no report via your SMS will be necessary to record this.

 

Pensions Issues
Are pension contributions included within the Coronavirus Job Retention Scheme?

No. The Coronavirus Job Retention Scheme will cover 80 per cent of furloughed employees' salary costs (up to a maximum of £2,500 a month), but the employer must pay the minimum automatic pension contribution of 3% of qualifying earnings, based on the 80% of salary paid under the scheme.

With thanks to our friends at Arc Pensions for the answer to this query. 

Do I have to pay pension contributions for furloughed employees?

Yes. Employers are still liable for auto-enrolment contributions, unless the furloughed employee has opted out or ceased saving into the pension scheme. As noted above, employers cannot claim the cost of the employer’s minimum automatic enrolment pension contributions on the subsidised salary. Any contributions above the statutory minimum would also be made at the employer’s cost. If an employer pays the remaining 20% of salary, it should also pay auto enrolment contributions on that amount.

With thanks to our friends at Arc Pensions for the answer to this query.

 

What if I pay contributions of more than 3% normally?

Any contributions above the statutory minimum would be made at the employer’s cost. HMRC’s guidance does not appear to grant a contractual easement for those employers who had agreed to pay employer contributions above the statutory 3% minimum employer contribution.

With thanks to our friends at Arc Pensions for the answer to this query. 

Will furloughed employees continue to make pension contributions?

Yes, unless the furloughed employee has opted out or ceased saving into the pension scheme. It is currently unclear whether there will be an easement for employers who seek to increase an employee’s contribution rate or reduce their own. Usually a 60 day consultation requirement would apply in order to be able to do this. If you make contributions to an occupational DC scheme, there may also be restrictions in the scheme rules that apply to this kind of change. The Pensions Regulator may issue some guidance to deal with this.

With thanks to our friends at Arc Pensions for the answer to this query. 

Can I suggest that employees consider whether to opt-out of pension saving?

No, even if you may consider it to be in an employee’s interest to consider this option, you risk being in breach of your statutory obligations by inducing an employee to opt out.

With thanks to our friends at Arc Pensions for the answer to this query. 

What else should I be aware of when communicating with employees about their pension at this time?

Employees may well be nervous, particularly those who are approaching retirement, of the impact of COVID-19 on the value of their DC pensions pot. The Pensions Regulator has stressed that there is an increased danger of scam activity in the current climate, so you may want to consider pointing members in the direction of resources including ScamSmart and the Money and Pensions Service.

With thanks to our friends at Arc Pensions for the answer to this query. 

Is there anything I should raise with our pension provider?

You should consider asking your pension provider (or trustees if you have an occupational DC scheme in place) about whether they have reviewed their default investment pathway and whether they have made or are planning any changes in the current volatile investment environment. This is something members may be worried about and would welcome communication about what is being done to look after their pension pot.

With thanks to our friends at Arc Pensions for the answer to this query. 

Can I pay pension contributions late?

No, although the position may change. The Pensions Regulator has not issued any specific guidance in respect of late automatic enrolment pension contributions.

However, the Pensions Regulator has acknowledged publicly that schemes may struggle to meet statutory deadlines and is taking a practical and pragmatic approach to funding issues for defined benefit pension schemes. If there are difficulties with payroll or other administrative issues which mean contributions are paid over late, they may take a similar pragmatic approach to DC arrangements but this is not yet clear.

With thanks to our friends at Arc Pensions for the answer to this query. 

What if I have a salary sacrifice arrangement for pensions in place?

An employee who currently makes contributions by way of salary sacrifice will have agreed to a reduction in their salary to account for the pension contribution being made by the employer on their behalf.

This means their salary for the Coronavirus Job Retention Scheme will be lower than it would otherwise have been. It seems employees who are participating in salary sacrifice will be worse off than those who are not, if the employer doesn’t make any top up payment over the 80% subsidised salary. It is not clear what the implications of this are currently. The employer may also still have an obligation to pay the contributions that have been sacrificed.

With thanks to our friends at Arc Pensions for the answer to this query. 

What does TPR say about auto enrolment?

Auto enrolment obligations continue as normal. This means employers must continue to make their own contributions, collect the right contributions from employees and also deal with re-enrolment and re-declaration.

With thanks to our friends at Arc Pensions for the answer to this query. 

Can I delay re-enrolling employees?

YES. TPR says employers can delay re-enrolment for 3 months to take account of COVID-19 related difficulties.

With thanks to our friends at Arc Pensions for the answer to this query. 

What if I pay more than the statutory minimum already?

An employer’s obligation to pay more than the statutory minimum is unaffected by the COVID-19 crisis. TPR reminds employers they might be paying more than the statutory minimum for a number of reasons. These include paying more than 3% or paying contributions based on something more than “qualifying earnings”.

With thanks to our friends at Arc Pensions for the answer to this query. 

What if I want to reduce pension contributions to the statutory minimum?

TPR flags that employers need to consider employment contracts, trade union agreements and the provisions of DC schemes which may affect the employer’s ability to make a change. Again, this is consistent with our view that changes need to be properly documented in furlough agreements and the scheme rules need to be checked so any necessary amendments are made.

With thanks to our friends at Arc Pensions for the answer to this query. 

What about consultation with employees?

Normally, if an employer with more than 50 employees wants to reduce its DC contributions, it needs to consult with affected workers for 60 days. That is not practical in the current circumstances. TPR acknowledges this, although it wants employers to consult as much as possible. It will not take regulatory action if:

  • the employer has furloughed employees;
  • the reduction applies only to furloughed employees;
  • the reduction applies only during the furlough period;
  • and the employer writes to the furloughed employees clearly explaining the change and how it will work.

This concession applies until the end of June 2020 but will be kept under review.

In all other cases, TPR expects employers to comply with the consultation requirements.

With thanks to our friends at Arc Pensions for the answer to this query. 

 ​​​​​

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