COVID-19: FAQs for employers

Posted on 15 June 2020

This page was last updated on 1 July 2020.

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.

The Coronavirus Job Retention Scheme
The Government has announced that it will pay employees' salaries during the crisis, is my business eligible?

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

What payments are available?

The Coronavirus Job Retention Scheme currently enables all UK employers to apply to the Government to continue paying 80 per cent of their employees' salary costs for those employees who are furloughed (on a leave of absence) as a result of the COVID-19 pandemic. For now, employers can also claim the cost of employer national insurance contributions and minimum automatic pension contributions on the subsidised salary. More details on how to calculate this are contained in this guide. From August, employers will be asked to share the cost of paying furloughed employees' salaries so will be able to claim less from the Government (see "How is the furlough scheme changing from 1 July?" below).

How is the furlough scheme changing from 1 July?

The key changes are as follows.

First, the scheme will remain in place until the end of July on the same reimbursement basis as currently, namely that employers can reclaim 80% of furloughed employees' salaries (up to the £2,500 cap) plus employers' national insurance contributions and auto enrolment pension contributions). From August, employers will no longer be able to seek reimbursement of the national insurance and pension contributions (estimated to be around 5% of the cost of the scheme on average). From September, employers will also have to start paying 10% of the furlough salary (with the Government paying 70%) and from October, this will increase to a 20/60% split. The scheme will close for good on 31 October 2020.

Second, the scheme closed to new applicants on 30 June, in anticipation of the scheme beginning to offer "maximum flexibility" from 1 July. This means that the furlough scheme is now only available for employees who were previously placed on furlough on or before 10 June and who therefore completed the previous three-week minimum furlough period by 1 July. The exceptions to this are those returning from statutory family leave (including maternity, adoption or shared parental leave), and armed military reservists.

Third, from 1 July employers can bring back any previously furloughed 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 the minimum period was three weeks). Both of these features will be particularly helpful for employers who are planning a phased return to work over the coming months. For further details of how this "flexible furlough" will work, see update here.

What is included in the payments and is there an upper limit?

Yes, until the end of July, the Government will pay 80 per cent of the salary costs of eligible employees, 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 salary on which to base the calculation is the employee's gross salary in the pay period to 19 March (however, if you have calculated salary based on 28 February as per earlier guidance and this is different then you can choose to base it on that calculation instead). This includes other regular cash payments that you are obliged to pay, such as past overtime and compulsory commission payments but not discretionary bonus and commission payments. The cost of benefits should not be included in the reference pay. The Government will continue to support businesses in paying their employees' salaries until October, but from August businesses will be asked to share the cost on a sliding scale (see "How is the furlough scheme changing from 1 July?" above).

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). Further, from 1 July, there is now the added requirement that employees must have been previously placed on furlough on or before 10 June  (see "How is the furlough scheme changing from 1 July?" above). 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).

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.

What about those employees who have already been made redundant?

The Government has said that anyone who has been made redundant since 28 February can be taken back on the payroll and entered into the scheme. However, the scheme closed to new entrants on 30 June (see "How is the furlough scheme changing from 1 July?" above).

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

The Government has said that any employee who stopped working after 28 February for whatever reason (so that includes not just redundancy but also if they resigned or their employment terminated for another reason) can be taken back and furloughed, if their former employer chooses to do so. However, the scheme closed to new entrants on 30 June (see "How is the furlough scheme changing from 1 July?" above).

We employ someone on a fixed term contract that will expire soon, can I furlough them?

Yes, subject to the eligibility criteria mentioned elsewhere in these FAQs, employees on fixed term contracts can be furloughed, and you may choose to extend or renew the contract during furlough.

Our business has already agreed temporary unpaid lay-offs with staff – can we apply so that they can be paid during that period?

Yes. The purpose of the job retention scheme is that employees for whom there is no work should remain in employment while continuing to be paid and remain on payroll. However, from 1 July there is now the added requirement that employees must have been previously placed on furlough on or before 10 June (see "How is the furlough scheme changing from 1 July?" above).

Our business has already agreed to reduced working hours with employees – can we apply?

Subject to the eligibility criteria mentioned elsewhere in these FAQs, yes. From 1 July, employers can furlough employees on a flexible basis, which includes agreeing with employees that they are to work reduced hours. Employers are obliged to pay employees full pay for any periods worked, but can claim under the scheme in respect of any periods that the employees do not work and are placed on furlough   (see "How is the furlough scheme changing from 1 July?" above).

What about those employees who are on sick leave?

The latest Government guidance states that you can furlough employees on sick leave (though note that the scheme closed to new entrants on 30 June (see "How is the furlough scheme changing from 1 July?" above). It highlights that 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.

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 (see "How is the furlough scheme changing from 1 July?" above).

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,
  • submit information about the employees to HMRC through a new 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.

From 1 July, there are additional considerations when calculating and/or submitting claims:

  • The number of employees in any claim period after 1 July must not exceed the maximum number of employees claimed for under any claim before 30 June. For example, if an employer has previously submitted three claims before 30 June, with a total of 50, 40 and 60 employees furloughed in each respective claim, the maximum number of employees that can be furloughed in any single claim after 1 July is 60 (though certain employees, such as those returning from statutory family leave, will not count towards this total).
  • After 1 July, employers cannot claim for periods that straddle calendar months. So, in the above example, one claim has to be made for the period to 30 June and another for the post 1 July period.
  • Generally, a claim period must be for a minimum of 7 days (though there are occasions when it may be less).
  • Employers will need to calculate and submit to HMRC employees' usual hours, and the number of hours actually worked/not worked for the claim period in question. This means that, before submitting a claim, employers will need to know the exact number of hours an employee has worked and not worked, which may limit employers' ability to submit claims before the end of the claim period. There are also complicated rules regarding how an employee's "usual hours" are calculated, depending on whether they work fixed or variable hours. For further details, see Steps to take before calculating your claim.

When combined with the gradual phasing-in of employer contributions to furloughed employees pay (see "How is the furlough scheme changing from 1 July?" above), there are concerns that the above features (and others) of the flexible furlough scheme render it so complicated that employers may be put off from applying for it. If you are in doubt about how to submit a claim and/or how to perform the calculations involved, it is advisable to check the Treasury Direction or seek legal advice if necessary.

Finally, the deadline for making claims in respect of the period before 1 July is 31 July 2020.

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.

How long will I be able to claim for?

For as long as the scheme remains in place and your employees are not working. The Government has originally stated that the scheme will would run for at least 3 months from 1 March. It was then extended to the end of June and more recently to the end of October.  

Do I have to pay the difference between what the Government pays and the employee's full salary?

No. The employer can choose to fund the difference but does not have to. From August, the Government will require employers to share the cost of salaries under the scheme (see "How is the furlough scheme changing from 1 July?" above) but there will still not be a requirement to top up to full pay.

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.

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.

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.

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. From 1 July, there is no minimum period for which an employee must be furloughed. Therefore, provided employees are eligible to be placed on flexible furlough (see "How is the furlough scheme changing from 1 July?" above), 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.

The next phase – returning to work?

With the furlough scheme firmly in place and Government plans, albeit scant, emerging for a reopening of workplaces, employers are starting to consider return to work programmes. For many, the closure of offices and the moving of business operations to employees' living rooms was relatively swift. However, returning to the workplace could be far more complex. Health and safety issues will be at the top of the agenda – from temperature checks and immunity testing, to redesigning floor plans and installing technology to control the flow of people in buildings while complying with social distancing rules, the challenges are many.

And with phased returns a central consideration, employers are beginning to look at how to bring some, but perhaps not all, employees back from furlough leave, or "unfurloughing" as it is now often referred to. The availability of flexible furlough from 1 July offers additional possibilities in terms of designing and implementing a phased return. In any event, communicating plans with employees and reassuring those reluctant to return because of safety fears will be key, but so will the process for selecting the employees who are required to come back to the office and those who remain on furlough (whether on a full- or part-time basis). It will also be the case for many employers who have been adversely impacted by the pandemic that along with a return to work for some of their employees, they will have to make more difficult plans for what the business might look like post-lock down. Whether it involves restructuring or a redundancy programme, a careful process will be required to comply with employment laws and to manage and reduce risk as far as possible (see our "FAQS for the Return to Work" here).

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?

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. Under the amended scheme, employees can from 1 July return on a part-time or flexible furlough arrangement (see "How is the furlough scheme changing from 1 July?" above).

 

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. This will have retrospective effect from 13 March 2020, meaning some employees will be entitled to have their sick pay back-dated. 

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. This will have retrospective effect from 13 March 2020 for those who have COVID-19 symptoms or those self-isolating, and from 16 April for those who are shielding.

 

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).

 

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

With schools closed for an indefinite period 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).

Several of our employees are self-isolating, can we require them to work from home or does it have to be treated as sick leave?

If an employee is self-isolating but is not unwell then if they are able to work from home you can require them to do so. If their job is not suited to homeworking then employees who are self-isolating as a result of Government advice will be entitled to SSP (and any contractual sick pay that may be payable depending on the policy). If there are business reasons to do so, an employer may choose to put an employee who is self-isolating on furlough leave and pay them under the job retention scheme provisions instead of paying sick pay.

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.

 

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).

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. 

 

Vulnerable employees
What is the Governments' 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.

 

UK lock down
I am worried my business will be ordered to shut, how can we protect our employees?

Although we are not yet at a point of a complete UK lockdown, some businesses have already been ordered to close and it is possible that others will follow. Some employers may be able to continue to operate with staff working from home (see section on "Homeworking"). If that is not possible and you would otherwise have to make employees redundant or agree a period of unpaid leave, you can apply to the coronavirus job retention scheme (see first section on CoronaVirus Job Retention Scheme) which will pay 80 per cent of each employee's salary costs (up to £2,500 per month) while they are not working.

We are able to continue to provide some services, can we ask employees to do different jobs?

Some pubs, restaurants and cafes which have had to close down have switched to offering take away food. This could involve some employees carrying out different duties. If you need to ask employees to carry out work that is not within their usual job description or what the employment contract permits, you may have to seek their agreement. However, in the circumstances, it is unlikely that employees will refuse if it means the business can keep running and they continue to be paid. (See "We still need our staff to do some work, can we reduce their hours and pay?")

In light of the Government's wider shutdown measures announced on 23 March, are we able to ask that our employees continue to come to work in the usual way?

At the time lockdown was introduced, the Government advice was that, save for key workers, people should only travel to and from work where "absolutely necessary". On 11 May, the Government updated its guidance to state that all reasonable steps should be taken by employers to help people to work from home, but for those who can't work from home and whose workplace has not been told to close, employees can be asked to go to work.

The list of business and venues that have been told to remain closed can be found here. The Government has indicated that non-essential retailers could be allowed to re-open from 1 June but only if they meet the Covid-19 safety and security guidelines (please see our 'Health and Safety obligations' section above).  

 

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. See first section on CV retention scheme.

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 any reduction in salary must 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. It is worth mentioning that there are some limited exceptions to this, however if a sponsored employees salary package is cut to below the appropriate rate, then you will have to stop sponsoring them.

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 has 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.

Some of my employees are Chinese nationals with visas that are shortly due to expire, but they cannot return to China right now because of COVID-19. What can they do?

The Government have announced some concessions specifically for Chinese nationals (and non-Chinese nationals that normally live in China) who are currently in the UK, that will allow them to remain here if their current visa is due to expire before 31 March. If you have employees that might be affected, then they will get an automatic extension of their visa, without having to file a new visa application.

It is possible that the government may widen this concession to include other nations of other non-EEA countries that cannot return home due to coronavirus, but this situation remains fluid.

 

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

Yes, at a minimum level. The Coronavirus Job Retention Scheme will cover 80 per cent of furloughed employees' salary costs (up to a maximum of £2,500 a month), plus the employer’s 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, you can claim the cost of the employer’s minimum automatic enrolment pension contributions on the subsidised salary. Any contributions above the statutory minimum would 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 to account for the fact the employer will only be able to recover the statutory minimum contribution on the subsidised salary. 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 but the excess will not be covered by the CJRS. 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. 

 ​​​​​

Practical guidance for COVID-19
Read the latest COVID-19 related updates on our hub.

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