Coronavirus – Covid-19 in the Workplace
With the UK and much of the rest of the world currently in the grip of the Coronavirus Covid -19 pandemic, businesses are having to confront unprecedented issues in the workplace.
We have put together the following information to assist you to navigate these unchartered waters. This is an evolving situation so please also refer to the latest Government advice or contact us if you have any particular issues:
Q: What is furloughing or furlough leave?
A: This is the Coronavirus (Covid-19) Job Retention Scheme (CJRS) which was introduced by the Government on 20 March 2020. It is part of a package of support set up to protect businesses and jobs affected by the crisis. Employers can apply to HMRC for a grant to cover most of the wages of their staff who are not working during the outbreak.
Q: Is my business eligible to apply for the CJRS?
A: Any employer in the UK is eligible irrespective of size or number of employees and this includes charitable and not for profit organisations and recruitment agencies
Q: How do I make a claim under the CJRS?
A: If you outsource your payroll to a payroll provider, they will be able to submit claims on behalf of your organisation otherwise claims can be made online by using the following link; https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme.
Q: How does the CJRS work and what I am entitled to claim?
A: If your organisation has been affected by the outbreak and can no longer maintain some or all of your staff, you can decide to furlough staff and apply for a grant that covers up to 80% of their usual monthly costs up to £2,500 a month per employee plus the associated costs of employer national insurance contributions and pension contributions.
Q: Does furlough only apply to those at risk of redundancy?
A: When the scheme was first launched the Government guidance stated that it applied to those who would otherwise have been made redundant or laid off. However, this wording has since been replaced with a requirement that the coronavirus must have “severely affected the employer’s business operations”. This means that there is now no specific requirement that furlough can be used only if redundancy is an underlying risk. Staff unable to work as a result of childcare responsibilities, for example, can be furloughed where there is no underlying risk of redundancy.
Q: Which staff should I furlough?
A: This will be a decision specific to your business but considerations will include which staff the business has no requirement for or a reduced requirement during the outbreak. In the hospitality sector, most staff will be affected and are likely to be furloughed unless the business can be adapted to provide eg takeaway food in which case some or all staff may be productive and retained. In other sectors the outbreak may have led to a reduced requirement for certain roles, at least for the time being. The residential property sector has been particularly badly affected, for instance, and those employed in estate agencies or in residential conveyancing work will find themselves with little or no work until normality is restored. Furloughing staff allows organisations to retain staff at almost full pay when they would otherwise have been redundant.
Q: How do I ensure fairness when deciding who to furlough?
A: Where there are a number of staff carrying out the same or similar roles and a reduced requirement for their services during the outbreak it may be necessary to select which staff members you wish to retain. This may give rise to problems as those selected for furlough may consider that this is a sign that they are less valued than those retained and those retained may feel resentful that their colleagues are effectively being paid to stay at home while they may be working harder than usual.
In particular, employers should be careful about any potential discrimination claims which could be brought under the Equality Act 2010 (‘EQA’) One solution to this is to rotate staff on furlough. This can be done provided that each period of furlough is at least 3 consecutive weeks. Employees can be furloughed for 3 weeks and then brought back and a colleague can be furloughed for the next 3 weeks and so on.
Alternatively, employers can carry out a selection exercise using objective criteria as they would in a redundancy exercise, when deciding who to furlough. We can advise you further in relation to this process.
Q: I have a pool of several employees all of whom do the same type of role and I need to choose who to furlough. Am I allowed to choose those who are in the higher risk categories given that it makes more sense for them to stay at home
Whilst it might seem logical to simply choose to furlough those employees who have underlying health conditions, are pregnant or are older, businesses must be aware of the risk of potential discrimination claims.
If an employer decides to apply a blanket policy of furloughing all employees who fall within the higher risk groups, someone who falls within the high-risk group who is also disabled, for example, might be able to argue that such a blanket policy is more likely to disadvantage disabled people. This could give rise to a claim for indirect disability discrimination or a failure to make reasonable adjustments. Such claims could only be successfully resisted if you could justify the decision so it will be necessary to consider the justification defence very carefully at the time of making the decision. Are there any adjustments you can make for the disabled employee to enable them to remain working at full pay but ensure they are not placed at risk?
Similar considerations apply in respect of pregnant employees or older employees as there could be potential claims of sex/maternity or age discrimination. If an employee in a high-risk group requires specific IT facilities in order to continue working, could efforts be made to set these up at their home? If it is absolutely essential for a particular role to be carried out in the workplace, is it possible to arrange for such work to be done outside normal office hours such that the employee would not have to come into contact with others? A safer option would be to draw up an objective set of criteria which doesn’t target specific groups. If you are concerned about the implications in respect of pregnant, disabled or older employees, you should seek legal advice.
Q: How long can I furlough staff for?
A: The scheme is temporary and is for a 4 month period starting on 1 March 2020. It may be extended beyond the 4 month period in due course but we will have to wait and see. You can apply at any time during this period.
Q: I do not run a business but employ a nanny. Can I furlough my nanny?
A: Yes, provided the nanny is paid through a payroll and had been prior to 19 March 2020 they can be furloughed.
Q: Is the furlough scheme “means tested” in any way?
A: No, all organisations are eligible to apply
Q: Does the furlough scheme apply to all employees or only full time staff?
A: Yes, any employee can be furloughed whether part time or full time or an agency worker
Q: Can I furlough my staff for part of the week only?
A: No, when on furlough, an employee cannot undertake any work for or on behalf of the organisation or for any associated organisation
Q: Can staff I have furloughed work anywhere else during furlough leave?
A: This will depend on their contracts of employment. If, as is often the case, there is a restriction on the employee working elsewhere during their employment then the fact that they are furloughed will make no difference to this and, on the face of it they cannot work elsewhere. If, however, they are being paid less than their usual salary eg 80% only then the employer should consider any request from employees to work elsewhere. A flat refusal to allow employees to work elsewhere in these circumstances could amount to a breach of the implied term to maintain trust and confidence and potentially give rise to a claim for constructive dismissal.
Q: How much are furloughed employees entitled to receive?
A: Furloughed employees will receive the lower of 80% of their regular wage or £2,500 a month. Employees who earn under £3,215 a month will receive less than £2,500 a month. This is because for those earning £3,125 a month 80% of salary is £2,500. Employees who earn less than £3,125 a month normally, will get 80% of their salary for three months (or more).
Employees earning in excess £3,125 a month will have the £2,500 cap applied. These employees will receive less than 80% of their salary for those three months (or more) unless the employer chooses to supplement it.
Q: What do I include when calculating my employee’s salary?
A: Regular wages, variable PAYE wages, fees and compulsory commission and bonuses can all be included in calculating the regular wage figure. Discretionary bonuses and commissions, tips, tronc shares, and the value of non cash benefits eg insurance or the use of a company car cannot be included.
The calculation is based on an employee’s actual monthly wage before tax as at the last pay period before 19 March 2020. If the employee has variable pay then for those employed for 12 months prior to the claim, the claim is for the higher of either the same month’s earnings last year or the average monthly earnings for the 2019/20 tax year. For those employed for less than 12 months, the claim is an average of the monthly earnings of their period of work.
Q: What happens to annual leave/holiday whilst an employee is furloughed?
A: The employee’s entitlement to annual leave will continue to accrue during furlough leave. Employers may wish to consider requesting that employees take some of their annual leave either before their furlough starts or during the furlough leave. Employers can require employees to take holiday by serving a notice on the employee of at least twice the duration of the holiday it requires the employee to take, so, for example, if you require an employee to take a week’s holiday you will need to give at least 10 working days’ notice. It may be advisable to only request that a proportion of annual leave is taken at this time given the restrictions currently in place on travel and other activities. Special rules have been introduced to provide that employees can carry over up to 4 weeks of annual leave into the next 2 holiday years.
Q: Can I require my staff to undertake training whilst on furlough leave?
A: Yes, provided that they do not carry out any services for the organisation or generate revenue
Q: What about employees on the National Minimum Wage or National Living Wage as their earnings will fall below this level if they are furloughed?
A: Employees are only entitled to the NMW or NLW if they are working. If the 80% will drop them below that threshold then employers can pay the lower rate if they are not working. If they are required to complete any training whilst furloughed they will be entitled to receive the NMW or NLW so the 80% would have to be topped up in those circumstances.
Q: Do furloughed staff have to pay tax and NI?
A: Yes, employees furloughed because of Coronavirus – Covid-19 will still pay income tax and national insurance and pension contributions (if applicable) on the reduced salary they receive.
Q: My company pays more than the minimum pension contributions required by auto enrolment. Do we still have to pay the increased level of contribution to staff furloughed?
A: You should top up to the level of the enhanced pension contribution as per the contract of employment unless you have reached an agreement to vary the contract with the employee
Q: Can I reclaim wages if I have asked staff to take a pay cut or work reduced hours?
A: No, the scheme is only for staff who are not working
Q: Can staff on long term sick leave be furloughed?
A: Yes, whether an employer wishes to furlough staff on long term sick leave may depend on what they are being paid. If they are being paid contractual company sick pay then this may make commercial sense.
Q: Can employees on maternity leave or other statutory leave be furloughed?
A: For those on maternity leave or parental, paternity, adoption leave, etc the rules regarding statutory payments still apply and they will continue to be entitled to receive statutory maternity pay where eligible.
It would appear that if your business offers enhanced contractual maternity pay, then it would be possible to furlough that employee in order to receive financial assistance with the payment of any enhanced maternity pay. However, at present it is not entirely clear how this would work in practice. There is nothing in the guidance which would prevent a woman on maternity leave from agreeing to be furloughed, thus bringing her maternity leave to an end. This would be likely to prevent her from returning to her maternity leave at a later date.
Q: How do I inform employees that they are furloughed?
A: You must consult with employees with a view to obtaining their agreement to a variation in their contract of employment. It is advisable to inform the employee of your proposal initially and explain that you will confirm the proposal in writing and seek their written agreement to it. A template letter notifying an employee of potential furlough leave is available on request at email@example.com.
Q: How do I end furlough leave and require employees to return to work?
A: You may wish to contact the employee informally first to advise them that their furlough is to end and of the date they are required to attend work and follow this up with a letter of confirmation. We have come across many situations in which furloughed employees have resisted attempts to bring the furlough period to an end and we have come across some astonishing excuses – that they have started decorating, for example, and want to finish it first! Unfortunately, some individuals seem to be regarding being furloughed as a period of extended holiday and forget that the purpose is to assist businesses to survive and to keep people employed at a time of national crisis. A request to return to work is a lawful and reasonable request and an employee who unreasonably refuses can be subject to disciplinary action in the usual way.
Q: I wish to bring staff back to work following a period of furlough but they are resisting on the basis that they are concerned for their health and safety. How should I deal with this?
A: It will be important for employers to address concerns that employees have about health and safety in the workplace and risks associated with returning to work. Employers will need to carry out a specific Coronavirus – Covid-19 workplace risk assessment. Employers will also need to be able to reassure employees that they are able to adequately implement social distancing measures in the workplace, that there are procedures and facilities in place for avoiding/minimising exposure by the use of personal protective equipment, sanitisers and regular hand washing and limiting interaction with visitors to the work premises. Employers should respond to any issues raised by employees and seek to reassure them. If it is possible for the employee to work from home then steps should be taken to implement home working. If this is not possible and if the employee refuses to return to work despite a safe system of work and safe working environment then an employer will need to follow the usual process for disciplinary action and may ultimately be able to dismiss if the employee refuses to work. We recommend that specific legal advice is sought in these circumstances.
Q: I need to introduce a pay cut for staff. Can I inform them that their pay will be reduced by 20% next month?
A: Many employers are having to implement cost saving measures in these difficult times. Whilst it is unlikely to come as a surprise to employees in the current circumstances, employers must still follow a process when implementing a pay cut. It is advisable to notify the employees first of the risk of a pay cut being introduced and then to write to them officially giving them notice of the proposal. Employers will need to obtain the agreement of employees to a pay cut. We recommend that legal advice is sought if you wish to introduce a reduction in pay and we can assist you with the process. It is not necessary and will not always be appropriate to introduce a company wide pay cut. In circumstances where not all jobs are affected, employers will need to give consideration to the criteria to apply and ensure that they do not inadvertently fall foul of discrimination law.
Q: If the furlough scheme ends in June, I shall need to make staff redundant. How and when should I start this process?
A: If it appears inevitable that redundancies will have to be made, employers may wish to start redundancy consultation processes in good time before the furlough scheme ends in order to minimise wage costs incurred. For employers proposing to make fewer than 20 employees redundant, there are no prescribed timescales for consultation. For those proposing to make more than 20 employees redundant at one establishment in a period of 90 days or less, there are collective consultation procedures that must be complied with failing which claims for unfair dismissal and protective awards are likely to arise. Where 20-99 redundancies are proposed, consultation must start at least 30 days before the first redundancy takes effect. Where more than 100 redundancies are proposed consultation must commence at least 45 days before the first redundancy.
If you have any specific queries arising out of any of the above or the implications of Coronavirus- Covid-19 in the workplace, please do not hesitate to contact one of our experts at the Nottingham Head Office Number: 0115 856 1625 who will be pleased to assist.