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Coronavirus – Guidance for Employers
Updates and Additional Information
(14 April 2020)

UK employers continue to face an unprecedented situation regarding how to deal with issues arising from COVID-19. If your inbox is anything like ours, you are inundated with various “updates” and trying to pick through what is fact and what is opinion can be challenging.

The purpose of this post, and how we’ve been working in general, is to bring you updates based on official guidelines only. We’re aren’t going to join in the speculation about what may or may not happen, what is or is not allowed; we’re just going to summarise the official rules and confirm the areas that still need clarifying.

As with all of these notes, we need to remind you that these are unprecedented times and it is unclear as to how employment law will be applied in these exceptional circumstances.

The information that follows has been compiled with input from government websites, Acas and HMRC (the only official resources that we’re happy to use as these are the institutions who will be responsible for enforcing the rules as we move forward), but the reality is no-one really knows for certain how actions that businesses need to take now will be interpreted later.

We strongly advise you to get in-touch with us on 0203 319 1649 to seek tailored guidance before you take any actions.

I’ve made an offer to a new employee but now don’t need them. What can I do? (Updated answer)

In this scenario you do have some choices.

Firstly, you can withdraw the offer legally by paying for the contractual notice period. It’s never a nice conversation but you should phone the individual and explain the situation. You should then confirm that you are needing to withdraw the offer but they are entitled to payment for their contractual notice period and will receive this. You’ll need to follow this up in writing.

As an alternative, you can see whether the individual would be prepared to delay their start date. You have nothing to lose by asking the question and it could well be that an individual would prefer to agree a delayed start date than find themselves in a position where they’ve served notice to their current employer and will be without a job if you withdraw the offer completely.

Update: The government have now also confirmed that your new employee can ask their previous employer to re-hire them, place them on furlough and make a claim through the Coronavirus Job Retention Scheme. There is no legal obligation for the previous employer to do this and it could present the previous employer with some future challenges if the employee decides that they don’t want to leave and join you after all but it’s certainly something that your new employee could explore.

What happens with holiday accrual during furlough? (Updated Answer)

As crazy as it seems, people will continue to accrue holiday during furlough. Prior to Covid-19 it was not possible to carry over statutory holiday from year to the next. However, the government has now confirmed that employees will be allowed to carry over holiday that they couldn’t take due to the virus for 2 years.

Update: Initially there was a view that people could not take holiday whilst they were furloughed. The Acas guidelines now confirm that this isn’t the case. Holiday can be taken during furlough and the employer can allocate holiday during furlough as long as appropriate notice is given.

It is very important to note however that, if someone is taking holiday, including bank holidays, then they must be paid at their full rate of pay, not at the furlough rate. So, if you have furloughed employees and are only paying them the 80% up to the cap of £2,500 per month then, if they are taking holiday they MUST be paid their full salary. This means that you would need to top up their salary to 100% for any days of annual leave that they take.

We strongly recommend getting employees to take accrued but untaken holiday during their furlough if at all possible. Whilst there is a financial cost in that you’ll need to top-up their pay, the alternative is that you have employees return to work with large accrued holiday balances. Whilst this can be taken in the coming two years, if they resign or you need to terminate employment before these balances have been cleared, you will need to compensate them for their accrued holiday. This could get very expensive.

I’ve just been involved in a TUPE transfer and my new employees weren’t on my payroll on 28th February 2020. Can I furlough them? (Updated answer)

Update: This is an area that has now been clarified in the official government guidelines on the Coronavirus Job Retention Scheme.

The scheme now states:

“A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.”

We aren’t yet clear as to how this will work in practice but the scheme is clear that these employees will be covered by the scheme.

The furlough rate takes my employee below national minimum wage. What do I do?

People are only entitled to national minimum wage when they are undertaking work. When furloughed the employee isn’t working and therefore national minimum wage does not apply. You can still pay people 80% of their salary even if that takes them below minimum wage.

One thing to watch for here though is if you are asking an employee to undertake training then they must receive national minimum wage for those training hours. This will really only become an issue if a furloughed worker is being asked to train for close to their normal contractual hours.

How do I make a claim on the Coronavirus Job Retention Scheme?

HMRC is issuing emails to all UK businesses who run a PAYE scheme regarding the steps that they will need to follow and the information that they will need to have in order to make a claim.

It is currently anticipated that the HMRC portal will go live on 20th April 2020 and extensive testing has been undertaken to ensure that it can handle the volume of claims it is likely to face but we’re thinking that patience may be needed with this!

According to the email that has been sent by HMRC, you will need:

  1. The bank account number and sort code you’d like us to use when we pay your claim.
  2. The name and phone number of the person in your business for us to call with any questions.
  3. Your Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number).
  4. The name, employee number and National Insurance number for each of your furloughed employees.
  5. The total amount being claimed for all employees and the total furlough period.

HMRC state in their email that they will issue a further communication when the portal goes live and is ready for claims.

The government website also states that you will be responsible for calculating how much you can claim but that HMRC will have the right to retrospectively audit all elements of your claim so we recommend keeping detailed records or how you calculate your claim.

There are some rumours doing the rounds about how the scheme will work. We’ve heard from semi-official sources that the plan is for businesses to be able to put their claim in up to 14 days before pay day so that the cash from HMRC arrives in their bank account before employee payments are due but we’re going to need to wait and see.

Can someone be furloughed whilst working notice?

Yes. Whether the employee serves notice to you or you serve notice to the employee (using a legally sound process) someone can be furloughed during notice. Now, the next question is what rate of pay should the employee receive?

There is a quirk of employment law that applies to this situation.

If the employee’s contract gives them statutory notice only (one week per completed year of service) then they need to receive their full salary for their notice period. So, if you are only paying them at furlough rate of 80% of salary up to the £2,500 cap then you’ll need to pay their notice at their full salary.

However, if their contractual notice is more than statutory notice, then you only need to pay them at the furlough rate. So, if an employee has been with you for 2 years but has a 1 month notice period then their notice is more than statutory minimum. In this situation, you only need to pay them at the furlough rate. Please don’t ask us why! This same rule applies in maternity leave or sick pay situations too and it’s one of those things that just is.

What records do I need to keep regarding the Job Rentention Scheme?

There is a requirement under the Coronavirus Job Retention Scheme to write to employees confirming that you are placing them on furlough. You are then required to keep this document for 5 years.

We are encouraging clients to ensure that they get employees to sign to confirm their acceptance of the furlough agreement as this will provide a solid audit trail should there be any future investigation. If you don’t have access to an electronic signatory system then we’d advise that you ask for employees to confirm receipt and acceptance of the furlough agreement via email and then keep the full email exchange for future evidence.

In addition, as mentioned above, do make sure that you keep full details as to how you reach the amount that you are claiming for under the scheme. It is clear that investigation into claims could go on for many years (we’re guessing up to 5 years given that’s how long you are required to keep furlough agreements for) and your memory could very well fail you in the future. Document any assumptions that you’re making so that you have a full set of records should you ever need them.

Employment laws still apply

When making changes to working hours or other terms and conditions, assuming your employment contract does not already allow for that, normal employment law applies – refer to our post on employment law: Job Retention Scheme – Employment Laws Still Apply (23-Mar-20).

Also, the employer must be careful not to discriminate in deciding who to offer furlough too – refer to our post on furlough discrimination: Furlough Decisions – Beware of Unintended Discrimination (24-Mar-20).

If you’d like help with the impact of Coronavirus or any other HR matter, contact us on 0203 319 1649 or fill in the form below.

Contact Us

If you’d like help with the impact of Coronavirus or any other HR matter, contact us on 0203 319 1649 or fill in the form below.

Contact Us

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