This update looks at the help offered to some self-employed individuals by the Self-employment Income Support Scheme. Details of this Scheme were published on 26 March 2020. It will be of direct interest to those self-employed individuals who may be able to claim under it. However, we think that some employers who make use of the services of self-employed individuals and who are concerned about their financial welfare may wish to draw this Scheme to their attention.

Read the full update on mayerbrown.com.

On 27 March 2020, the Pensions Regulator (“tPR”) issued further guidance in response to the ongoing Covid-19 outbreak. The guidance is prominently sign-posted on tPR’s website and includes:

 

• guidance for trustees on defined benefit (“DB”) scheme funding and investment;
• guidance for employers in relation to DB scheme funding;
• guidance for DB scheme trustees whose sponsoring employers are in corporate distress; and
• guidance relating to defined contribution investment.

Continue Reading Covid-19 – UK Pensions Regulator guidance for employers

At long last, we have further details on the Coronavirus Job Retention Scheme. This has come out of GOV.UK overnight and provides some much welcomed detail. This update looks at the further information that has been provided and some potentially tricky areas for employers who are looking at using the Scheme. To read the full update, please visit our website.

The Coronavirus Act 2020 has now been passed by Parliament in the UK. The Emergency Volunteering Leave Scheme provides for employees and workers to take time off work to work as emergency volunteers. This note looks at the Scheme, the obligations an employer owes to staff who wish to volunteer, and some likely tricky issues which could come up. To read the full update, please visit our website.

On 24 March 2020, the Government Equalities Office and the Equality and Human Rights Commission announced the decision to suspend the enforcement of the gender pay gap regulations for the 2019/2020 reporting year in light of the COVID-19 outbreak. This means that there is no requirement for companies to publish their gender pay data by 4 April 2020 for private companies. However, should any companies wish to do so, companies have been encouraged to do so. As at the date of this post, just over 3,000 companies have already reported their gender pay gap data on the government website for this year, compared to around 11,800 companies that published their data last year.

The UK Government has posted a link to the Coronavirus Business Support page.

There is limited further information on the job furlough Scheme, other than that they hope to have it up and running by the end of April 2020. To access the link to the furlough Scheme, please click here.

On 20 March, the UK Government announced a series of wide-ranging measures to assist businesses and employees through the COVID-19 crisis, including a Coronavirus Job Retention Scheme (the “Scheme”) (see the Chancellor’s speech here). Whilst details of the Scheme are sparse at this stage, we set out below answers to key questions our clients are asking about the Scheme:

1. What is the Scheme?

In brief, employers will be able to contact HMRC for a grant to cover 80% of the wages (up to a total of £2,500 per month) of employees who are not working but are “furloughed” and kept on payroll, rather than being dismissed. The Scheme is available to any employer in the country – small or large, charitable or non-profit.

It is not clear what is meant by “wages” in this context – whether it is just “basic pay” or includes allowances and bonuses paid in a prior reference period. Nor whether it includes employer pension and national insurance contributions. We understand further guidance will be issued shortly.

2. When will it apply?

The Government has announced that the Scheme will cover backdated wages from 1 March 2020, although it is likely to be some weeks before the payments are actually made under it.

3. How does an employer apply?

The details of application for the Scheme have not been announced yet as it is still being set up. We understand that an online portal is being set up for employers to notify HMRC and apply for the grant after the relevant employees have been notified that they are to be treated as furloughed.

4. What is a furloughed employee?

“Furlough leave” or “furloughed employee” are not familiar concepts under UK employment law. However, in this context, a furloughed employee is someone who rather than being dismissed for redundancy by their employer, is kept on the payroll during a period where the employer does not have any work for the employee.

Workers and self-employed individuals (independent contractors) are not covered by the Scheme. It is only intended to cover employees registered for PAYE purposes.

It does not apply to employees who have already been dismissed or made redundant – the Scheme is designed to reward employers who keep their employees on the books during the COVID-19 crisis by offering a significant wage subsidy.

Further, it does not appear to extend to:

  • subsidising wages where shorter hours or reduced pay have been negotiated in response to the COVID-19 crisis; nor
  • employees on sick leave or in isolation.

5. Does the Scheme create a legal right to place employees on furlough leave?

No, the Government has been clear that this announcement does not create a legal right to place employees on furlough leave. An employee’s status will be subject to employment law, and what is set out in their contract of employment.

Some employers may have what is called a lay-off clause in their contract, which allows them to send employees home without pay for a limited period, or they may have a practice of operating such an arrangement so that there is an implied contractual right to do it. This is rare however and most employers do not have the contractual right to lay staff off without pay. The position for them is that if they send employees home because there is insufficient work then those employees should continue to be paid. If they are not paid or there is no contractual right to send them home in the absence of work, then the employer could face claims for the unpaid wages (in the form of breach of contract or unlawful deduction from wages claims) and potentially constructive dismissal claims.

The Scheme is designed to cover both scenarios:

  • where an employer has a lay-off clause, the Scheme will see employees receive 80% of their salary (up to the £2,500 monthly cap) as opposed to the zero pay they would otherwise be entitled to; and
  • where there is no lay-off clause, the Scheme will see Government contribute the same amount towards the employers’ contractual obligation to pay staff their wages during a period of no work.

6. Do employers need consent to place employees on furlough leave and are they obliged to pay the shortfall in wages above the Government contribution?

If an employer does not have a contractual right to enforce temporary leave then it will need consent to place an employee on furlough leave. If an employer unilaterally places an employee on furlough leave, it runs the risk of a constructive dismissal claim, although in current circumstances, the risk of such a claim would appear low, particularly when the alternative for employees is likely to be the loss of their job entirely.

More significantly perhaps is the position regarding the pay due to the employee in excess of the Government contribution. Unless an employer has the right to reduce pay during a period of temporary leave, then it will be obliged to make up any shortfall and continue benefits during any period of furlough, unless employees agree to reduced pay (perhaps to avoid a risk that the employer has to make redundancies).

This is clearly going to be front and centre of many employers’ thinking, given the news on Wednesday 18 March from the United Kingdom that schools are to close indefinitely for all but key workers and “the most vulnerable”. How are employees expected to combine new childcare duties with continuing to work either from home or at a work location?

The short answer is that there is no short answer and there is going to be no substitute for effective dialogue between employees and their employer. We suggest the following questions may help:

  • Is the work location staying open generally so that the employee would otherwise be attending work? If the office is closed and employees generally cannot work from home, then an employee who has additional childcare responsibilities is in no different position than other employees who cannot work from home (unless the employer is moving staff into jobs that can be done from home).

Assuming that the work place is open, for an employee who now has additional childcare responsibilities we think the following is relevant:

  • Is the employee’s job one which can be done at home?
  • If yes, then is it one that can be done flexibly i.e. part time and maybe out of ordinary working hours?
  • If yes, then the employer and employee may, at the appropriate time (see below) have a discussion about going to short time working, reflecting the employee’s expected work contribution during that time with pay being reduced proportionately.
  • If the employee’s job cannot be done at home and the employee says that they cannot attend work full-time but they can attend part-time (and assuming that is practical) then again a discussion may be had at the appropriate time to get consent to some sort of reduced hours, and reduced salary arrangement.

If the employee cannot attend work at all, and their job cannot be done from home flexibly then this is going to be the toughest case because financial pressures are going to mount on many businesses and inevitably some are going to have little option but to consider redundancies to balance the books, and in all probability staff who are unable to work at all are going to be more at risk than staff who are able to continue working. We are not suggesting that employers should come to that conclusion directly, and there are good reasons to look at the facts in each case. For example, if there are key staff who will be needed when the business reopens, the employer may choose to carry the load to be able to reopen effectively at the earliest opportunity. Employers are going to have to be careful to ensure that working mothers are not disproportionately affected by any such salary reductions, or other measures implemented, as the courts will usually assume that female employees are more likely to have childcare responsibilities. In short, employers will need to carefully consider the practical and legal risks that could arise from short term measures designed to keep business going as an alternative to redundancy. This would also involve consideration of the costs of redundancy, if that stage was reached, particularly if an employer has a contractual redundancy scheme providing enhanced pay outs.

The second issue is when employers can move to have such discussions. Under English law all employees, regardless of length of service (workers and self-employed individuals are excluded), have the right to unpaid time off work to make arrangements for childcare. This means employers will have to allow employees a day or two at home unpaid to make alternative arrangements. Many employers will have supplemented these arrangements with emergency policies of their own, some of which may offer paid leave, and these too need to be honoured. Beyond that however employers will face a difficult balance between moving quickly to preserve their financial position and being seen to be too tough on their staff who through no fault of their own are unable to work in these difficult times. What makes this all the more difficult is that behind this all lies the inevitable spectre of mass redundancies, and so both employers and employees may need to have some difficult discussions to avoid even tougher discussions.

The question of whether staff have a right to know if a colleague has become infected with the virus brings two separate duties into conflict. On the one hand, the employer owes a duty to take reasonable care of its employees’ health. On the other hand medical information is sensitive personal data and as such there are limited circumstances in which it can be disclosed to third parties without the consent of the data subject, i.e. the employee infected with the virus.

Our view is that in most cases this conflict is capable of being resolved. Staff can be told in general terms that a colleague has tested positive. They can of course also be told what steps the employer has taken to contain the spread of the virus at work (deep clean of the office for example, if appropriate). Individuals who have come into contact directly with the individual will probably have the right to be told that they personally are at increased risk of infection. For staff generally it will not normally be necessary to disclose the name of the infected staff member. If people can work it out based on information provided by the employer, or the rumour mill puts two and two together to work out who it is, then that is, at most, a technical breach of the data protection rules in these circumstances but reduces the risk of breach of the employer’s health and safety obligations. In circumstances where an office is shut completely (i.e. no one at all is attending the office) then there is likely to come a point where colleagues can no longer be a source of infection in the office and so there is no need to make any general statement if staff subsequently become unwell. If you have key workers attending the office but the majority of staff are prohibited from entering then only that small group should be informed, in case there is scope for infection via the office.

More difficult questions can arise. Given that many people in the UK will be infected and are unlikely to receive formal testing, many staff may not know for sure if they are infected. The employer’s messaging needs to be clear whether someone has tested positive or suspects that they are infected with the virus. Secondly we have had clients ask what to do if staff insist on being told the identity of the member of staff who has tested positive (or is suspected of having the virus) because they want to take appropriate measures to protect their own health. This is clearly difficult and employers have to balance any employee relations consequences if staff generally think that they cannot trust the employer to look after their interests at work, as against the right of the individual who is infected (or suspects they are infected) not to have others informed of their identity and state of health. In practical terms speaking to the individual to see if they consent may be the best way forward, but of course if the individual is too ill to give consent, or declines, this leaves the employer in a dilemma. We anticipate that employers will try to hold the line rather than disclose the names of infected colleagues unilaterally.

The Government confirmed last night that the introduction of the IR35/off payroll reforms to the private sector will be delayed until April 2021.  This is part of a broad package of measures that the Treasury has announced to protect the economy in light of the Covid-19 outbreak in the United Kingdom.  The Government has confirmed at this stage that it is simply a deferral and not a cancellation.  This news will come as a welcome relief to some employers and it is hoped that additional clarification about the IR35/off payroll reforms will be provided in advance of the new implementation date.

However, for others who have already finalised plans on the basis of implementation in two weeks’ time, there will need to be careful consideration as to whether to proceed as planned or to explore the legal and practical viability of postponing arrangements for a year.  If you need help considering the options available to you, please contact your usual Employment Department contact.