The UK Government has, in keeping with past practice, used the arrival of the bank holiday weekend to update the Coronavirus Job Retention Scheme. It has now published a second iteration of the Treasury Direction, which we have reviewed. To read our commentary on the updated Direction, please visit

It is going to be one of the sadder consequences of the Coronavirus pandemic, that most employers are going to have to look closely at whether or not to make significant job cuts to their current headcount. Whilst some employers may view this as an opportunity to recruit and acquire staff either generally or in particular areas, most employers are going to be looking at scheduling necessary headcount reductions. The news that there are more than 7 million people are currently on the Furlough Scheme has doubtless concentrated minds wonderfully at the UK Government, which is why the Coronavirus Job Retention Scheme has been extended until the end of July 2020 in its current format and is then being tapered rather than a cliff ending. Presumably some of the Government’s thinking is that some employee’s jobs may be saved, and some employee’s jobs may be moved to part-time working, and to the extent that there are job losses these will be scheduled over three months rather than one horrendous month. To read the full update, please visit

The latest guidance from BEIS, published 13 May, confirms how holiday entitlement and holiday pay is to work during the Coronavirus pandemic. The Guidance Note is informative in some areas but makes a number of quite odd suggestions in others. We must remember that it is simply guidance. An employee’s statutory rights for holiday leave and holiday pay are not affected by this, although the guidance will be of persuasive effect. It will have more impact in relation to the Furlough Scheme, where clearly employers are entitled to expect that HMRC will respect guidance put out by BEIS. To read the full update, please visit

This update follows on from the Article we recently published on the many areas of planning that UK employers could usefully carry out in preparation for a return to work. We now have had the announcement from the Prime Minister on Sunday 10 May, and the advisory document, “New Guidance Launched to help get Brits Safely Back to Work”, published on 11 May. It sits alongside the rather longer document dealing with the strategy generally for recovery, “Our Plan to Rebuild”, and has limited information directly in relation to work matters. There are then specific guidance documents, such as Working safely during COVID-19 in offices and contact centres, published by BEIS, also on 11 May, which contains more practical guidance in relation to the sorts of details employers need to think about for office workers.

This update looks at the guidance that has been published and the principles that can be derived from the published guidance. It then also looks at the recent ICO guidance on workplace testing which is likely to feature in many employer’s plans for a return to work. To read the full update, please visit

Each spring, the Pensions Regulator (“tPR”) publishes its Annual Funding Statement on what it expects for defined benefit pension scheme actuarial valuations. With the recent 2020 publication, it is of particular interest to employers because of the COVID-19 pandemic.

Whilst aimed at pension schemes with valuation dates between 22 September 2019 and 21 September 2020, it is also relevant for schemes experiencing significant changes and which have to review funding and investment risk.

Continue Reading TPR Annual Funding Statement 2020

We now have a further updated Guidance Note from HMRC. On 30 April 2020, the Government produced some new guidance on the Furlough Scheme. Contrary to some of the previous guidance updates, these are broadly helpful in clarifying some areas of uncertainty.

We have written a short report on the changes, which is available from

Not very seriously, appears to be the answer. Indeed, despite the Lord’s scathing Report being published on Monday 27 April, later that day, the financial secretary to The Treasury, Jesse Norman, told the Commons that the Government still intends to include an amendment to enable the private sector off-payroll scheme to be enacted in the proposed 2020-2021 Finance Bill to start on 6 April 2021, stating: “The Government remains fully committed to introducing these reforms to ensure that people working like employees, but through their own limited companies, pay broadly the same tax as the individuals employed directly”. His only comment, which seemed to take on board anything said by the Lords, was that the Government would use the next 12 months to seek external research on the long-term effects in the public sectors before they are introduced into private sectors.

With all due respect, the response seems to miss the point being made. The concerns that many witnesses interviewed by the Lords in their inquiry had raised was that if these contractors are paying broadly the same tax as employees, consideration has to be given to the rights of those contractors to avoid them being “zero-rights employees” and in an “all pain and no gain” situation. The comments on behalf of the Government also sadly ignore the impact and huge costs to businesses of this flexible workforce becoming far less accessible to them, and more costly.

It seems that the real impetus in continuing along this route, despite the comments, is the need for revenue generation under the guise of an ostensibly fairer regime.

“Riddled with problems, unfairness and unintended consequences”  was The Lords’ verdict in a Report published on Monday on the ‘off –payroll rules’ (the “Rules”) which the Government had proposed introducing on 6 April 2020. The Report is a good read and echoes what many of us have been saying for some time about the introduction of the Rules in the private sector.

The Government has confirmed that it will delay introduction of the Rules to April 2021 as a result of the impact of COVID-19 on the economy generally, but whether the Lords’ damning commentary on the Rules (and IR35 generally) will lead to a proper consideration of viable alternatives remains to be seen. The Lords recommend that businesses will need considerably longer than a year (April 2021) to recover from the COVID-19 disruption and says it is not right to impose unnecessary burdens on businesses at such a difficult time. Further, it recommends the Government takes its time to consider the matter properly, given our current circumstances.

In considering matters, the Report accepts that revenue generation, a key reason for the introduction of the Rules, is an important consideration.  Indeed the Government will need to recover the costs of its COVID-19 expenditure somewhere. The Government will see this as a good place to start and will be reluctant to give up this possible source of revenue which HMRC suggests may net as much as £4.1 bn by 2024/25, (although those predictions are somewhat controversial!). However, the Report emphasises the need to balance revenue generation with fairness, making it very clear that in many cases the Rules will not create a fair system for contractors who may then be taxed as if they are employees but not enjoy any of the legal rights that an employee would have. The Report goes as far as describing these contractors as “zero rights employees“, i.e. taxed as employees but with no employment rights. Today, 15% of the workforce is self-employed. However, with the introduction of the gig-economy, many of these individuals are relatively low earners, so fairness in any new system is a key issue, as is the recognition that working through a PSC will often be a requirement of the business they are working for, rather than a lifestyle choice. The Report criticises the whole premise of IR35 in trying to treat independent contractors as employees when they clearly need to be in their own distinct category.

The Report reflects that the proposed introduction has already led to hardship for contractors. Many companies had said that they would no longer work with PSCs after 6 April 2020 given the proposed introduction of the new Rules, so the reprieve in the introduction of the Rules has come too late for some. This has also denied businesses the significant benefits of working with PSCs, providing flexibility in workforce requirements (matching demand with supply), and reducing overall fixed costs. It seems unwise to deny businesses such opportunities in the current environment when they need to be given every incentive to regenerate in as profitable a way as possible. The Report felt the Rules effectively privatised the costs of tax compliance in shifting the burden of compliance onto businesses. The estimate of costs to businesses of this was significant, and the Report did not feel this had been properly evaluated by the Government. The Report identified that the proposed introduction had led to companies introducing blanket assessments for types of PSCs, many of which are inaccurate. Again this leads to a reduction in work for contractors. It has also led to unscrupulous and unlegislated umbrella PSC arrangements coming into play who try to extract high fees from those working under them.  The Report emphasises the unfairness of these impacts on contractors.

The Report did not pull its punches on its assessment of CEST – the tool introduced by HMRC to assess employee status. Its conclusion was that CEST was inaccurate in a number of cases and simply did not reflect current case law on employee status, largely because it ignored mutuality of obligation. It also found (unsurprisingly) that CEST tended to favour a finding of employee status.

So what now?

The Report recommended that Government needs to indicate by October 2020 whether it still planned to introduce the Rules in April 2021. It emphasised the need for businesses to be able to plan going forward and criticised the delayed provision of guidance until six weeks before the implementation date this year, which had impacted on the ability of businesses to prepare and was likely to have led to some of the hardships described above.

Importantly, the Lords were scathing of IR35 generally and urged HMRC and the Treasury to consider alternatives properly, and in a measured way, feeling that HMRC had failed to appreciate or listen to the adverse impacts of the introduction of IR35 in the public sector. It set out some alternatives which had been suggested and should be considered including:

  • a flat rate deduction rate for companies using PSCs;
  • the introduction of a new ‘Freelancer’ limited company with its own tax treatment;
  • introducing ‘Engagers tax ‘ to balance the lack of employers NIC;
  • addressing the difference in NIC rates for the employed and self-employed;
  • introducing a statutory employment test leading to certainty for contractors and businesses alike.  In this regard it urged the Government to consider the recommendations in the Taylor Review (which it had committed to doing in  2018 but which appeared to have fallen by the wayside). One of the recommendations of the Taylor Review was the concept of a ‘Dependent Contractor’ – someone who would have identified, but more limited, employment rights to address the unfairness of the “zero rights employee“ concept.

Looking forward, the Report identified six key tenets to be adopted for any alternatives: certainty, simplicity, fairness, supportive of growth, administratively straightforward, and enforceable with limited resources.

It will be interesting to see how the Treasury and HMRC react to such a report. Watch this space!

The UK Government has relaxed the Working Time Regulations 1998 (“WTR“) on carrying over untaken annual leave due to the effects of COVID-19. Under the Amendment Regulations, workers will now be able to carry over untaken annual leave into the next two leave years where they have been unable to take it due to the COVID-19 pandemic. This update explores the key changes to the regulations, practical points to consider and potential problem areas for employers. It is important to appreciate that the new rules apply to all employees and are not restricted to furloughed or to non-furloughed employees only. Read the full update available on