The Law Commission published its report on Technical Issues in Charity Law in September 2017 following a public consultation.
Following a fortnight of announcements and proposed legislation, the Government has laid down the foundations for their economic footpath through this pandemic. Furlough is a word few of us had heard a month ago but now is part of our regular vernacular! As we await legislation underpinning the recent announcements and the completion of HMRC’s systems, this fourth update will provide an update from the last week.
Again, we would reiterate that all the information is correct at the time of going to print on 31 March 2020.
Furloughed employees – the Coronavirus Job Retention Scheme
The Government published its guidance last Friday (27 March), which provides a little more clarity on this Scheme. Inevitably, the devil will be in the detail and the application of the Scheme to the numerous and complex situations that arise.
The essential aspects of the Scheme remain as follows:
- Employers can place employees on furlough leave (a period of paid absence) and reclaim 80% (up to a maximum of £2,500) of the employees’ wage back from the HMRC in addition to any national insurance contributions and minimum automatic enrolment pension contributions.
- Any organisation can claim, provided they had a PAYE scheme in place at 28 February 2020.
- All employees are eligible provided they are on PAYE (this includes zero-hour workers) on 28 February 2020.
- The Scheme started on 1 March 2020 and will continue for three months.
- Whilst on furlough leave, an employee will accrue holiday but cannot undertake any work, volunteering or training that would provide services for or profit their employer in any way.
- Furlough can be used for employees who are shielding in line with NHS letters and guidelines.
- The minimum period of furlough leave is three weeks.
- Employees who were made redundant post 28 February 2020 can be rehired and placed on furlough leave.
- The online reclaiming programme is hoped to be up and running at the end of April 2020.
Entitlement and selection
The employer will determine which employees would need to be laid off and contact them to request their consent. This is especially key when the employer does not intend to top up the 80% to full pay. If the employee does not consent to this, then they will potentially have an unlawful deduction of wages claim. That said, the alternative may well be redundancy or lay off with no pay, so it is likely that employees will agree in the absence of a viable alternative.
We still have no further information from the Government on selecting employees for furlough leave. The guidance notes that “when employers are making decisions in relation to the process, including who to offer furlough to, equality and discrimination laws will apply in the usual way”.
In view of this we would advise the following;
- Ensure any criteria used to select furlough workers are clear, transparent and non- discriminatory.
- Be especially careful with selection where you are not able to top up the 80% of salary as any selection on potentially discriminatory grounds could result in a finding of less favourable treatment due to the deduction in pay.
- Before applying criteria, offer voluntary furlough leave to employees
National Minimum Wage (NMW) and furlough Leave
The guidance has clarified the position with regards to the payment of NMW whilst on furlough. As individuals are only entitled to the NMW (and the National Living Wage) for the hours they are working, furloughed workers who are not working can be paid 80% of their pay even if that would fall below the NMW based on their usual working hours.
The only exception to this would be if employees on NMW are required to complete some online training courses whilst furloughed. In those cases, the employees must be paid the NMW whilst training. However, given the Government has clearly set out that no volunteering nor training that would profit the organisation must be completed during furlough, this training would be for that individual’s personal advancement and training.
Pay on furlough with irregular hours
Details guiding employers with furloughed employees on irregular hours have been given to help when working out furlough pay. The arrangements are as follows;
- More than 12 months employment – furlough pay will be the higher of the following; the same months in the previous year or the average monthly earnings for 2019/2020.
- Less than 12 months – average monthly earnings since that employee started work.
Provision for self-employed
Given the catastrophic effect of the country’s shut down on those who are self-employed, the Government has offered a similar reimbursement scheme.
- The Scheme is available to self-employed individuals or members of a partnership if they have submitted their self-assessment for the tax year 2018/2019, have traded in 2019/20 tax year, will continue to trade in the tax year 2020/2021 and has lost profits because of coronavirus.
- They must have average trading profits of less than £50,000 and more than half the individual’s income must come from their self-employed business.
- Individuals who are eligible will receive a taxable grant that will be 80% of their average profits for the last three completed tax years up to a maximum of £2,500 per month for three months.
Social distancing and health and safety at work
There has been no further guidance from the Government as to employees not in key roles continuing to attend work. As we head towards the anticipated peak of infection in the next fortnight, the message from the Government and the NHS is to stay at home wherever possible. With this in mind, we would continue to advise the following checks:
- Continue to assess whether employees can work from home; it may be that this is not possible in any way given the service they provide, however, regular assessments for other roles should be carried out.
- Employees are 2 metres away at work stations.
- Lunchtimes and/or break times are staggered where possible so that all employees are not congregating at canteens/rest areas/coffee and tea making areas at the same time.
- Check in with employees regards public transport links and whether these are still working and what risks they bring to the employee.
- Address whether more employees in the workplace could use private transport means; this is especially key given pictures of overcrowded public transport as providers reduce the services. Be creative with solutions, whether this is giving them spaces in an organisation’s car park usually reserved for employees who are now at home, or subsidising car parking fees.
- Address whether employees who are still coming to work could be placed on furlough leave
Emergency volunteering leave
In response to the pandemic’s effect on the NHS, social care and the society at large, the Government has announced a volunteer scheme. The idea being that volunteers will “fill in the gaps” where possible.
The response has been overwhelming, and Schedule 7 of the Coronavirus Act 2020 sets out the process an individual must follow if they are employed and would like to volunteer.
- Employees (and workers) must give three working days’ notice of their intention to volunteer and must submit an emergency volunteering certificate – this is issued by the appropriate authority where the individual is going to volunteer.
- An individual can volunteer for a period of two, three or four weeks in any sixteen-week period.
- The leave is unpaid, but the individual will continue to accrue all other aspects of their employment i.e. holiday etc.
One final piece of legislation to note is the Government’s amendment of the paid holiday provision in the Working Time Regulations. To give more flexibility to businesses without costing employees their holiday entitlement, employees (and workers) can now carry over up to four weeks statutory annual leave into the next two years. This will only apply where it has not been reasonably practicable to take the leave due to the effects of the covid-19 pandemic. If you provide contractual leave over and above the statutory entitlement, the provisions for this contractual leave will remain the same. Regulation 13A of the Working Time Regulation, which permits the additional 1.6 weeks paid statutory leave to be carried over for 12 months, remains the same. This amendment only applies to the first four weeks of paid statutory holiday and is intended to protect those who are working through the pandemic.
For further information about any issues raised in this briefing, please contact Matt Wort.
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