A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
As the tight grip of lockdown eases across the country, the Government is producing swathes of guidance as to how this will look in practice. The purpose of this ebriefing, and future ones in this series, is to assess which pieces of guidance are key to employers and outline the necessary details and ramifications.
The contents of this ebriefing are accurate and current at the time of publication.
Redundancy and furlough
On 26 June 2020, the Treasury published its Third Direction. The purpose was to give more details about the flexible furlough scheme. It did this in great detail, but it also threw into question whether employers can make employees redundant whilst on furlough and continue to claim under the Coronavirus Job Retention Scheme (CJRS) for notice pay. At the time of writing, it is unclear whether this was the Treasury’s intention or not!
Government guidance, which remains unchanged, refers to making employees redundant whilst on furlough. As does the continuing guidance advising employers that shielding employees and those with caring responsibilities should be furloughed whether their roles are redundant or not.
We are hoping for clarification on this point.
It is hard to believe that the Government would seek to intentionally change the purpose of the CJRS at this late stage; that kind of decision could be subject to judicial review. In the meantime, we would advise the following;
- Employment costs until the termination date can be claimed under the CJRS.
- Redundancy payments (neither statutory nor contractual) cannot be claimed under the CJRS.
- Pay in lieu of notice sums cannot be claimed under the CJRS.
- Notice pay whilst the employee remains employed, may still be claimed under the CJRS (subject to the varying caps and employers’ contributions) but there is a low risk that HMRC will request that this is paid back by the employer in time. Given exchanges with the HMRC in the House of Commons and Twitter, we would say that is unlikely, but it is still a risk of which to be aware. We will keep you updated of further clarification.
Holidays and furlough
As the country starts to open again and holidays become more of a reality, the Government has offered some guidance to holiday pay and flexible furlough.
The Government confirmed several months ago that employees on furlough could take holiday and, whilst they must be paid 100% of their salary during their agreed holiday, their employer could still claim back 80% of that cost from the scheme.
It has now been confirmed that if an employee takes holiday whilst flexibly furloughed then any hours/days taken as holiday during that period will be counted as furloughed hours and not working hours. The guidance can be found here.
Example; An employee is flexibly furloughed and works Tuesday, Wednesday and Thursday but remains on furlough on Monday and Friday. If they then take two weeks’ leave at the start of August, their employer must pay them two weeks’ full pay, however, the employer can claim up to 80% (subject to the cap) of their two weeks’ salary from the CJRS. The claim is not limited to the four days they would have been flexibly furloughed during that two week period.
However, the Guidance does state that employees should not be placed on furlough simply because they have booked holiday for that period and the employer wants to reclaim for 80% of the cost. It is unsure how the HMRC will police that although it may be obvious from the way the claim periods run and last only for fortnights at a time in peak holiday season.
Holidays and quarantine
10 July was a good day for everyone hoping to holiday abroad this summer and an even better one for the travel industry. As from this date, the requirement to self-isolate for 14 days when returning to the UK from a long list of countries was lifted. The list can be found here and includes the majority of European holiday destinations with the exception of Portugal. The only requirement appears to be that all passengers (apart form those on a small list of exemptions) will be required to provide contact information on their arrival in the UK for the purpose of tracking any infection.
We would advise that employers request details of holiday destinations from employees prior to them taking holiday to confirm that they will not have to self-isolate on their return. Some employees may feel that this is information they do not wish to give. However, an employer, given its duty under Health and Safety requirements, is entitled to ask for this information to ensure the safety of its employees from infection and a COVID-secure workplace.
This welcome lifting of the quarantine requirement addresses the issue of pay during the 14 day self-isolation period. For employees who are travelling to countries not within the list, they will still need self-isolate on their return. For employees who can work from home during this period, they can be required to work and will continue to be paid their normal salary. For those employees who are unable to work from home, the situation is more difficult. The Statutory Sick Pay (SSP) rules have not been amended so these employees will not be entitled to SSP on the current interpretation of the rules. They would need to fall back on any contractual sick pay provision or taking further holiday or unpaid leave. it is important to have this conversation with any employee prior to them leaving for a destination not on the list noted above to ensure that this issue is addressed.
Important to note is that this applies to England only; the devolved administrations of Northern Ireland, Wales and Scotland will publish their own specific guidance.
Statutory Sick Pay changes
The Government has further updated SSP regulations so that employees are, subject to SSP eligibility criteria, entitled to SSP because they are in a bubble with another household and someone within that bubble has COVID-19 symptoms. This will apply to employees who live on their own or single parents with children under 18 who have formed a “bubble” with one other household.
Within these amended regulations, the Government has also provided that SSP will no longer be payable to employees who have been asked to stop shielding. Please read our briefing on this issue for detail on the lifting of the shielding requirement as from 31 July 2020.
For more information
For more information please contact Matt Wort.
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