Covid-19

Importantly there is a cut-off date of 10 June 2020 (next Tuesday) to furlough an employee who hasn’t previously been furloughed but who is eligible for the scheme.  The reason being that the scheme will be closed to new entrants after 30 June 2020.  From 1 July, you will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.  So if you are pondering putting an additional employee on furlough, you need to make a confirmed decision as soon as possible.

Any claims to be made under the current scheme (i.e. claims for the period up to 30 June 2020) must be made by 31 July 2020.

Changes to CJRS rules:

From 1 July 2020, the scheme rules change and are different for each successive month up the end of October when the scheme is due to close entirely.

From July, claim periods will no longer be able to overlap calendar months and the number of employees you can claim for in any claim period cannot exceed the maximum number you have claimed for under any previous claim under the current CJRS.

From 1 July 2020 :

• you may be able to change the working patterns of furloughed employees and allow them to work part time.  This only applies to employees furloughed who are already on furlough as at 1 July and have been furloughed for a minimum of 3 weeks prior to 30 June.
• you will be permitted to furlough employees for only part of their working week.  When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns. Further guidance on flexible furloughing and how employers should calculate claims is due to be published by the government on 12 June.
• There is no change to the furlough claim for those who you still want to be on full time furlough.  For the month of July, you may continue to claim the lower of 80% of wages or £2,500 per month as well as claim employer NICs and minimum pension contributions (this changes though from 1 August onwards, see below).

From 1 August 2020:

• you can claim the lower of 80% of wages or £2,500 per month.
• You will no longer be able to claim employer NICs and minimum pension contributions.

From 1 September 2020:

• you can claim 70% of wages up to a cap of £2,187.50 per month.
• You will have to pay 10% of wages to make up the minimum 80% total you need to pay staff up to a cap of £2,500 (you can choose to top up the payment as before).
• You will not be able to claim employer’s NICs and minimum pension contributions.

From 1 October 2020:

• you can claim 60% of wages up to a cap of £1,875 per month.
• You will have to pay 20% of wages to make up the minimum 80% total up to a cap of £2,500 (you can choose to top up the payment as before).
• You will not be able to claim employer’s NICs and minimum pension contributions.

The scheme is due to end on 31 October 2020.

There is a useful government factsheet which provides more information: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/888764/Factsheet_for_SEISS_and_CJRS_schemes.pdf

You may need to obtain employment law advice for this precise scenario.

The general guidance from HMRC has changed on sick leave and furlough since the scheme was first announced.  The general position is that employers who want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees.  In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee.

If your employee becomes sick while furloughed (and we presume this also means going on longer term sick leave part way through their furlough leave), it is up to the employer to decide whether to move the employee onto SSP or to keep them on furlough, at their furloughed rate.

Employers are entitled to furlough employees who are currently being shielded or currently on long-term sick leave. It is up to employers to decide whether to furlough these employees.  You cannot of course claim both SSP and the furlough scheme grant for these employees at the same time.

The amount to pay may depend on whether the firm is topping up their salary to above the furloughed rate.  If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary.  SSP is likely to be lower than furlough pay and so an employee will have no incentive to declare themselves sick.

If the firm provides enhanced company sick pay in its contracts of employment, then this should be considered. Employers will need to decide what to do and it may be preferable to agree that company sick pay is suspended.

Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP.  If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.

Note however that the last date for furloughing a new member of staff will effectively be 10 June 2020.

Furloughed employees must have been on your PAYE payroll on 19 March 2020 (that is you must have notified HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020) so the scheme will not cover newer employees who were not on your payroll by that date.

Employees on unpaid leave are not eligible unless they were placed on unpaid leave after 19 March 2020.

The scheme does cover employees who were made redundant since 19 March 2020, but you need to rehire them.

Yes, trainee solicitors are employees and can be furloughed. There are obviously some issues regarding their training contract but the SRA has produced a Q&A to explain its approach to education and training, for areas such as the QLD, LPC, Professional Skills Course and period of recognised training:

https://www.sra.org.uk/sra/news/coronavirus-questions-answers/

The employer may need to extend the training contract by the length of time the trainee is on leave.  A training contract is not less than 2 years, but it can be extended for illness and other leave. The Q&A suggests that the employer needs to inform the SRA of the end date but this wouldn’t be known yet so the firm may need to wait until the furlough has ended and then they can plan the remainder of the training contract and advise the SRA accordingly.

Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.

The latest information from the government confirms that individuals with an outstanding in-country application under Tier 2 or 5 can be furloughed.

https://www.gov.uk/guidance/coronavirus-covid-19-advice-for-tier-2-4-and-5-sponsors#if-you-cannot-pay-the-salaries-of-sponsored-employees-because-youve-temporarily-reduced-or-ceased-trading

This provides confirmation that you can temporarily reduce the pay of your sponsored employees to 80% of their salary or £2,500 per month, whichever is the lower.

Any reductions must be part of a company-wide policy to avoid redundancies and in which all workers are treated the same.

These reductions must be temporary, and the employee’s pay must return to at least previous levels once these arrangements have ended.

A new employer is eligible to claim under the scheme in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

The scheme is effective from 1 March 2020 (it was backdated so as to apply from then). The end date has been extended to 31 October 2020.

The minimum period for which an employee can be furloughed is three weeks.

Employers can only submit one claim every three weeks.

Claims can be backdated to any date from 1 March onwards, but only where the employees concerned have not been carrying out any work for you in the interim period.

It is up to the firm to decide who can be furloughed. The guidance suggests who could be deemed a key worker, but it must be for the firm to determine what their business needs are and who is critical to that particular business.

An employee cannot demand to be furloughed. Some employees will be deemed essential to the ongoing running of the business and to ensure that services can be provided to clients. Some roles are less essential, or their work may not easily be conducted from home. Employers will have to make those difficult decisions.

An employer should look to apply fair and reasonable selection criteria just as if it were conducting a redundancy exercise.  In the present circumstances, it is hoped that all parties recognise that firms are having to implement furloughing very quickly to safeguard as many jobs as possible for the long term and to keep the business going.

All firms should seek to consult with employees if this is practicable and any firms who are looking to furlough 20 or more employees will probably find that the collective consultation rules apply. These rules provide that where possible you should consult with the unions or, if none, elected representatives and file an HR1 form. https://www.gov.uk/government/publications/redundancy-payments-form-hr1-advance-notification-of-redundancies

Assuming there is no recognised union and no elected representatives then you can probably take a view that these are extraordinary circumstances and instead suggest ‘special circumstances’ arise. You could then simply consult with employees directly, but you may take the view that the form HR1 should still be filed. If this applies, you may want to seek employment law advice.

An employee’s employment rights are unaffected. Normal employment law applies if a firm seeks to terminate a contract of employment or make someone redundant after the period of furlough expires.

There probably isn’t any need to do this. Furloughed staff will need to be fully aware that they cannot undertake any work for you. You may however still want to be able to get hold of your staff and keep in touch with them (especially about any extensions to furlough). Some staff may need to be taken off furlough leave (or the furlough leave may not be extended) and resume home working so it makes sense that they continue to have the means to do that as required.

The minimum period is three weeks.

Until the end of July 2020, the scheme allows a firm to ‘re-claim’ 80% of the wages of furloughed staff (up to £2,500 per furloughed employee per month). The scheme itself does not prevent payments being delayed.

For an employer to claim the grant it has to pay its staff and so you will continue to run your payroll as normal. Unless agreed otherwise with the employee(s), you would pay your furloughed employees on their standard day of pay – this would be either the 80% (or up to £2500 as applicable) or their normal pay (of which you are effectively topping up the furlough pay to that which you are contractually obliged to pay). Standard employment law applies and the terms of the employment contract will stand unless you agree with the employee to alter the terms during this period (such as reducing pay to the amount of the furlough claim but not less or paying on a later date).

If you wanted to delay making payments to staff until HMRC had made these repayments, then this could be dealt with through agreement with the furloughed employees. However, a firm should consider what affect this may have on employees.

From 1 August 2020, the amounts you can claim are different, see: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/888764/Factsheet_for_SEISS_and_CJRS_schemes.pdf

Most Contracts of employment used by law firms will unlikely have a ‘lay-off’ clause that allows you to lay off staff or reduce salary and so some form of consultation and agreement will need to be reached with staff for temporary amendments to their contracts of employments.

The scheme does not mean that usual employment law rules do not apply.

If you need to reduce their pay to the furloughed amount then you can attempt to agree with your staff that their pay for the period of furlough will be reduced to 80% of their standard pay (up to the cap of £2,500). In the present circumstances, one would hope that most, if not all, employees will accept that going on furlough and accepting the pay cut and with the hope that their job can be preserved for the long term is preferable to being made redundant.

You must write to the employees affected and should agree the amendment to the terms in their contract of employment.

The official guidance states:

“Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.”

You can make a claim every three weeks and it does not suggest that a claim has to cover the whole month and in fact the scheme has been designed to allow for flexibility so that furloughed staff can be brought back to work if required.

As part of the claim you would confirm the claim period (start and end date) and amount claimed (per the minimum length of furloughing of 3 weeks).

The guidance states that you should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

Furloughed workers statutory minimum holiday entitlement of 5.6 weeks per year will continue to accrue while they are furloughed. The exact amount will vary depending on how much leave the employee has already taken.

You can seek to vary the employment contract and ask for employees to agree to any contractual (as opposed to statutory) holiday not to accrue during furlough.

However, you may be content that workers can now carry-over up to four weeks’ holiday into the next two holiday years.

It may be that some employers may alternatively insist employees take holiday during the furlough period. In that case, the employers would then have to pay any holiday pay in full but could claim for the 80% grant towards this. You should consider though whether compelling employees to use their holiday entitlement when they can’t really leave their house would be a popular decision with your staff.

There is no restriction on contacting furloughed staff and there are various reasons why this should be encouraged. The only caveat is that furloughed employee cannot provide services to or generate revenue for, or on behalf of your firm.

The furlough period would not automatically continue but the firm may extend it in line with any government extension. This would be something to document in your agreement letter.

You could put someone on furlough until the end of June (in line with the current end date of the scheme) but you could indicate that you may end the furlough sooner if there is a need. Similarly, you can make provision for extending the furlough period. It would probably be essential to write to the employee before the end of the current furlough leave and give them notice if it is being extended or not.

The online portal is now available and has been from 20 April 2020.  Employers should pay their staff at the normal payroll dates (unless they agree a later date with the employees – remembering that this is another contractual term you are amending in their contract and amendment of this term would be more difficult for employees to cope with).

The scheme is designed to reimburse the employer for payments already made. If this causes cashflow issues, then the employer may need to look to loan facilities.

All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees. These should be paid by the employer as normal, but you can claim the costs back as part of the scheme up until end July 2020 (employers need to pay these costs after 31 July 2020).

The claim will be for the NICS and minimum pension contributions based on the 80% of the salary (or cap of £2500).

Therefore, this may not cover all of the payments to be made by the employer including:

• additional National Insurance or pension contributions an employer makes because they chose to top up the employee’s salary above the 80% (or above £2500 as applicable)
• any pension contributions made that are above the mandatory auto enrolment employer contribution

Wage costs are confirmed as follows:

Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
     o the same month’s earning from the previous year
     o average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

You can claim a grant from HMRC to cover both the wages for a furloughed employee (as set out above) plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.

For the current scheme (until end June 2020), if an employee is furloughed then they can take part in volunteer work or training but only long as it does not provide services to or generate revenue for, or on behalf of your organisation. It is difficult to see what work could be deemed to be non-profit making. You certainly cannot pay the staff for any work in this period. If the staff member is required to work, they should not be furloughed as the scheme is designed to cover instances where the firm cannot offer the employee work and would otherwise be considering redundancy.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for the current scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

The scheme rules change from July 2020 and this will permit employers to furlough employees for only part of their working week.  When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.

The grant covers the lower of 80% of an employee’s wage or £2,500 plus the NICs and the minimum auto enrolment pension contributions (based on that same 80% or £2,500 figure). The grant is therefore for a maximum claim of £2,500 gross per employee (plus NICs and auto enrolment) – the Government has confirmed this equates to a salary of £30,000. This may be significantly less than an employee’s actual salary. There is no size limit on the employer’s eligibility, so the same scheme is potentially applicable to all employers. The wage rate is capped at the same amount of £2,500.

The grant may not reimburse an employee’s full salary. It will be up to the employer to agree with the employee whether they will still pay the full salary or only the amount which will be reimbursed.

The scheme is effective from 1 March 2020. The government’s decision to backdate the scheme to 1 March was designed to cover employees who had already been made redundant since 28 February 2020, but they need to be rehired by their employer to qualify for the scheme.

The grant will start on the day the employee is placed on furlough and the scheme guidance does state that this can be backdated to 1 March but of course they can only be backdated for staff who have not been working for you at all in that period.

You cannot furlough someone until they stop work for you. Furthermore, you cannot simply place someone on furlough leave. This has to be with their agreement and so an employer would need to have full knowledge of what work the employee has been doing. If these discussions are only happening now then the furlough leave will realistically probably only be effective from the current date onwards, in which case the present amount of furlough leave will be for two - three months, as applicable, to 30 June 2020 (although this could be extended).

An employer can ask an employee to go on furlough and then propose what this means for their individual contract of employment. However, an employee has the right to refuse to accept to go on furlough leave although they will have to accept that they may well be at risk of redundancy or termination of employment, depending on the circumstances of the employer.

Without knowing the background to this matter, it is difficult to advise. An employee should get their standard pay as per their employment contract for the time before it was agreed the furlough leave was to take effect. Whether the employee gets 80% or more after that (i.e. during the period of furlough) is something that must be agreed with the employer. The default position is that the employee would be paid what their contract of employment provides (normally this would be 100%) but this may then be reduced by agreement although, in some limited cases, an employment contract may have a clause in it which allows the employer to amend the contract and reduce hours and pay without the employee’s agreement being required. In many cases, employers will seek to agree to pay the reduced 80% as the alternative would be redundancy. This is entirely a matter for an individual employer and employee though and if there are concerns or this cannot be agreed, then normal employment laws apply and either party may need to seek employment law advice.

If the new job was started by 19 March, the new employer may be able to claim for the employee that was employed as of 19 March 2020 and was on their PAYE payroll on or before that date; this means that the new employer will have made an RTI submission notifying HMRC of payment of you as an employee on or before 19 March 2020.

It is possible for the old employer to take you back and furlough you but it is entirely up to the individual company as to whether they wished to do so.

Updated guidance from HMRC confirms that employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for an employer after that, and prior to 19 March 2020, can also qualify for the scheme if the former employer was to re-employ them and put them on furlough.

If an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer/s should not re-employ them, put them on furlough and claim for their wages through the scheme.

Employees on zero hour contracts are eligible to be furloughed provided that they are employees albeit on flexible contracts and are on their employer’s PAYE.

The guidance on this has changed significantly since the scheme was first promoted.

If employers want to furlough employees for business reasons and they are currently off work (due to sickness and, it is presumed this includes a period of self-isolation where they are currently entitled to SSP), they are eligible to do so, as with other employees. The start date of the furlough will be the date that agreement is made. In these cases, the employee should no longer receive sick pay from that date and would be classified as a furloughed employee and be entitled to receive an amount equivalent (or greater if agreed) to the furlough pay.