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Coronavirus Job Retention Scheme (furlough leave)

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Coronavirus Job Retention Scheme (furlough leave)

Why?

On Friday 20th March 2020, in response to the Covid-19 Coronavirus outbreak, the Chancellor Rishi Sunak announced support for employers whose businesses have been affected by the virus.  All businesses, regardless of sector, are eligible for the Coronavirus Job Retention Scheme.  The scheme permits employers to pose to their employees an option of Furloughing as an alternative to lay off or redundancy.  In doing so, the employee may then receive pay at 80% of their normal earnings (up to a max of £2500 per month), which under the scheme, the employer will then be able to claim back via HMRC.   

Although there is no set framework as yet, you can access COVID-19: support for businesses guidance and COVID-19: guidance for employees which provide basic details.

Is there eligibility criteria for Furlough?

It covers all employees on the PAYE system, including zero-hours workers and therefore will cover many workers and not just employees. Self-employed are not covered by the scheme. There is hope that a separate offer will be made to assist self-employed.

An employee must have been on your PAYE payroll on or before 28 February 2020.

The scheme also covers employees who have been made redundant since 28 February 2020, if they are rehired by their employer.

An employee on sick leave or self-isolating should receive Statutory Sick Pay, but can be furloughed after this.

Employees who are shielding in line with public health guidance can be placed on furlough.

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed. However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Employees who are unable to work because they have caring responsibilities resulting from Coronavirus can be furloughed. For example, employees that need to look after children can be furloughed.

How do I invoke Furlough?

When considering furloughing employees, you must first consult with them to gain their agreement in writing that they are willing to receive 80% of their wage. If an employee expresses an unwillingness you could make them aware that the alternatives are statutory guarantee payments (if there is a lay-off clause within their employment contract) or redundancy.

An employer can force an employee to take furlough leave if there is a lay-off clause within the employment contract.

If you are furloughing over 20 employees, you may want to consider collectively consulting with them.

You must notify employees of their Furlough status in writing and keep a record of this for five years.

Can I give employees work when they have been furloughed?

Government guidance to employees is “to qualify for this scheme, you should not undertake work for [employers name] while you are furloughed”. Therefore, it is advised that no work is requested of the employee otherwise you may not claim the refund of 80% as per the scheme. 

Formal meetings such as consultation for redundancy, disciplinary hearings and grievances hearings can still take place during the furlough period.

Can employees work elsewhere when they have been furloughed?

Employees can start a second job whilst on Furlough if allowed under their employment contract. Any term that restricts further employment during normal working hours can be waived by the employer.

An employee will be paid 80% of their wage/salary from their current employer and 100% of their wage/salary from second employer.

An employee can be prevented from working for a competitor, subject to enforcement of a clause being included within the employment contract. For clients with Elcons contracts, this clause is located in the Statement of Main terms of Employment entitled “OTHER EMPLOYMENT”.

Do employers need to notify their employees that they can obtain a second job whilst under Furlough?

It is not the employers responsibility to make employees aware of this.

What about other contractual/statutory leave during a period of Furlough?

Any form of pay curtails the scheme and therefore if staff report sick to receive sick pay this will stop eligibility for the scheme.  Maternity leave will override a period of furlough.  

Employees may be able to taken annual leave during furlough and it be paid at 80%. Employers may be able to force employees to take annual leave during the furlough period, subject to giving adequate notice in line with Regulation 15 of the Working Time Regulations 1998.

The full position on annual leave is still unclear and details are due to be published shortly.

What is the employee’s status whilst furloughed?

They remain an employee and length of service will continue to accrue.  Contractual rights will remain save for pay and benefits.

Can I put staff on furlough, bring them off furlough and then put them back on it?

It appears not.

What about staff I have already laid off or made redundant?

If you have laid staff off or made them redundant due to the effects of coronavirus and if you have done this since the 1st March 2020, you may contact these employees and pose Furloughing as an alternative.  They are under no obligation to accept.  If they do accept, you will need to confirm the new arrangement in writing.  It appears that you may not be able to claim payback if staff are laid off.

Pay – how will this work?

Your pay run will operate on its normal dates. You should pay at 80% of the normal wage.  There is no clear guidance on this as of yet.  We advise at present to pay based on contracted hours for those with set hours.

Pay for an employee whose pay varies is calculated in the following way:

If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

  • The same month’s earning from the previous year
  • 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.

Earnings include any contractual commission an employee may earn and overtime. The 80% does not include non-monetary benefits such as health insurance or a company and discretionary bonus (including tips).

We advise taking guidance from HMRC and an accountant on this point.

You can choose to top up wages to any higher percentage, but this would be a business choice and you would not be able to claim more than 80% back via HMRC.

You must consider whether paying an employee receiving 80% of their wage will take them under National Minimum Wage (NMW). There is currently no guidance on this.

Is the contribution of 80% of £2,500 or is the total £2,500 per employee?

Guidance states “HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month”.

It is assumed that all cost paid through PAYE are included in this (so including pension contributions etc.) and we interpret the guidance to mean a maximum limit of £2,500 per employee per month.  The intention also appears to be that the employee will receive £2,500 gross. However, confirmation on this point is required from HMRC.

How do we claim back money?

Companies will be required to submit information to HMRC for staff furloughed with details of their earnings.  HRMC will be setting up a new online portal for this. Grants are expected to be paid by the end of April 2020.

An employee must be furloughed for a minimum of three weeks for you to be eligible to claim under this scheme. This is consistent with the public health guidance seeking to minimise the number of people outside of their homes on a regular basis.

To claim, you will need:

  • Your ePAYE reference number
  • Number of employees being furloughed
  • The claim period
  • Amount claimed
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

You can only submit one claim at least every three weeks.

How long will the scheme run for?

Initially, the scheme has been put in place for three months and is backdated to the 01 March 2020 until 31 May 2020. They have stated that “this will be extended if required”

How do I ask am employee to return to work?

You can request an employee to return to work at any time and this will end the furlough period.  We advise that any conversations asserting your request are followed up in writing and that as much notice as possible is given to an employee regarding a request to return to work.

Disclaimer

Please note that all information contained within this document is for guidance purposes only and is subject to change upon receipt of full guidance/legislation from the Government.

Elcons Employment Law Consultants is not liable for any dispute that may arise from the information contained within this document.

 

 

 

Extension of IR35 Postponed

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The government has announced that the extension of IR35 to medium and large companies in the private sector is being postponed by a year, to 6 April 2021. The IR35 tax rules are aimed at making sure that where a contractor who provides their services through an intermediary (often their own limited company) would be considered to be an employee if that intermediary were not used, that contractor is subject to broadly the same tax and National Insurance contributions as employees.

February’s Top 5 cases

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  1. Manager who quit after ‘public dressing down’ in group email was constructively unfairly dismissed

A manager at a logistics company was constructively unfairly dismissed following a “public dressing down” in a group email from another senior manager, an employment tribunal (ET) ruled.

Fraser MacLean, who worked as a general manager for parcel logistics at Menzies Distribution, resigned without notice after he lost faith in a grievance process investigating the conduct of the company’s chief financial officer (CFO).

Paul McCourt, the firm’s CFO, emailed MacLean and 15 other staff members – including workers who MacLean managed – blaming him for the company’s poor financial performance in Scotland, which McCourt described as an “omnishambles” in the email. The tribunal ruled this email constituted a repudiatory breach of MacLean’s employment contract, and noted that a single incident of abuse was enough to find in favour of a claim of constructive unfair dismissal.

Menzies Distribution was ordered to pay more than £14,000 in compensation and lost earnings and benefits.

  1. Company director not allowed to retract his ‘heat of the moment’ resignation was unfairly dismissed, tribunal finds

A managing director has won a claim of unfair dismissal against a company he founded after his fellow bosses accepted a resignation made in anger and terminated his employment hours after he stormed out of a meeting.

An ET heard Robert Rae, former managing director of Wellhead Electrical Supplies, told his fellow directors “I won’t be back” as he left a meeting about employees’ pay. Despite contacting the directors the day after the disagreement to clarify he was not resigning, he was told his resignation had already been accepted, and he was not to interfere with the business of the company any more, or speak to staff.

The ET ruled this was an unfair dismissal, as Rae offered “no real resignation despite what might have appeared at first sight”.

  1. Disabled employee described as ‘lively’ by manager wins discrimination and harassment claims

A customer service adviser for HMRC has won claims for discrimination and harassment on the basis of disability after she was described as “lively” by her line manager.

A Manchester ET upheld a complaint of discrimination and harassment brought by Stephanie Pemberton, who has rheumatoid arthritis, over a comment from her line manager that she “can become lively when there is a flare up” in her condition. The ET noted that while the remark was “throwaway” and “not malicious or ill-intentioned”, it nonetheless had the effect of “violating Mrs Pemberton’s dignity or creating such an environment”.

HMRC was ordered to pay Pemberton £4,000 plus interest for injury to feelings. A number of other claims were dismissed.

  1. Secretary who resigned after her boss said she would not hire someone who was black was unfairly dismissed, tribunal finds

A secretary was unfairly dismissed after her managing director told her she would not hire someone who was black during a phone conversation, an ET has ruled.

The tribunal found Mrs C A Hobbs, who worked for Avon Care Homes from November 2015 until her resignation on 8 April 2019, was unfairly dismissed after she quit without notice following her managing director admitting she would not be hiring a candidate because of the colour of their skin.

Judge Christa Christensen said the racially charged actions of Avon Care Homes’s managing director, Christina Bila, “utterly undermined” Hobbs’s ability to trust her employer, and ruled the serious nature of the unlawful recruitment practices Hobbs was being asked to administer meant she was not required to raise a grievance before resigning.

  1. Lawyer denied job for being ‘expensive’ wins age discrimination case

A senior solicitor has won an age discrimination claim after being rejected for a job at a law firm because he was “expensive”, a tribunal has ruled.

A Manchester ET found Raymond Levy was discriminated against because of his age after he was denied a job at McHale Legal, despite being the only person interviewed for the role. It ruled that “expensive” was in fact “synonymous with his being an experienced and older solicitor”, and that the firm changed the job requirements to suit a more junior solicitor after it had deemed Levy unsuitable.

Vegetarianism v Veganism

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An employment tribunal has ruled that ethical veganism is a philosophical belief and is therefore protected by law. Jordi Casamitjana said he was sacked by the League Against Cruel Sports after raising concerns that its pension fund was being invested into companies involved in animal testing.

However, Vegetarianism is not currently deemed as a philosophical belief and therefore not protected by Law.

January’s top 5 employment cases

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January’s top 5 employment cases:-

 

  1. Facilities assistant fired for excessive internet browsing at work was fairly dismissed, tribunal finds

A facilities assistant was fairly dismissed after an investigation revealed her level of non-business related internet use was “substantial”, an employment tribunal ruled.

A Liverpool tribunal found national law firm Weightmans was entitled to fire Mrs T Hall, a facilities assistant who worked for the company from February 1995 to January 2019, over her internet use while at work, which included online shopping. The tribunal dismissed the claim of unfair dismissal lodged by Hall, saying the investigation and dismissal procedure followed by Weightmans was “textbook”.

  1. Female driver relocated by manager who found her attractive awarded £74,000

A Nottingham employment tribunal ruled that Kim Beaney, a driver and trainee highway inspector, had been constructively unfairly dismissed following harassing behaviour by her manager and her supervisor.

The tribunal heard that Beaney’s line manager, Grant Bosence, was attracted to her, so deliberately placed her at a depot where his friend, Steven Curtis, was supervisor, so Curtis could “extol [Bosence’s] virtues as a potential romantic interest”. In doing so, Bosence reassigned Beaney from the depot she was originally allocated.

It found that Beaney was the victim of harassment and discrimination by her colleagues, which led to her resignation a few months into her employment.

  1. Retailer constructively unfairly dismissed disabled manager after failing to make reasonable adjustments

A disabled manager at a health food shop was constructively unfairly dismissed after the chain failed to provide her with additional support, a tribunal ruled.

The East London Employment Tribunal unanimously ruled that Holland & Barrett failed to make reasonable adjustments for Miss R Harkness after it did not increase staffing hours at her store to avoid the risk of Harkness working alone, and failed to provide her with mentoring support. Harkness had raised concerns about a medical condition that meant she might have to use the toilet without notice and its impact on her ability to work on the shop floor alone.

The tribunal found this failure to make reasonable adjustments directly resulted in Harkness’s resignation in June 2018, and so her resignation was considered constructive unfair dismissal.

  1. NHS worker asked if her pregnancy was planned was discriminated against, tribunal rules

A pregnant NHS administrator was discriminated against after her manager asked if her pregnancy was planned and if the cost of her maternity leave would come out of the team’s budget, a tribunal found.

A London tribunal ruled that the comments made to Haddi Camara, a temporary employee assigned to work for the East London NHS Foundation Trust, were “objectively inappropriate and upsetting” and “manifestly made because of the claimant’s pregnancy”.

The tribunal said the comments were likely made by her line manager in frustration, as she had been considering terminating Camara’s employment and saw the pregnancy as a barrier to doing this. However, the tribunal ruled Camara had been fairly dismissed because the reason for her dismissal was budgetary pressures.

  1. Oxford professor forced to retire at 69 wins age discrimination claim

An Oxford University professor forced to retire before his 70th birthday because of the university’s employer justified retirement age policy (EJRA) was unfairly dismissed and discriminated against, an employment tribunal ruled.

The Reading Employment Tribunal found that Oxford University acted unlawfully by dismissing Professor Paul Ewart, who was head of atomic and laser physics at Oxford’s Clarendon Laboratory, because of his age. At the time of his dismissal in September 2017, Ewart was 69.

The tribunal found the EJRA, introduced in 2011 in a bid to bring younger and more diverse staff into the university, had only created a “trivial” number of new opportunities and so forcing older staff to retire was not a “proportionate” method for achieving the policy’s stated aims.

National Minimum Wage and National Living Wage increases April 2020

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Last night the Government announced the National Minimum and Living Wage increases for 2020

The National Living Wage, for those 25+ will become £8.72 p/h

The rate for 21 to 24 years olds will become £8.20 p/h

For companies that strive to give “The Real Living Wage”, set by independent experts and championed by the Living Wage Foundation, this is £9.30 an hour rising to £10.75 in London, where costs are higher.  It is earned by all workers regardless of their age.