Events are moving so quickly at the moment that it's a struggle for employers to keep up. 

With government guidance continually being updated and businesses having to implement rapid changes it's never been more important to keep on top of developments.   The guidance for employers and businesses is changing daily, and here is an update on the developments in the last few days. health of their loved ones, their jobs, their income, their businesses, their financial security".

Job retention scheme

On Friday evening the Chancellor announced a new Job Retention Scheme.  The purpose of the scheme is to support employers by funding part of their wage bill for those employees who would otherwise be out of work because of coronavirus.  All businesses are eligible, and the government guidance, 'Covid-19: support for businesses' advises employers to:

• Designate affected employees as "furloughed workers", and notify them of this change
  
  
• Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (further detail on the information required will be set out by HMRC).

Once this has been done, HMRC will reimburse the employer for 80% of furloughed workers' wage costs, up to a cap of £2,500 per month per employee.  The guidance emphasises that existing systems are not set up to facilitate payments to employers, but states that HMRC are working urgently to set up a system for reimbursement.  Payments will be available from the end of April and will be backdated to 1 March.  The scheme will be open for three months and will be extended if necessary.

Does the change have to be agreed? 

The guidance also states that "changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation".  This is not a direction that employees should be consulted, or have to agree to the change in status, but employers will need to be mindful of the implied duty of mutual trust and confidence.  Given the circumstances it is likely that most employees will readily consent, especially if the alternative being on unpaid leave or out of work.

Payment practicalities

The government has published guidance for employees, 'Covid-19: guidance for employees', which makes it clear that, in order to qualify for the scheme, the employee should not undertake work for their employer while furloughed.  It also states that the employer may choose to fund the differences between the government's 80% and the employee's salary, but does not have to.  The employee guidance states that if the employee's salary is reduced as a result of the changes, then the employee may be eligible for support through the welfare system, including Universal Credit.

The payment of up to £2,500 is to cover all employment costs. So we anticipate employers have the option of deducting employer national insurance and pension contributions from the payment rather than paying them in addition.  The payment to employees will also continue to be subject to PAYE and employee national insurance.  However, more guidance is needed to confirm precisely how this will work. 

During the time that the employees are retained they will be accruing holiday and other benefits.  But employers do have the option to put employees on annual leave (subject to complying with the notification requirements in the Working Time Regulations) as an alternative to being furloughed. 

Tricky issues

Can an employee be forced to take furlough leave?  Would it be a constructive dismissal if they are?  Provided an employer has a good business reason for designating an employee as furloughed and explains the situation to the employee, it's unlikely that employees will be able to claim constructive dismissal.  However, employers with generous redundancy policies, may find employees (especially those with long service) pushing to be made redundant instead.  

But conversely, what happens if an employer makes someone redundant rather than putting them on furlough leave?  Will it be possible to contest such a decision on the basis that it's unfair?  The employer should consider furlough leave as an alternative to redundancy as part of a fair process.    

What about employees who are expected to continue to work, while their colleagues get furlough pay?  This may certainly cause some people to become disgruntled, though in these times when job security is at risk, they may be relieved that they are continuing to receive their full salary.  It's very important that employers keep communication channels open in these times of uncertainty, and explain the reasons behind the decision to keep some people working, while letting others go off on furlough pay.

Another possibility is that employees on long-term sick may suddenly state that they wish to return to work in order to take advantage of the job retention scheme.  What happens then?  Employers should take a sensible approach.  Any employee signed off on long-term sick leave will have to get a doctor's note stating that they are fit to return.  If they are fit to return to work then their employer will have to let them return, or potentially face breach of contract and constructive dismissal claims.  Provided that they are able to carry out work they will be entitled to furlough pay, though provided that the employer is not automatically topping up the extra 20% of salary, arguably this is of little detriment to the employer in the short-term.  

Certain questions, such as how a month's salary will be calculated for those with irregular earnings, and the self-employed remain.  It is to be hoped that further detail will be available in due course.

We set out further information bout the new SSP Coronavirus Regulations in our bulletin on business transformation last week.  For more details, click here.  

Coronavirus Bill

The Government is also in the process of putting emergency legislation through Parliament to introduce various measures to deal with the crisis.  One of those is the proposed introduction of a new Emergency Volunteering Leave for workers to allow those qualified and willing to help in the health and social care sectors to do so.  Partner, Nicola Ihnatowicz, discusses more here  in our first mini-podcast.