Coronavirus (COVID-19) – Employment Law FAQs

Updated on 12 Nov 2020

Can I make just one person redundant?

Redundancy can be tricky when the employer has identified only one person, for whatever reason, as redundant. It can be much easier if the employee has less than two years continuous service but there are still risks to consider, such as the perception the employee has been dismissed. They may consider it discriminatory or because they stand by certain statutory rights like whistleblowing in the interest of the public or raising health and safety concerns. These grounds can be automatically unfair. More than 2 years’ service then they can also throw in unfair dismissal.

Redundancy must be down to business reasons where the employees work has ‘ceased or diminished’, and not because of their performance, attitude or attendance. This could lead to a claim of unfair dismissal in Tribunal. Consider your options carefully, have a clear policy and route to follow. Have the right letters on hand, at the right time.

Added: 06/05/2020 Reviewed: 05/01/2021

How do I furlough someone?

Employers can claim for employees who were employed on 30 October 2020 and on their PAYE RTI submission to HMRC between 20 March and 30 October 2020. An agreement must be in place to ‘lay-off’ a member of staff which can be done through a clause within the Contract of Employment, by introducing a Variation to Contract or by using one of the temporary options available on MyTHSP.

Where this lay-off agreement is in place then furlough leave, along with the rights to pay, continuity of employment and work related duties must be set out in a letter to the employee and retained by the employer for at least five years from the date the coronavirus job retention scheme grant is claimed. HM Revenue and Customs will require sight of these letters if they undertake an audit of the employer’s activities during this time.

Updated: 12/11/2020 Reviewed: 05/01/2021

What happens to holidays when on furlough leave?

According to the 1999 Working Time Regulations a full time employee is entitled to a minimum of 28 days paid leave per year. In the UK we usually choose to fix eight of these days for bank and public holidays, but the right is for 28 days. Furloughed employees continue to accrue leave as per their employment contract.

The Government have also permitted that employees can carry forward a maximum of 20 days over into the next 2 calendar holiday years where it has not been reasonably practicable to take it.  This ensures leave is not lost and can be utilised reasonably over a longer period of time.

Employees can take holiday whilst on furlough and holidays must be at 100% of normal pay.  Accrued leave can also be deferred and taken later in the year.

Updated: 12/11/2020 Reviewed: 05/01/2021

If an employee does not have the virus but is living with someone who does, should they be signed off sick?

They are required to stay at home for 10 days starting from the day the first person in house developed symptoms or, if they do not have symptoms, the day their test was taken.  If they are not ill but can work from home then there is no need for them to be treated as being on sick leave.

If they cannot work at home then the Statutory Sick pay scheme has been amended to make it clear that the time they spend self-isolating will count as a period of incapacity for work.  Coronavirus SSP is available to them from day 1.  The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness.

Short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

What evidence can I ask for that an employee is genuinely ill or required to self-isolate?

The normal practice of obtaining a fit note from a GP is clearly no longer a feasible option. The Government has introduced an online scheme through NHS 111 under which an employee, after answering a series of questions can be emailed an ‘isolation note’ indicating that they should remain at home either because they have coronavirus symptoms or because they should be self-isolating. This note will be deemed to be adequate evidence of their inability to work for the purposes of SSP – essentially equivalent to a fit note.

Added: 31/03/2020 Reviewed: 05/01/2021

Can an employee refuse to come to work for fear of contracting the virus?

If the workplace is not one that the Government has ordered to close then the position remains that employees can be required to work. The strong advice from Government is that the employee should work from home whenever this is possible. But where homeworking is simply not an option the advice is that employees can still travel into work.

This means that in most circumstances the employer can still require the employee to come to work as normal. This assumes of course that the employer has carried out a risk assessment and has put in place the appropriate measures so that the workplace is as safe as it can be. If the employee reasonably believes the employer is instructing the employee to work in unsafe conditions and refuses to come into work, and is dismissed as a result, that will be an automatically unfair dismissal (and the normal two years’ service is not required).

Employers will want to be sensitive to employees who have good reason to be particularly cautious because of an underlying condition or because of their contact with vulnerable people. In these circumstances – and where home working is not an option – the employee is probably best treated as either being off sick or ‘on furlough’.

Updated: 12/11/2020 Reviewed: 05/01/2021

If I am required to close my premises, am I still obliged to pay employees?

That depends on the terms of their contracts. Salaried employees will be entitled to full pay if you close the workplace unless there is a clause in the contract allowing you to lay them off for a temporary period without pay. The same goes for hourly paid employees with a minimum number of guaranteed hours. Where there is no set obligation to provide a minimum number of hours then the employer will not be obliged to pay for hours that the employee is not actually asked to work.

The furlough scheme may be available if you cannot maintain your workforce because operations have been affected by coronavirus.  If you do not have an existing clause in place within your contracts to put your employees on the scheme, you can use one of our temporary options available on MyTHSP.

Updated: 12/11/2020 Reviewed: 05/01/2021

What is the Government’s ‘Coronavirus Job Retention Scheme’ and when does it come into effect?

The Government announced a radical job retention scheme back in March 2020 to enable employers to furlough employees allowing them to pay up to 80% of their wages, capped at £2,500 per month.  The scheme is now moving into its third evolution.

The extended CJRS came in on 1st November 2020 and, after an extension announced on 17th December 2020, is set to run until 30th April 2021.

  • Employees had to be employed and on the employer’s PAYE payroll on 30th October 2020
  • Employees not previously furloughed can now be furloughed
  • Employees can be furloughed in a flexible arrangement

More details can be found on our current Extended Furlough Scheme Factsheet on MyTHSP.

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

What does furlough mean and how is it different from being laid off?

Furlough means ‘temporary leave of absence’ and it is not a term that has been used in UK employment law – until now. An employer can now designate an employee as being ‘furloughed’ meaning that they are being kept on the payroll, but not being given any work to do. This is no different from a ‘lay-off’ but the Government seems keen not to refer to it in that way. This may be because the term ‘lay-off’ is sometimes used (inaccurately) as though it is interchangeable with ‘redundancy’ – even though they have distinct and separate meanings in employment legislation.

Added: 31/03/2020 Reviewed: 05/01/2021

Which employees are covered by the scheme after 1st November 2020?

Potentially, any employee, on any type of employment contract, who was on the employer’s PAYE system by 30th October 2020 is covered.

Foreign nationals are eligible to be furloughed. Grants under the scheme are not counted as ‘access to public funds’, and you can furlough employees on all categories of visa.

Employees who are transferred under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations 2006).) or PAYE business succession rules apply to the change in ownership subject to employees being:

  • transferred from their old employer to their new employer on or after 1 September 2020
  • employed by either their old employer or new employer on 30 October 2020
  • on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee

The employer is unable to claim furlough for any employee currently working under notice.

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

Does the scheme apply to zero-hours contracts?

Yes, zero-hour staff will be included provided they are paid through PAYE. Those who are not on the payroll will not qualify under the furlough scheme but could benefit from a separate scheme aimed at the self-employed. This is something that they will need to pursue directly with HMRC.

Updated: 12/11/2020 reviewed: 05/01/2021

Does the scheme apply to agency workers?

Yes. Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved.

As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them during hours which you record them as being on furlough, including performing such work through or on behalf of the agency for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can we choose which employees to place on furlough and which to ask to come into work?

It will be for the employer to designate an employee as furloughed in which case the choice of who to place on furlough will be essentially one for the employer to make. It would be sensible when making the choice to take into account the personal circumstances of individual employees. Those with caring commitments for example might find it much harder to continue working (even from home) than those without. Ultimately however the employer will be able to make its decision based on the needs of the business ensuring that it retains access to the skills and experience that it needs to continue operating as best it can.

Updated: 12/11/2020 Reviewed: 05/01/2021

What wages will the extended Coronavirus Job Retention Scheme (CJRS) cover? How will pay be calculated?

From 1st November 2020, through to 30th April 2021 the extended CJRS will cover 80 per cent of wage costs to a maximum of £2,500 per month.  The employer will be expected to cover the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

The amount payable will be based on the employee’s normal salary.  Dependent on whether the employee has been furloughed previously the pay reference periods and calculations will be different.  For those previously furloughed (before 31st October 2020) the pay reference period will be the last pay period ending on or before 19th March 2020, for those not previously furloughed under the CJRS, the reference period is the last pay period ending 30th October 2020.

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

Could we temporarily increase the pay of employees so that they can recover more under the scheme?

No, the pay reference periods refers to past payments from the employee’s PAYE records have been fixed by the government in line with the schemes coming into operation.

For those previously furloughed (before 31st October 2020) the pay reference period will be the last pay period ending on or before 19th March 2020, for those not previously furloughed under the CJRS, the reference period is the last pay period ending 30th October 2020.

Updated: 12/11/2020 Reviewed: 05/01/2021

Does it only apply if we don’t pay the wages – or will we be able to recover wages that we have already paid?

Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day.

The guidance continues to emphasise that HMRC will retain the right to retrospectively audit all aspects of an employer’s claim.

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

Can I bring back employees who have already been made redundant?

If an employee was made redundant from their job shortly before 1st November 2020 the ex-employee can ask you to re-hire them so that they can be furloughed.  The employee must have been on the RTI Payroll on 23rd September 2020.

However, there is no obligation for you to take this step.

Updated: 12/11/2020 Reviewed: 05/01/2021

What do I have to do to bring employees within the scheme?

The guidance published by the Treasury says that employers will need to designate affected employees as ‘furloughed workers’ and notify them that you have done so.

Each pay period the employer will be required to claim for the furlough grant using the designated HMRC portal which will require details of each employee being claimed for (Name and NI number) as well as their working patterns – calculated in hours.

The guidance emphasises that HMRC will retain the right to retrospectively audit all aspects of an employer’s claim.

Updated: 12/11/2020 Reviewed: 05/01/2021

Do I have to place all of my employees on furlough, or can I be selective?

It is clear that the Treasury does not envisage an all or nothing approach. Some employers will need to maintain a skeleton staff even if the majority of their operations are shutting down. Some will only need to send a relatively small proportion of their employees home while other parts of the business carry on almost as normal.

Ultimately however the employer will be able to make its decision based on the needs of the business ensuring that it retains access to the skills and experience that it needs to continue operating as best it can.  The scheme allows for flexible furlough if the employer has some wok available to their employees.

It is clear that employers and employees will be able to benefit from the scheme in either scenario.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can we change which employees are furloughed at any one time – can an employee be furloughed, brought back to work and then furloughed again?

Yes, under the extended CJRS an employer can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can we place sick employees on furlough or do we have to keep paying them SSP?

The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness.

 

If your employee is on sick leave or self-isolating as a result of coronavirus, they may be able to get Statutory Sick Pay (SSP).  The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness.

Short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers 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 an employee is:

  • unable to work because they are clinically extremely vulnerable
  • unable to work because they have caring responsibilities resulting from coronavirus (COVID-19), including employees that need to look after children

They are eligible for the grant and can be furloughed.

Updated: 12/11/2020 Reviewed: 05/01/2021

What if a furloughed employee becomes sick?

Furloughed employees retain their statutory rights, including their right to SSP. This means that furloughed employees who become ill, due to Coronavirus or any other cause, must be paid at least SSP.

If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary.

If employers keep the sick furloughed employee on the furloughed rate for the period that they are sick, they remain eligible to claim for these costs through the furloughed scheme.

Updated: 12/11/2020 Reviewed and Updated: 05/01/2021

Could someone return early from maternity or adoption leave to benefit from the furlough scheme?

The normal rules for statutory parental leave, such as maternity, shared parental, adoption paternity or parental bereavement leave and pay apply.

If the employee decides to end their maternity or statutory leave early to enable them to be furloughed (with the employers agreement), they will need to give the employer at least 8 weeks’ notice of their return to work and the employer will not be able to furlough them until the end of the 8 weeks.

Updated: 12/11/2020 Reviewed: 05/01/2021

The furlough scheme does not pay all of an employee’s salary – do I have to top up their pay to the full amount?

The guidance says that this is voluntary – but it is in reality a matter for the contract of employment. For most employees on a salary, or with a guaranteed minimum number of hours the employer remains obliged to pay the employee in full if it is not in a position to offer work. To that extent the furlough scheme subsidises the employer’s wage cost but does not replace the obligation to pay wages.

If there is a clause in the contract allowing the employee to be laid off without pay then the payments made under the furlough scheme will be in addition to the employee’s contractual entitlement and there will be no obligation to top up the employee’s pay to the full amount.

This means that even with the benefit of the furlough scheme the employer may be facing a substantial contractual obligation to employees for whom it can provide no work. One option is to agree a temporary reduction in salary so that the amount paid by the furlough scheme represents the full amount to which the employee is entitled. The employer could make the employee’s consent to such a change dependent on the employer designating them as furloughed rather than making them redundant.

A letter designating an employee as being furloughed can be found on MyTHSP.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can I reduce the hours that employees work?

This depends on the terms of the contract. The more important question is likely to be whether an employer is able to reduce the pay of an employee who has been given fewer hours to work. Very few employees will actually have a contractual entitlement to work a full working week provided that the employer is prepared to pay them as normal. Where the employee’s reward package is dependent on commission or a bonus paid on output then there may be an argument that the employer is in breach of contract if they do not give the employee the chance to work a full week. In the circumstances of the current crisis however, there must be a strong argument that it would not have been possible to earn much commission anyway.

Added: 31/03/2020 Reviewed: 05/01/2021

What does a reduction in hours mean for pay?

This depends on the terms of the contract. If there is a clause within the employees contract to enforce short time working and reduced pay then pay can be reduced, usually on a pro rata basis of the normal contractual hours worked.

If there isn’t a clause allowing for a reduction in hours and / or pay a salaried employee whose hours are reduced will still be entitled to be paid in full unless they agree otherwise – perhaps as an alternative to redundancy.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can I instruct employees to take annual leave if I cannot offer them work?

Under the Working Time Regulations an employer can instruct a worker to take annual leave by giving notice that is at least twice the duration of the leave that must be taken. So if the employer wants the employee to take two weeks’ of annual leave entitlement then it must give the employee four weeks’ notice of this. There is of course nothing to stop employers and employees from agreeing that any given period without work should be treated as annual leave.

Updated: 12/11/2020 Reviewed: 05/01/2021

Can I instruct employees to take annual leave while they are on furlough?

Yes.  An employer can enforce holiday during a period of furlough under the Working Time Regulations.  Any period of holiday taken during furlough must be paid their usual holiday pay in accordance with the Working Time Regulations i.e. their normal rate of pay or, if their pay is variable, their average pay received over the previous 52 working weeks.

Updated: 12/11/2020 Reviewed: 05/01/2021

What about taking annual leave if they are off sick or self-isolating?

An employee can request to take annual leave as opposed to being on SSP however it is well established that a worker cannot be forced to take annual leave while off sick.

Updated: 12/11/2020 Reviewed: 05/01/2021

How do I stop too many employees taking what is left of their annual leave later in the year?

The Government has amended the Working Time Regulations to allow employees who have been prevented from taking their basic four-weeks (20 days) of annual leave entitlement to carry over that leave for up to two years. Where it is not reasonably practicable for employees to take their full entitlement this year, they will be able to defer their remaining leave to next year. The additional leave of 1.6 weeks (the further 8 days of statutory leave) must still however be taken in the current holiday year.

The Regulations also make it clear however that the employer can only defer the employee’s request to take annual leave where it has ‘good reason’ to do so. While a rush in demand for leave towards the end of the year may well satisfy this requirement, the employer should make every effort to accommodate requests for leave where possible.

Added: 31/03/2020 Reviewed: 12/11/2020

Does the prospect of the furlough scheme make it unfair to make employees redundant?

It will certainly be a relevant consideration. There may well be circumstances in which any reasonable employer would conclude that the job retention scheme means that there is no need to make employees redundant. The extent to which the employer could recover its wage costs by placing employees on furlough will certainly affect the reasonableness of any decision to proceed with redundancies.

The job protection scheme does not in itself protect employees against redundancy. Nor does it cover all of the costs associated with employing somebody. In the absence of an agreement from an employee to accept the sum provided by the scheme for the duration of the furlough, and depending on the terms of the contract, the employer of furloughed employees could still be facing considerable costs.

It would seem likely however that an employment tribunal would take the view that a reasonable employer would at least explore the options presented by the scheme and whether an employee would accept the associated drop in pay for the duration of the furlough before concluding that employees should be made redundant. While the scheme itself does not require employers to take part, it is difficult to see why an employer would refuse to at least consider doing so and discuss the matter with employees who would otherwise be made redundant.

The employer cannot claim the furlough grant for any employee during their notice period.

Reviewed and Updated 05/01/2021

Can employees be furloughed during their notice period?

No.  The furlough grant cannot be claimed for an employee during their notice period.

Reviewed and Updated: 05/01/2021

Can a furloughed employee still claim a redundancy payment if laid off for four weeks or more?

No. There is an incredibly complicated procedure under which an employee who is laid off without pay can claim a redundancy payment after four weeks when there is not likelihood of a return to normal working within the next four weeks. To qualify, however, the lay-off in question must be unpaid or be on short-time working and in receipt of less than 50% of a normal week’s pay for the work they do.

If an employee is fully furloughed under the CJRS they will bee in receipt of 80% of their earnings, up to £2,500 per month (or more if agreed with their employer) while not doing any work for their employer.

Where an employee works some hours under a flexible furlough arrangement, it is possible that they could be in receipt of less than 50% of their normal wages, if they are a higher earner and work only a few hours under the arrangement.

Updated: 12/11/2020 Reviewed: 07/01/2021