Client Alert
COVID-19 Update – What Do the Latest Proposals Mean for UK Employers?
27 Mar 2020
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On 23 March 2020, Boris Johnson announced that the UK would effectively be going into “lockdown” for a period of at least three weeks, in order to tackle the spread of coronavirus. This means closing all non-essential shops and public spaces and banning public gatherings of more than two people. Individuals are only allowed to leave their house for one of four reasons: shopping for basic necessities, one form of exercise per day, medical need or travelling to and from work, but only where this absolutely cannot be done from home.[1] The police will have powers to enforce these restrictions through issuing fines, although, unlike in some other countries, there is not (yet) a requirement for individuals to carry documentation explaining why they are not in their house.
These restrictions will, of course, have a huge impact on every aspect of life and will place employers, employees and the self-employed in a situation that would scarcely have been imaginable even a few weeks ago. The UK Government has announced a number of proposals designed to assist businesses and protect workers – and the self-employed – financially throughout the coming months. Most notably, these include (i) a funded furlough scheme – the “Coronavirus Job Retention Scheme”[2] (the “Scheme”), which will be available to all businesses in the UK to avoid layoffs; (ii) a “self-employed income support scheme”; and (iii) changing the rules on payment of statutory sick pay. The UK Government also announced cash-flow assistance measures to help business during this difficult period.
In this alert, we will:
- Examine the Scheme in further detail;
- Explain the latest changes to statutory sick pay rules;
- Consider the position for self-employed workers; and
- Provide answers to some commonly asked questions.
The Coronavirus Job Retention Scheme – What Is It and How Will It Work?
The Scheme will provide support to eligible UK employers to enable them to continue paying part of their employees’ salaries during the crisis period. All UK employers (whether small, medium or large companies) whose operations have been severely affected by COVID-19 are potentially eligible.
The latest guidance for employers regarding the Scheme, including the information required in order to be able to make a claim, can be found online. The key features of the Scheme are as follows:
- The Scheme will apply to all furloughed employees paid through an employer’s PAYE payroll system, including employees on agency contracts and employees on flexible and zero-hours contracts.
- Under the Scheme, Her Majesty’s Revenue & Customs (“HMRC”) will issue a grant to cover the lower of 80% of a furloughed employees regular wage (excluding fees, commission and bonuses) or £2,500 per month, plus the associated Employer National Insurance contributions (“NICs”) and minimum automatic enrolment employer pension contributions on that subsidised wage.
- Employers can choose whether or not to top up the remaining 20% of wages, but employer NICs and pension contributions on any such top up will not be covered by the Scheme.
- HMRC will publish further guidance on how employers should calculate claims for employer NICs and pension contributions before the Scheme goes live.
- The Scheme will be open to all employers for at least three months from 1 March 2020 and will cover employees who were made redundant since 28 February 2020, if the employee is re-hired and placed on furloughed leave by their employer, as well as employees who have been placed on unpaid leave since that date.
We understand that HMRC is working urgently to set up a system to facilitate payments, and it intends to be in a position to make payments by no later than the end of April 2020.
Emergency Changes to Statutory Sick Pay Rules
Statutory sick pay (“SSP”) is paid by employers to employees who are incapable of work due to sickness. This is currently paid at a flat rate of £94.25 for up to 28 weeks. Prior to the new measures described below, SSP would only be paid on the fourth consecutive day that an employee is sick.
On 13 March 2020, the UK Government extended the Statutory Sick Pay (General) Regulations 1982 to include those who are self-isolating due to coronavirus.[3] In these circumstances, the employee will be eligible for SSP, and payments will be backdated to 13 March. The employees do not need to have been diagnosed with coronavirus. Rather, the entitlement extends to employees that are “isolating [themselves] from other people . . . to prevent infection or contamination with coronavirus,” in accordance with guidance from Public Health England, National Health Service (“NHS”) Scotland and Public Health Wales.[4] This, however, only applies to employees that cannot work due to self-isolation. Those working remotely will not be entitled to SSP and should be paid as normal for the work that they are doing.
The Coronavirus Act 2020 (the “Act”), which received Royal Assent on 25 March 2020, provides further that (i) the current rules surrounding SSP will be amended with effect from 13 March 2020 such that SSP will be payable from the first day of incapacity (as opposed to the fourth day) if an employee’s incapacity is due to coronavirus[5] and (ii) HMRC will have the power to fund payment of SSP by employers in respect of coronavirus-related incapacity (rather than relying on employer funding).[6] Further legislation will be required in order to give effect to these changes, so we await specific details regarding how these changes will work in practice.
See further guidance surrounding the UK Government’s proposals in respect of SSP, together with additional advice for businesses.
What Are the Protections for the Self-Employed?
The UK Government has previously announced the following measures to enhance protections for
self-employed workers who are unable to work for reasons related to COVID-19, such as, for example, illness, self-isolation or business closures:
- The self-employed income support scheme: On 26 March 2020, the Chancellor announced that the UK Government will be putting in place a new self-employed income support scheme. Under the scheme, any self-employed person with trading profits of up to £50,000 per year whose business is adversely affected by coronavirus will be able to apply for a taxable grant that would cover up to 80% of monthly profits, up to a cap of £2,500. The amount of the grant will be calculated based on the previous three-years’ earnings and will be paid in a lump sum. This scheme will only be available to people who have already registered as self-employed and who have filed their 2019 tax return. It is hoped that people will be able to access this scheme no later than the beginning of June and the grant will be available for at least three months, and longer if necessary. See further details about the scheme.
- Universal Credit: New measures announced on 20 March 2020 means the minimum income floor will be suspended until the coronavirus outbreak is over. This means self-employed people can now access Universal Credit in full at an equivalent rate to SSP. There will also be an increase in standard Universal Credit of £20 a week.
- Taxes: Self-assessment tax payments due on 31 July 2020 have been deferred to 31 January 2021. The next quarter of VAT has also been deferred until the end of the financial year.
FAQs for UK Employers
1. What are the current rules on layoffs/reduced hours working?
2. Can employers enforce a period of unpaid leave?
3. Can employers defer start dates for future joiners?
4. How much do employers have to pay employees who are self-isolating?
5. Are there special rules for paying employees who are in the “vulnerable” groups?
6. Do employers have special duties towards pregnant employees?
7. Must employers allow employees to work from home?
10. Do Health and Safety requirements extend to homeworking?
11. What about data security when employees are remote working?
1. What are the current rules on layoffs/reduced hours working?
Unless the employment contract includes a contractual right for the employer to temporarily lay off the employee (meaning that the employee remains employed but does no work and receives no pay) or place the employee on reduced hours with reduced pay, the employer will have to obtain the employee’s agreement to do so. Unilaterally reducing an employee’s salary could amount to a breach of contract and/or an unlawful deduction from wages. Accordingly, employers seeking to implement such changes would need to consult with employees and seek their agreement to the changes.
Given the proposals set out under the Scheme, employees who would otherwise have been laid off without pay may now be able to receive pay under the terms of the Scheme. As noted above, however, the Scheme will only be payable in respect of employees who are still employed but not working at all and so would not apply to employees who have agreed to work reduced hours with reduced pay. This could give rise to requests from employees who are currently working reduced hours to be placed on furlough leave so that they benefit from payments made under the Scheme. An employer is under no obligation to agree to such requests, although it should clearly document the criteria it has used to identify which employees should be placed on furlough leave to reduce the risk of claims for discrimination.
2. Can employers enforce a period of unpaid leave?
As above, unless the employment contract includes a contractual right to lay off staff, an employee would have to agree to take unpaid leave. Again, though, it is hoped that the introduction of the Scheme will reduce the need for employers to take this step. It is worth bearing in mind that employers can require employees to take a period of annual leave, although the employer must give the employee twice as much notice as the required leave (so 10 days’ notice if requiring the employee to take five-days leave).
3. Can employers defer start dates for future joiners?
Deferring the start date would normally be a matter for agreement between the employer and the candidate. If the candidate does not agree to deferring the start date, then the employer could consider withdrawing the offer. This will be more straightforward if the offer has not been accepted (as there will be no contract in place). If the offer has been accepted, the employer would need to give notice under the contract. The reasons for withdrawal should be clearly documented and communicated, so as to avoid any potential allegation of discrimination from the candidate.
4. How much do employers have to pay employees who are self-isolating?
Self-isolation is deemed as “incapacity” under the latest Government guidelines and so an employee who is unable to work whilst self-isolating will be entitled to statutory sick pay. If an employee is self-isolating but still able to work from home, they will be entitled to their normal pay. Employers should also check internal policies that may provide for continued pay or benefits during work stoppages.
5. Are there special rules for paying employees who are in the “vulnerable” groups?
On 16 March 2020, the UK Government “strongly advised” employees who are aged over 70, under 70 with underlying health conditions and/or who are pregnant to be particularly stringent regarding social distancing, which includes working from home where possible.[7] Clearly, if employees who fall within this group can work from home then they will continue to be paid as normal. If, however, an employee in this group is unable to work from home, the current position would appear to be that those employees would be entitled to SSP or company sick pay (if offered by the employer). The employer might also be able to place the employee on furlough leave and obtain relief under the Scheme if they satisfy the requirements of the Scheme. It is hoped that the UK Government will put further measures in place to assist employees who fall within this group given that they might be required to self-isolate for a number of weeks or, potentially, months.
6. Do employers have special duties towards pregnant employees?
Employers already have specific duties to protect the health and safety of pregnant employees under the Management of Health and Safety at Work Regulations 1999. These include carrying out a workplace risk assessment for new or expectant mothers and altering working conditions to alleviate any such risks.[8] If it is not reasonable to alter working conditions for pregnant employees, the employee should be offered a suitable alternative or, if suitable alternatives are not available or the employee reasonably refuses the alternative work, the employer must suspend the employee on full pay.[9]
Pregnant employees fall within the vulnerable group who have been strongly advised by the UK Government to self-isolate and work from home if possible. If the nature of the employee’s work means they cannot work from home and there are no suitable alternatives, employers might have to consider suspending the employee on full pay.
7. Must employers allow employees to work from home?
The UK Government has confirmed that employees should only be travelling to and from work if the work absolutely cannot be done from home. Accordingly, employers should allow employees to work from home if it is possible for them to do so. If an employee cannot carry out their normal duties working from home and the workplace has had to close, then the employer might be able to seek relief under the Scheme to ensure that employees will continue to be paid throughout this period.
8. Can employees continue to work from home even if they now have childcare responsibilities as a result of school closures?
Ordinarily, employees might be able to request unpaid time off to care for dependents if they are unable to work due to childcare (or other care) responsibilities, and employers would not have to agree to home working requests if an employee is unable to work from home as normal due to such responsibilities. In the current circumstances, however, as so many employees are likely to be facing the combined impact of school closures and the requirement for homeworking, employers might have to consider allowing greater flexibility for their employees who are having to juggle homeworking with childcare. This might include allowing employees to work flexible hours and relaxing deadlines (where possible).
9. What happens if an employee volunteers to assist the NHS or to provide social care during this time?
The Coronavirus Act 2020 includes specific provisions to allow employees to take “emergency volunteering leave” in order to support the NHS or other organisations in the social care sector during this time.[10] Employees who wish to take such leave must obtain a certificate from an “appropriate authority”, such as the Secretary of State for Health and Social Care, a local authority or the NHS Commissioning Board, must provide a copy of the certificate to their employer at least three working days before they wish to start to the leave and must take the leave in a block of two, three or four weeks (the relevant period must be stated in the certificate). Provided an employee satisfies these requirements, they must be permitted to take the leave by their employer and must be allowed to return to their job at the end of the leave on no less favourable terms and conditions. Employers are not obliged to pay salary to employees who are taking emergency volunteering leave, although employees are entitled to continue to benefit from all other terms and conditions of employment during this period. Employees who take emergency volunteering leave must not be subject to any detriment for having taken the leave, and dismissing an employee in these circumstances will be automatically unfair.
The Act further provides that the Secretary of State must establish arrangements for compensating volunteers during this period, although it is currently unclear exactly how such compensation will work in practice.
10. Do Health and Safety requirements extend to homeworking?
Yes, an employer’s responsibility for its employees’ health and safety extends to employees who are working from home. Employers should usually carry out a risk assessment to ensure that the employee’s home working arrangements do not give rise to any health and safety concerns. Given the unprecedented number of employees who will now be working from home, it is unlikely that employers will be able to carry out their normal risk assessments for homeworkers – indeed, for many employers, this might be the first time that employees are permitted to work from home on a long-term basis, so they might not have established risk assessment procedures in place for home workers. However, employers should ensure that managers and senior staff regularly check in with employees who are working from home to ensure that they are comfortable and to reduce the risk of employees feeling isolated. Employers would also be advised to remind employees of best practices in terms of ensuring a comfortable and safe working space. ACAS have prepared some practical guidance regarding homeworking.
11. What about data security when employees are remote working?
The UK Government has instructed all staff to work from home, wherever possible. Data protection law doesn’t prevent employees from working from home; however, employers should consider the same kinds of security measures for homeworking that would be in place in the office. Practical examples include following best practice IT security measures (employers should note the guidance released by the UK National Cyber Security Council, available online here), reminding employees of data security and confidentiality policies and instructing employees to ensure that voice-activated devices at home are stored in a separate room from the employee’s work area.
12. Can a UK employer disclose that an employee has tested positive for COVID-19 (or has related symptoms) to colleagues or external contacts?
Employers need to weigh up their duties to employees under health and safety law with duties to protect the personal data of the reporting employee. In many cases, employers will decide to inform employees or recent visitors to the workplace if a colleague has – or is suspected to have – contracted COVID-19, in order that those individuals can take steps to protect themselves. The UK data protection regulator, along with many of its EU counterparts, is clear that data protection law should not stand in the way of pandemic response. However, only the minimum necessary should be provided – and the individual should not be identified. In (rare) cases where it is necessary to reveal the name of the employee(s) who contracted the virus, the European Data Protection Board has advised in its COVID-19 Statement that the concerned employee(s) should be informed in advance.
We will continue to monitor all developments and will provide further updates as this information becomes available.
Matthew Rodin, a trainee solicitor in our London office, contributed to the writing of this alert.
[1] https://www.gov.uk/government/publications/full-guidance-on-staying-at-home-and-away-from-others/full-guidance-on-staying-at-home-and-away-from-others..
[2] https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme.
[3] Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020.
[4] Section 2(2)(c) Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020.
[5] Section 40 Coronavirus Act 2020
[6] Section 39 Coronavirus Act 2020.
[7] https://www.gov.uk/government/publications/covid-19-guidance-on-social-distancing-and-for-vulnerable-people/guidance-on-social-distancing-for-everyone-in-the-uk-and-protecting-older-people-and-vulnerable-adults.
[8] Regulation 16(2) Management of Health and Safety at Work Regulations 1999 (SI 1999/3242).
[9] Regulation 16(3) Management of Health and Safety at Work Regulations 1999 (SI 1999/3242).
[10] SS. 8 and 9 and Schedule 7, Coronavirus Act 2020.
Annabel GillhamManaging Partner, London
Trevor L JamesPartner
Lara M. KingAssociate
Oliver SprattOf Counsel