Here at enlightenHR we are doing everything we can to support our clients and their employees through these challenging and uncertain times. There’s a very great deal of information out there at the moment and so we wanted to pull a page together that gives you the ‘what you need to know’ as well as some places to go for more information.
Job Retention Scheme
You will no doubt have heard about the Government’s scheme to support employers so that they can “furlough” employees rather than lay them off or make them redundant. As yet the details are very sketchy, what has been published is available at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
Briefly and subject to change as details emerge:
- All UK Businesses will be eligible (sole traders, partnerships, limited companies, LLPs, plc etc.)
- It will apply to all employee who would otherwise be made redundant or laid-off
- This does NOT mean every employee, just those who you would lay-off or make redundant if there was a reduced capacity required
- Employers will have to agree with the employee that they are to be re-designated as “furloughed” employees, the employee would probably be given three options so it would seem unlikely that they wouldn’t agree;
- Redundancy
- Lay-off without pay
- Furlough with 80% pay (although it’s not yet clear whether that’s 80% of net or gross)
- The employer does not have to top up the missing 20% but would need the employee’s agreement to that reduction or it would be an illegal deduction from wages and subject to a ET claim – see above about reaching agreement, it seems unlikely that the employee wouldn’t agree
- Furlough Agreement is in the Dropbox if you desperately need to action, but our advice is to hold off for a couple of days if you can, pending Government guidance being published.
- The employment would continue – not yet confirmed but likely that holiday would continue to accrue, whether that could be taken whilst on furlough (and therefore at what rate) is not clear
- HMRC will reimburse to the employer 80% of wage costs (so this might include pension, employer’s NI as well as compulsory commission – but not non-monetary benefits like health insurance or a car) up to a maximum of £2,500 per month
- Employee must not undertake ANY work for the employer during the furlough
- Employer will have to register furloughed employees through a new (yet to be set up) portal
- Employees may start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one)
- As long as each furlough period is at least three weeks employees can be furloughed multiple times
- Employers must notify employees of their furlough status in writing and keep the record of that written notification for five years.
Statutory Sick Pay
- If you’re a director of a limited company and have fewer than 250 employees you can pay yourself two weeks of SSP if you need to self-isolate, subject to meeting the minimum payroll requirement for SSP. The government will refund £94 per week, maximum £188, to your company, as well as SSP (up to two weeks) for staff of businesses with fewer than 250 employees. Finally, Statutory Sick Pay is to be paid from day 1 instead of day 4 for those affected.
Tax matters
The government has also announced a number of measures designed to take some of the pressure of businesses and individuals when it comes to tax matters:
- VAT payments will be automatically (you don’t need to apply for this) deferred for the next quarter – businesses won’t need to make VAT payments until June 2020. Businesses will also will have until the end of the 2020/21 tax year to settle any liabilities that have accumulated during the deferral period.
- Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021 without penalties or late payment fees.
- Self-employed people can now access universal credit at a rate equivalent to statutory sick pay.
- HMRC have delayed the introduction of reforms to IR35 that were due to come into force from the 6th April 2020. These will now take effect from the 6th April 2021.
Other business matters
- Business in the retail, hospitality or leisure sectors do not need to pay business rates for the 2020/21 tax year. But there’s more… If you currently pay little or no business rates (as you qualify for Small Business Rates Relief (SBRR) or Rural Rate Relief), you will be eligible for a £10,000 grant to help meet ongoing business costs. Furthermore, a £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises with a rateable value between £15,000 and £51,000.
- Lenders that partner with the British Business Bank are introducing coronavirus interruption loans from 23rd March 2020. The government will act as a guarantor to lenders on 80% of each loan. The government will not charge businesses or banks for this guarantee and will support loans up to £5 million. No interest will be charged for the first 12 months but, remember, this is a loan, not a gift, and you will have to pay it back at some point.
Mortgages and rent
- Both mortgage borrowers and tenants can apply for a three-month payment holiday from lenders/landlords. Nobody can be evicted from their home or have their home repossessed over the next three months.
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To support our clients we have created a Dropbox folder that contains a wide range of guidance notes and template documents that employers might find useful. These include:
- Business Options to reduce salary and associated costs
- Consultation to reduce working hours/pay letter
- Support for employee conversations
- Information relating to employees returning from affected areas
- Payments for employees
- Folder – docs for redundancies where employees have under 2 years’ service
- Folder – docs relating to instigating lay-offs
- Folder – docs relating to home working
- Folder – docs relating to reducing hours/pay
We will be adding to this daily, as needed. For example, we’re in the process of developing draft consultation letters for you to use to offer designated employees the option of a 20% reduction in wages and to be furloughed in due course.
If you would like access to this folder, or support with managing your HR needs, we’d love to hear from you about joining our AdviceLine clients. You can find out more about this here, or contact Alison today.
