Assistance for employers to stand behind their employees/job retention scheme
Stand behind your employees, and we will stand behind businesses is the firm message that we are being given by the government.
The other clear message is that it is everyone’s individual responsibility to comply with the government guidance about self isolation and social distancing, and if we do not more drastic measures will follow.
There is so much information out there, the following are reliable and everyone (businesses and individuals) should keep up to date with guidance:
The big problem: For employees to be able to afford to follow guidance, they need reassurance from their employers. For employers to do all they can to reassure employees, they need to have reassurance about what assistance they will get. Otherwise businesses face the reality of months of wages to pay with very little certainty about what will be coming in. This is not sustainable for a lot of business. Businesses are concerned to ensure there is something left for their employees to be able to come back to.
On Friday 20th March 2020, we have had positive news from the Prime Minister and the Chancellor and heard about an unprecedented economic intervention to be able to give businesses the ability to do everything they can to avoid laying staff off – the Job Retention Scheme. In summary, businesses may be able to receive a grant to will help businesses cover wages (up to 80%) for employees who are paid through PAYE (zero hours to permanent).
On Saturday 21st March 2020 some limited guidance was published on govt.uk for both employers and employees .
This blog may well go out of date very quickly, and we will endeavour to publish further guidance just as soon as we have more information.
Job Retention Scheme
If an employer cannot cover staff costs due to COVID-19, it may be able to access support to pay part of employment costs. The employer must designate employees as furloughed workers, this means change their status which will be subject to normal employment law and their contract. The employer can claim a grant of 80% for employment costs [unclear of what this includes i.e. wages holiday, benefits, NI, pension] up to a max of £2,500.
We are all awaiting guidance, but the following points are being asked:
What is a furloughed worker?
This is not a term that we would usually use in UK employment law, and therefore there is no legal definition. Having done some research, it is a term that appears to be used in US labour law and means a mandatory suspension from work without pay, during which the employee would be banned from doing any work, and will be expected to return to work on a specific date or conditions. The employee retains benefits.
In the UK, this could mean that it will be akin to a lay off and will be a temporary suspension for a specified period of time. The key is likely to be that they will not be able to carry out any work, but will remain an employee.
How do you choose furloughed workers?
Lots of businesses find themselves in a predicament. Is it fair that those workers that we may otherwise have laid off, will then be at home doing no work while their counterparts are at work carrying out all the work? Often, it will be those employees whose work is particularly impacted, or that do not perform as well that will be selected for lay off.
The morale of those who continue working is likely to be something the employer will need to address. However, we are in unprecedented times, and an employer is urged to consider the reason for the scheme. The scheme has been introduced as a safety net for those employees who would have been otherwise laid off and therefore caused extreme financial hardship. The scheme is designed to reduce that hardship and mean that employers can encourage employees to do the right thing.
It is likely that employees who are furloughed may be able to do other voluntary work in the communities. During a lay off an employee would normally be able to carry out paid and casual work. If this is to be the case, the rules will need to cover adjustment to the grant.
How do you change status and furlough an employee/worker?
The guidance is clear that the employment status will need to be changed subject to normal employment law.
There is very unlikely to be a contractual right to change status, therefore the following options apply:
1. Force change. All Employees would be able to pursue breach of contract for lost wages [limited amount due to grant].
Worst case: Employees with over 2 years would be able to treat themselves as constructively dismissed i.e resign as a result of the fundamental breach of contract. This is a type of unfair dismissal. Realistically, employees may be very unlikely to take this course of action as it would leave them out of employment in such troubling times.
2. Agree a change in status i.e. for 2 to 3 months, or until a condition is met i.e. business fully open.
This would be agreed as an alternative to redundancy or another forced measure. The leverage to agree a change is that the employee will still be employed, and being paid a percentage.
The only benefit for an employee with over 2 years service refusing a change would be to remain on full pay and then to be made redundant. If made redundant they would be entitled to:
1. Be served and paid contractual notice; and
2. Statutory redundancy payment (1 or 1.5 weeks capped at 525 per week (rising to 538 from 6 April) for each year employed. Max £15,750).
At the end of the furlough it would still be possible to make the person redundant however we do not know if this would impact on the grant.
HMRC process and portal is not set up yet. As a result it may take some time to access scheme. Guidance suggests it can be backdated.
This is a huge relief to employers and employees. That being said, employers await the full details of how the scheme will be implemented and how quickly grants will be made. We will continue to keep ourselves up to date with the scheme and are here to help employers navigate through the scheme.
If you need any assistance with how to deal with workers or employees in these unprecedented times, please do not hesitate to contact Kate Brooks on 01202 057754 or firstname.lastname@example.org