Last Updated: 14/04/2020
So, you’re in lockdown along with the rest of the UK, you’ve made some large and quick business decisions, it’s stressful, so what happens next? How do you Furlough your staff correctly?
Ensure you are HR compliant, with employment law, both now, during lockdown, helping you implement your business continuity plans and when you can ‘return to some form of normal’.
Whether you’ve had to close completely, have some areas of the business continuing to operate as it meets essential services criteria, or are fully operational with staff working from home adhering to strict government guidelines, follow our HR best practice guidance during the COVID-19 crisis.
What happens if you’ve fully closed or are getting ready to close completely?
You may have already put steps in place with your employees whilst you are closed or preparing to put steps in place for closure. These steps may include changing an employee’s employment status to ‘furlough worker’, requesting they work from home, asking them to take holiday, or taking unpaid leave including parental leave and dependency leave, or a combination of all across the business.
Below sets out best practices on each of those options to ensure you are staying ahead in terms of HR.
The Furlough Scheme explained
The government announced the Coronavirus Job Retention Scheme on 20 March 2020 (updated Guidance released on 26 March 2020 and 09 April 2020) applicable to those who may have alternatively been laid off. The scheme is designed to support employers whose operations have been severely affected by Coronavirus.
- The scheme eligibility is open to all UK businesses, whose employees:
- have been on their PAYE payroll on 28 February 2020
- employees hired after 28 February 2020 cannot be furloughed and are excluded from the scheme
- employees who have TUPE’d from one employer to another are eligible to be Furloughed with their new employer as continuity of service applies
- must not work during the period they are a ‘furlough’ worker, or undertake any paid work for anyone else (if your employees already have more than one job, they can be furloughed for each job but the cap applies to each employer individually)
- Employees on Zero-hour contracts will be eligible for this scheme, subject to criteria, that are paid under a PAYE scheme
- employees that have been made redundant since 28 February 2020 can be reemployed and then their status changed to ‘furlough worker’
- Employers can reclaim up to 80% of salary costs up to a maximum of £2,500 per employee per month. Plus the Employer can apply for a grant to cover the associated Employer NIC and min auto-enrolment pension contributions. Fees/Commissions/Bonuses are NOT included.
- It is up to the employer whether they pay 80% of the employee’s salary, or they can choose to top it up to the full 100% (subject to employment law and renegotiating any contractual elements)
Ideally, you should talk to each employee individually and confirm to them you would like to change their employment status to ‘furlough worker’ and you will need to gain their agreement to this change.
- Explain to them that this means they would not work for the period of time they are classed as a ‘furlough worker’.
- Confirm that it means they will receive up to 80% of their salary up to a maximum of £2,500 per month per employee.
- If they have a layoff clause in their contract follow the layoff process.
- If they do not have a layoff clause within their contract you should ideally get their agreement, by providing them with a written agreement to change their status to Furlough worker. As current terms and conditions and employment law does still apply.
The Government have published a list of the information Employers will need to make a claim for wage costs through this Furlough Scheme.
The list of information Employers will need to claim is:
- your ePAYE reference number
- the number of employees being furloughed
- National Insurance (NI) numbers of those employees being furloughed
- names of employees you want to/have furloughed
- payroll number/Works number of those employees you want to/have furloughed
- your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
Employers will need to calculate the amount you are claiming and HMRC reserves the right to retrospectively audit all aspects of any claim. Once the portal is open, (expected to be open from 20 April 2020), you will be able to claim up to 14 days in advance of your payroll period. You will need to ensure you have enrolled for PAYE Online, this can take up to 10 days.
Will Employees Pay Income Tax and NI on these payments while on Furlough?
YES – employees will pay tax and NI on any payments received through this scheme.
If you have already closed, the only alternative you may have is to phone each employee individually and confirm the above to them.
Do I pay National Minimum Wage (NMW) for Employees on Furlough Scheme?
If the 80% of their normal earnings for an Employee who has been Furloughed, would take them below the NMW, they still only receive 80%. The reason for this is that employees are only entitled to the national minimum wage for the hours they work, if they are furloughed they are not working so NMW would not apply.
Can Employees on Sick Pay be Furloughed?
NO, employees on sick pay are off sick and cannot be furloughed but can be furloughed afterwards.
How do Employees get proof of Sickness if off work with Coronavirus?
If an Employee has Covid-19 or is advised to stay at home with symptoms, rather than going to their GP to get a ‘fit note’ (sick note) to claim SSP, they must visit NHS 111 online to get an ‘isolation note’.
Can Shielding Employees be Furloughed?
YES, those employees who are shielding in line with government guidelines (they will have received a letter from the NHS advising them to shield for 12 weeks) can be Furloughed, those employees who have a member of their household who are required to shield can also be furloughed as they are shielding to protect a household member.
You can ask employees to take a period of holiday to cover the closure, you should ideally agree this with the employee. This would be paid at full pay.
You are able to tell an employee when they are taking their annual leave as long as you provide them with twice as much notice of the intention for them to go on holiday as the period you would like them to take. E.g. you want them to take one week’s annual leave, therefore you would be required to give them two weeks’ notice.
Unpaid Leave/Dependency Leave/Parental Leave
You may ask an employee to take a period of unpaid leave, or an employee may request they take a period of unpaid leave. You should agree with the employee on the length of time the unpaid leave will be applicable and when it will start.
Usually, the employee will need to provide you with 8 weeks’ notice of their intention to take unpaid parental leave, however, you may in these circumstances agree that this can be taken with less notice.
Employees that are already in self-isolation will need to be kept informed of any changes, such as the business closing and how that will affect them once their self-isolation period finishes.
If the employee is in self-isolation because either they or a member of their household has coronavirus symptoms, then they may be able to move to one of the above schemes once they have finished their self-isolation period.
During the business closure, you may have some employees who continue to work from home. You should discuss this with each employee, how it will impact them on an individual basis and whether they are able to operate effectively from home.
During the business closure for all employees regardless of their current status:
- Keep in communication with your employees, keep them up to date on any developments within the business, and any changes such as:
- Partial reopening
- Changes to employment status
- Ensure you have mental health and well-being facilities in place to assist your employees
- If you have employees working from home, discuss with them how to communicate with you and how often to check in, the purpose of the check-in shouldn’t be to be ‘big brother’ but to ensure they are ok and have everything they need to continue to operate effectively
What happens if you are partially open?
The decision to be partially open won’t have been an easy one, you’ll have had to quickly review which areas and departments can continue to operate effectively, and you will have had to take some of the same options as if you had closed completely with some of your employees. For those employees that are unable to continue working whilst you are partially open, the same options and steps would apply as those above for complete closure.
In addition, you may have some employees working fewer hours than their contractual obligations or working in a variety of differing ways.
Below sets out best practices on each of those options to ensure you are staying ahead in terms of HR.
If only some Employees are Furlough Workers
Consider basic selection criteria to confirm who was selected for Furlough Worker status, how they were selected and why, in case this is tested at a later date.
Reduction in hours
You may have to review the hours your employees are working, which may include a reduction in hours. To reduce your employee’s hours, you should ideally meet with them in person (maintaining social distancing), and explain to them:
- If you would like to change their hours
- What the change in hours will look like
- How long is the period of change in likely to be for
- How their salary will be affected during the change
You should get the employee’s agreement to vary their terms and conditions for the period. And confirm to them in writing the changes.
During this period of time:
- Keep reviewing the business needs
- Can you bring additional employees in?
- Do you need to review the hours employees are working?
- Keep in touch with employees who are not working as part of the partial opening, and keep them abreast of any changes
- Ensure you have mental health and well-being facilities in place for all employees regardless of whether they are working or not
- Follow the latest government guidance in protecting your employees from Coronavirus
What happens if you are fully open?
When the government announced their lockdown, they excluded some businesses from this, if you are one of these businesses, you will be continually reviewing your operation to ensure you are still operating effectively and that you are able to follow government guidance.
During this period of time:
- Ensure your employees are ok – ask them! Do they have any concerns about continuing to work?
- Have you got employees who are self-isolating? Keep in touch with them
- Either because they fall into a category that has been advised to self-isolate, or
- because they or someone they have been in contact with has coronavirus
- Do you have suitable restrictions in place to meet government guidelines?
- 2-metre distance
- Washing hand facilities
When the Government announces the lockdown can be relaxed, what happens next?
There may be a variety of scenarios when the government relaxes the lockdown, this could include some people being told to continue with self-isolation whilst others can return to more ‘normal daily life tasks such as returning to work, commuting, shopping etc.
We will be here with you every step of the way to guide you on how to bring your business back to full capacity.
You will need to take the same considerations into account when deciding who, when, and how, in bringing people back to work.
- Who are your key workers/departments?
- Do they have childcare responsibilities? Are the schools reopening?
- Are travel services returning to ‘normal’? Can they get to work?
You will have been in regular contact with your employees during the lockdown and will have some idea of who will be able to return first.
You should have a business continuity plan which includes:
- the key areas of the business
- Which employees have which status
- What to do if the lockdown is relaxed but the schools remain closed
Reduced Hours employees
Meet with the employee on an individual basis to confirm their hours can return to their contractual obligation, confirm the date this will be applicable and follow up with a letter confirming the temporary change to terms and conditions has been reversed.
Phone each employee individually and confirm they are able to return to work and the date this will be applicable from. Follow up with a letter confirming the employment status will revert back to employed from Furlough worker and their salary will return to 100%.
Holiday/Unpaid Leave/Dependency Leave/Parental Leave
Contact each employee and discuss with them their individual circumstances, are they able to return to work, or do they need a further period of leave (school closures etc.) Follow up with each individual on the agreement you have made with them and their expected return to work date.
Keep in regular contact with employees who continue to self-isolate, whether it is because they are still in an at-risk group, or for another reason. Regularly communicate updates on work and a realistic timescale of when the employee may be able to return to work.
Following the relaxation, you may find that following Coronavirus business has not picked up as you would have hoped, you may need to consider some alternatives such as making redundancies.
The redundancy process varies depending on the number of employees who are at risk of redundancy at each establishment.
If you need to consider making redundancies, please contact one of our consultants who will help you through the process with step-by-step guidance.
Park City can assist you during this difficult time to ensure you are HR and H&S compliant both now, during the lockdown, helping you implement your business continuity plans and when you can ‘return to some form of normal’. Talk to us. We are here to help.