CORONAVIRUS – latest update 01/04/2020
ADVICE FOR EMPLOYERS
What’s the latest best practice?
Many employers will now have furloughed some or all of their workforce and some are still considering whether they need to or not. The advice in this bulletin will hopefully help to clarify some questions still being asked:
As of the information we have available today, the UK Government have been very clear in their instruction to all individuals that they should NOT GO OUT AND SHOULD STAY AT HOME and have brought new powers into law for the authorities to enforce these if breached.
In addition: “social distancing” 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) means staying 2 metres apart, no gatherings allowed of more than 2 people (unless part of your household), wash your hands with soap and water frequently even at home (every 20 mins for at least 20 seconds), self-isolate if you have even mild symptoms for at least 14 days, if in the “at risk” group then self-isolate for at least 12 weeks, and if you are in the “shielding” group who have been told you MUST self-isolate for at least 12 weeks, then do so.
This means that unless absolutely necessary, individuals should not leave their home except where the reason for travel is classed as essential, such as:
- To go shopping – for essential necessities such as food or medicine. Note this should only be as absolutely necessary and ideally a maximum of only once per day (there may also be some restrictions at the places you shop at so please take note of any local instructions and guidance)
- To exercise – you may exercise once per day, but in doing so should maintain social distancing at all times. In addition, you may NOT drive your car to a place where you wish to exercise, but should instead only exercise from your home. If there are 2 people in the house then each should take turns separately to walk the dog (if you have one) if it needs more than one walk per day
- To go to work – because your work cannot be done from home AND you are in an industry that has not been forced to close on the instructions issued by the UK Government. If your business is not one of those required to close, then provided you have systems in place for social distancing, hygiene and PPE (Personal Protective Equipment) to minimize the risk of spreading the Covid-19 virus, then you may, at present, stay open. The businesses that have been told they MUST close as of guidance updated on 27th March 2020, and any exceptions to these are stated within this link: https://www.gov.uk/government/publications/further-businesses-and-premises-to-close
- To go to work – because you are in a role designated as a “Key Worker”. Some letters are attached for you to give to your employees if they are in the above categories, but please ensure they are able to justify why they are travelling, as the news today has confirmed that the first individual has been charged and fined for “non-essential travel” in breach of the new laws
Can we claim for furloughed employees yet, and is the HMRC Portal available yet?
You cannot submit a claim as yet for the reimbursement of part of employee wages under the Coronavirus Job retention Scheme. The HMRC Portal is not yet active and the exact guidance on how to calculate the amount to be claimed and how to use the portal has not as yet been issued. However, when information is released by HMRC we will share this.
For now, based on the latest guidance available
- For the company to be eligible then you must be a UK employer that had created a PAYE payroll scheme prior to 29th February 2020
- For an employee to be eligible, indications are that they MUST have been registered on a UK Payroll scheme and have an ePAYE number
- If they have been employed on or after 1st March 2020, then it is clear that they are not eligible, however;
- There still remains some confusion about the eligibility of employees who started working prior to 1st March 2020 who have not actually been started on a UK Payroll (due to payroll dates) and who do not have an ePAYE number – when we have this clarity we shall share this with you;
You may if you so wish for those who are not eligible continue to pay them; or they may be payable under SSP or other statutory allowance; and they should apply for Universal Credit, for which they may or may not be eligible. Please refer to previous bulletins regarding various scenarios for employees.
For employees who are not working from home, or are designated key workers, or those already on short-time working but who you have furloughed; you have the right but not the obligation to top up wages to their full entitlement from the 80% (or £2,500 max limit).
Note: that employees who are “shielding” are eligible to be furloughed.
In respect of the calculation for the claim from HMRC, it is also anticipated, but not yet confirmed, that you will be required to:
- Work out the total amount of wages for the furloughed employees (from the date of furlough) plus the amount of Employer’s National Insurance and up to the max of 3% of the Employee’s autoenrollment pension contribution (unless the Employee opts out of this whilst furloughed) at 100%
- Then calculate 80% of this total amount – this will be the lump sum claim you will make to HMRC
- Prior to claiming however you will need to access the HMRC Portal (not active yet), designate every employee who has been furloughed, and then make a single claim for the 80% (up to £2,500) of the overall amount
- Note that normal Tax, National Insurance and Pension contributions on the 80% payable to the employee is still deductible through normal payroll
- As you are expected to make the April Payroll for your employees on time using the deferred VAT payments, grants and any loans you have obtained, then you will need to do the calculation BEFORE doing so, pay the wages and then claim the reimbursement from HMRC via the portal
Critical Changes from 1st April 2020
- There is a change in the calculation of Average Weekly Hours for employees with varied hours contract, and
- There is also a National Minimum Wage increase effective from 1st April 2020 (see below)
Calculation of wages for varied hours employees
A key change to current legislation from 1st April 2020, is in the calculation of the Average Weekly Wage in respect of wages or holiday calculations for employees whose hours vary from week to week, such as those on casual or zero hours contracts.
Prior to 31st March 2020, this calculation was done over the previous 12 weeks of work.
From 1st April 2020 all calculations of an employee’s Average Weekly Hours, must be calculated using the previous 52 weeks of work, or if less than this base the calculation on the number of weeks worked.
Please consider this when calculating the wages of furloughed employees.
National Minimum Wage Increase from 1st April 2020
The annual increase in the National Minimum Wage/National Living Wage is still effective from 1st April 2020 despite the current situation, so please be aware when calculating your employee’s wages.
For clarity, an employee must be of school leaving age to be eligible for the National Minimum Wage and aged at least 25 years old to be eligible for the National Living Wage. The Apprenticeship Rate is applicable for apprentice under the age of 19 years or where they are 19 or over in their first year of their apprenticeship.
- NMW/NLW Rates
The rates change every April and so from 1st April 2020, the rates shall be as below. The rates from 2019-2020 are shown for comparison:
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
|April 2020 (current rate)||£8.72||£8.20||£6.45||£4.55||£4.15|
|April 2019 to March 2020||£8.21||£7.70||£6.15||£4.35||£3.90|
- Calculation of Wages for the HMRC Claim
In calculating any wages for furloughed employees you need to take into account any relevant increases for affected employees.
Practically, this will be the amount you use to calculate the 100% of wages and from which you will then work out the 80% to be paid.
It is noted that this effectively means that some employees may be brought below the NMW/NLW for the period of furlough, however at present the Government have indicated that this is acceptable, as you are not obligated to top up wages by the additional 20%, although you may choose to do so.
One final note in respect of this; employees who are furloughed may not carry out work or services that generate revenue for the company, but they are able to carry out training and development whilst furloughed. However, it is important that when carrying out training and development whilst furloughed that they are paid at least the NMW/NLW for the period of training
What to do about Holidays
Effective from 27th March 2020, the Government stated it would amend the Working Time Regulations 1988 (WTR) to allow employees to carry over any accrued but untaken annual leave entitlement as a result of Covid-19 for a period of 2 years. The purpose of this amendment is to allow employers that cannot afford to lose staff from critical roles whilst also ensuring employees do not lose any holiday entitlement, they have been unable to take during the crisis.
Under the WTR, employers are required to ensure that employees have sufficient opportunity to take holidays and gain the rest they need away from work within each leave year. Employers are NOT allowed to pay employees for accrued but untaken holiday unless the employee is leaving the company. As a consequence, when an employee has been unable to take all their holiday entitlement, there is facility to allow carry over of some holiday by agreement between the parties, but only for a maximum of 12 months.
Given the current situation, this period is now being extended to 2 years;
- Where due to the Covid-19 crisis, an employee has been unable to take all of their accrued but untaken holiday entitlement they may carry this over
- The amount of carry over is for a maximum of 4 weeks only each year
- An employee who is on furlough cannot take holiday due to Covid-19 and so will continue to accrue holiday but is unable to take these.
- This includes for Proclaimed and Bank Holiday entitlement
In practical terms;
- Cancel any holidays for employees who are on furlough, as they are unable to take holiday in this circumstance
- Ask “key workers” or other employees who continue to work (at home or otherwise) if they still wish to take their holidays as scheduled – if not then cancel these as above
- Where a key worker or other worker wishes to still take the time away from work, and as a business you can manage this, then carry on as normal – note that during any holiday you should NOT contact the employee during this period, except in an emergency
- Employees who are on short-time working or lay-off may request accrued holiday, and where they do so, this MUST be paid at their full normal wage rate
- Continue to record the accrual/taking of holidays in the normal way so you have an accurate record of these
- Where an employee approached the end of the stated Holiday Year, then ensure you put details of how this is to be managed and carried over, in writing to them
Key things to note:
- The initial period that the Coronavirus Job Retention Scheme is operating is 12 weeks from 1st March 2020, unless extended by the Government – claiming under the scheme will stay open until all claims have been dealt with by HMRC
- Effective from Saturday 28th March 2020, all Local Authorities have been provided with £12 billion from the UK Government to hand out as a grant of either £10,000 or £25,000 to businesses receiving Business Rates Relief. The Government have made it clear that the Local Authorities should ensure this money is paid direct to the bank accounts of local business owners as soon as possible – this means that eligible companies should be receiving some support soon
- Coronavirus Job Retention Scheme – HMRC will set out further details on the information required.
- Deferring VAT and Income Tax payments – This is an automatic offer with no applications required, businesses will not need to make a VAT payment during this period.
- Statutory Sick Pay relief package for SMEs – A rebate scheme is being developed and Further details will be provided in due course once the legalisation has passed.
- 12-month business rates holiday for all retail, hospitality and leisure businesses in England https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/873622/Expanded_Retail_Discount_Guidance.pdf
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief – you do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 – You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank – https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
- Covid Corporate Financing Facility (CCFF) – a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans – https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020
- HMRC Time To Pay Scheme – call HMRC’s dedicated helpline: 0800 0159 559.
The below link is the Gov.uk overall guidance in respect of this matter which will be updated by the Government as things develop.
This advice is being reviewed and updated regularly and is currently in line with Government and ACAS guidance as updated 1st April 2020.
Should you require any further advice or guidance please call us on our usual HR number of: 01325 488425 or email: email@example.com