Alan Lewis delivers employment status from IR35 to COVID19 updates to the IOC, from round table to virtual fellows email breifings.
Two key briefings below, first the 15 point summary on the Job retention scheme update, then a ten point summary, ‘KEY DEVELOPMENTS FOR THE EXPRESS COURIER SECTOR TO BE AWARE OF WITH FURLOUGHING’
Brought to the IOC by Alan Lewis, expert express courier sector employment lawyer of Constantine Law
15 point summary review for the April 9th Job retention scheme update for the express courier sector
(Note: On 4 April 2020 and again on 9 April the Government issued updated guidance about the Coronavirus Job Retention Scheme).
Here we summarise 15 points of clarifying or new information from the second and latest versions of the Scheme. This is not a summary of the full Scheme.
1. WHAT IS IT DESIGNED TO DO? The Guidance used to say that the scheme was designed to help employers keep in employment those who would otherwise be laid off or made redundant. That has now changed. The latest Guidance says the Scheme is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. There is no definition of what “severely affected” means.
2. WHAT ABOUT INDIVIDUALS? Individuals can furlough employees such as nannies, provided they pay them through PAYE and they were on their payroll on, or before, 28 February 2020.
3. CAN AN EMPLOYEE WHO HAS LEFT BE RE-EMPLOYED AND PUT ON FURLOUGH? It has now been made clear that if an employer made an employee redundant, or they stopped working for an employer on or after 28 February 2020, the employer can (but is not obliged to) employ them again and put them on furlough and claim for their wages through the scheme. This applies even if the employee left of their own accord.
4. WHAT ABOUT EMPLOYEES WITH CARING RESPONSIBILITIES? Employees unable to work due to having to care for people as a result of Covid-19 can be furloughed. An example would be employees that need to look after children - they can be furloughed.
5. WHAT ABOUT FIXED-TERM CONTRACTS? Employees on fixed term contracts can be furloughed. Their contacts can be renewed or extended during furlough. Where a fixed term contract ends because it is not extended or renewed, the employer can no longer claim under the Scheme for that employee.
6. WHAT ABOUT INDIVIDUALS WHO ARE NOT EMPLOYEES? The Scheme covers office holders, salaried members of LLPs, agency workers and workers (where they are contracted to provide the services personally). This means that directors can be furloughed and the furlough arrangements should be adopted by board resolution of the company, noted in the company records and communicated in writing to the director. Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company. This also applies to salaried individuals who are directors of their own personal service company.
7. WHAT IF AN EMPLOYEE DOES VOLUNTEER WORK? This is permitted so long as it does not provide services to generate revenue for the employer’s business.
8. WHAT ABOUT OVERTIME, COMMISSION AND BONUSES? The employer can claim for these if they are obliged to pay them regularly to employees.
9. WHAT ABOUT WORKING FOR A DIFFERENT EMPLOYER? Provided their employment contract does not prohibit it, employees on furlough can work for another employer. This means, for example, that an employee could be receiving 80% of their salary whilst furloughed and at the same time a salary from the new employer. This will lead to situations where some employees are better off on furlough than they would otherwise have been, a surprising result.
10.WHAT ABOUT EMPLOYEES WHO ARE SHIELDING OR ON LONG-TERM SICK? They can be furloughed. There had been a requirement that this could only be done for shielding employees if they would otherwise have been made redundant or they can’t work from home. That requirement has now been removed.
11.CAN SSP BE CLAIMED IN ADDITION TO THE JOB RETENTION SCHEME GRANT? No.
12.CAN A FURLOUGHED EMPLOYEE CARRY OUT WORK FOR A COMPANY OR ORGANISATION WHICH IS LINKED OR ASSOCIATED WITH THE EMPLOYER? No.
13.CAN AN EMPLOYER SWITCH EMPLOYEES FROM SICK PAY TO FURLOUGH AND VICE-VERSA? Yes, though this should not be abused by using furlough to in effect top up SSP for short terms absence.
14.ARE FOREIGN NATIONALS ELIGIBLE FOR FURLOUGH? Yes.
15.CAN THE EMPLOYER IN A “TUPE” SITUATION PUT ON FURLOGUH EMPLOYEES OF A PREVIOUS BUSINESS? Under the Transfer of Undertakings (Protection of Employment) Regulation 2006 (commonly referred to as “TUPE”) employers can inherit staff and the contracts of employment of those staff automatically transfer over to the new employer. Provided the transfer happened after 28 February 2020, the new employer is eligible to designate those staff as furloughed (still having to obtain their prior agreement to avoid a breach of contract).
10 KEY DEVELOPMENTS FOR THE EXPRESS COURIER SECTOR TO BE AWARE OF WITH FURLOUGHING
Brought to you by Alan Lewis, expert express courier sector employment lawyer of Constantine Law
INCLUDING COMMISSION IN THE FURLOUGH PAY CALCULATION
Government has amended the eligibility criteria for commission payments to be included in claims for furloughed pay under the Coronavirus Job Retention Scheme.
The clarification means that express couriers with employees who earn commission will be able to claim for any regular payments that they are obliged to pay employees including
wages
past overtime
fees
compulsory commission payments
Discretionary bonuses and commission payments however, and non-cash payments cannot be included.
EMPLOYEES WHOSE PAY VARIES
Where the employee has been employed for 12 months or more, you can claim the highest of either:
the same month’s earning from the previous year
average monthly earnings for the 2019-2020 tax year
Where the employee has been employed for less than 12 months, employers can claim for 80% of their average monthly earnings since they started work.
The scheme is in place from 1 March 2020 for 3 months and may be extended if necessary. To be eligible for the grant, a furloughed employee (including “workers” if they were on the PAYE payroll as at 28 February 2020) must have been enrolled on the company's PAYE payroll and cannot undertake work for, or on behalf of, the organisation.
Staff who are working reduced hours are not eligible for pay to be reimbursed.
REDUNDANCY
Where an employee on the payroll as at 28 February 2020 has been made redundant on or after 28 February 2020, express couriers can re-employ them, put them on furlough and claim for their wages through the scheme.
TRAINING
Furloughed employees are free to participate in training and this is encouraged as long as it is not part of work to generate income for the organisation within the furlough period.
VOLUNTEERING
A furloughed employee is free to take part in voluntary work if this is in line with public health guidance, as long as they are not providing services for their employer.
EMPLOYEES WHO LEFT FOR ANOTHER JOB THAT FELL THROUGH
Where an employee left your company’s employment to take up a new job elsewhere which was withdrawn or postponed as a result of the Covid-19 situation, you can, if you wish, re-hire them and put on furlough, claiming payment via the Scheme.
MOVING EMPLOYEES ON AND OFF FURLOUGH
Provided an employee is furloughed for at least 3 weeks, you can rotate employees on furlough. You cannot claim subsidy under the scheme for any employee wo is furloughed for fewer than 3 weeks.
FURLOUGHED EMPLOYEES WHO WORK A NEW JOB DURING FURLOUGH
Government has clarified that you can furlough an employee and, if contractually allowed, that employee can take up new paid employment and you can still claim the subsidy under the scheme to pay them on furlough. Whilst this will allow some employees to have windfall earnings (the furlough pay plus the earnings in the new job), the intention is to ease the burden that the UK has right now with recruiting fruit pickers, cleaners and care workers.
EMPLOYEES ON SICK LEAVE
Employers can now move employees from sick pay to furlough and vice-versa, provided they do not abuse the Scheme to top up sick pay for short term absences. SSP cannot be claimed in addition to a subsidy under the Scheme.
CASH FLOW IN FUNDING UNTIL THE SUBSIDY ARRIVES
The HMRC portal to claim the subsidy is expected to be ready from 20 April 2020. Funding the furlough pay In the meantime may prove challenging for some express couriers. With the agreement of the employee, payment of furlough pay can be delayed until the subsidy is received.
