With remote working recently becoming essential for many businesses, employers must look at adapting how they manage their employees while they are working from home.

For any employee working from home, the employer should:

• pay the employee as usual
• keep in regular contact
• check on the employee’s health and wellbeing

Employers and employees should be practical, flexible and sensitive to each other’s situation when working from home because of the Coronavirus (COVID-19) pandemic.

Employers should:

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Which employers are eligible?

The guidance provides that the scheme is designed to help employers whose operations have been severely affected by COVID-19 “to retain their employees and protect the UK economy”. However, it makes clear that all employers (rather than “UK employers”) are eligible to claim under the scheme “and the government recognises different businesses will face different impacts from coronavirus”. Under the new guidance any entity with a UK payroll can apply for a grant provided they have:

• Created and started a PAYE payroll scheme on or before 28 February 2020;
• Enrolled for PAYE online (this is new); and
• A UK bank account

Which workers are eligible to be furloughed?

Individuals who ceased to be on your PAYE payroll after 28 February 2020 can be re-employed and furloughed:

• It doesn’t matter why the employee left your employment (the previous guidance just referred to those who had been made redundant)
• The ex-employee can ask to be re-employed but you are not required to re-employ them – it is up to you as the employer to decide what to do (although there could be discrimination issues if you are selecting some but not all of the staff that left, so take advice if this is the case)

There is more detail on the types of workers that are covered by the scheme:

• Salaried LLP members, office holders including company directors, agency workers including those employed by umbrella companies and Limb (b) Workers who are paid through PAYE are all covered. As are apprentices and foreign nationals
• Employees who are shielding, or who can’t work due to caring responsibilities, are covered, as are employees that started unpaid leave after 28 February 2020
• Employees on fixed term contracts can be furloughed. You can extend or renew their contracts while they are furloughed
• To be eligible for a grant under the scheme for employees you wish to furlough, you must confirm in writing to them that they have been furloughed and keep a record of this for five years

What rules apply during furlough leave?

Employees who are furloughed are not allowed to perform any work for you (or a linked or associated company) other than training:

• BUT they are permitted to work for other employers and
• You are free to consider allocating any critical business tasks to staff that are not furloughed
• Employees with more than one job can be furloughed by all or any of their employers and the pay cap applies to each employer individually
• Employees can be furloughed multiple times provided each period of furlough leave is a minimum of 3 weeks (this means you can rotate your staff on and off furlough)

How much can you claim?

There is more detail on how much you can claim:

• You will be able to claim for 80% of pay subject to a cap of £2,500 – it is now clear that these figures are before tax
• For those employees whose pay varies, “pay” means an employee’s “regular” contractual pay which includes wages, “compulsory commission” (which presumably means contractual past commission earned) and past overtime
• Variable pay does not include discretionary bonuses, discretionary commission, tips, non-cash payments or benefits in kind (e.g. gym membership)

New guidance is given for those employees on salary sacrifice:

• The lower sacrificed salary is the relevant amount to take into account for the purposes of claiming from the scheme
• BUT HMRC has confirmed COVID-19 is a “life event” which means employees can revert to their pre-salary sacrificed salary if they wish
• Grants under the scheme cannot be used to cover redundancy payments (but nothing is mentioned about notice payments)

Are there any uncertainties still?

No clarification is given on the uncertainties around holidays. However:

• We note that ACAS guidance indicates that a furloughed employee can take annual leave at the same time as being on furlough leave.
• Nevertheless, there remains a risk that if employees take holiday leave during furlough leave (e.g. for pre-booked holiday or for bank holidays they are contractually entitled to), the furlough scheme will not cover the pay for that leave
• If you are considering requiring your employees to take holiday whilst on furlough leave, you should take advice.

No further clarification is given around maternity and other parental leave during furlough or as regards sickness during furlough leave:

• It is still unclear whether an employee who is sick during furlough reverts to sick leave (and therefore Statutory Sick Pay (SSP) and their employer’s sick pay scheme (if relevant)). It may be advisable to suspend the operation of the company sick pay scheme during furlough leave
• The updated guidance does say that you cannot claim for employees while they’re getting SSP, but they can be furloughed and claimed for once they are no longer receiving SSP
• Also unclear is whether an employer’s claim for a grant to cover enhanced maternity pay has the effect of ending maternity leave, which could put at risk any SMP entitlement at risk when furlough leave ends

Do employers have to pay full holiday pay if holiday is taken during a furlough period?

Based on extensive previous case law, holiday pay must be based on normal remuneration. This applies for at least the four weeks EU minimum leave and includes overtime, allowances, commission and bonuses, meaning employees do not get less pay when they are not working.

Normal remuneration is assessed over an average of 52 weeks from April 2020 (formerly 12 weeks) so annual leave during furlough must be based on normal remuneration. Although it is more expensive to have an employee on holiday rather than furlough, the advantage for the employer is that the employee’s remaining holiday entitlement between now and the end of the holiday year is reduced.

In the absence of express guidance employers who force furloughed employees to take holiday can claim the 80% grant money from HMRC for employees on holiday leave as they are not at work and not working. However, it seems employers have to top the holiday pay to the full salary amount in contrast to the furlough period where they can choose to top up pay (or not).

This need to top up applies for at least the four weeks EU minimum leave. For the remaining 1.6 weeks there is a potential legal argument that an employer could get the employee to consent to just being paid the 80% but employers should probably pay the full amount for the entire holiday period too.

The guidance is not clear on the relationship between furlough and holiday, the interrelationship is untested and legal advice may need to be taken if a problem arises.

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If we can help you with this or any other HR issue, please do not hesitate to contact a member of our HR Team at HR Services Scotland Ltd on 0800 652 2610 – select option 2 for HR

New legislation making major changes to existing employment regulations has come into force with effect from Monday 6 April 2020.

The most significant changes are:

Parental Bereavement Leave & Pay

The Parental Bereavement Leave and Pay Act 2018 gives all employed parents the right to 2 weeks’ paid leave if their child aged under 18 dies, or if they have a stillbirth at 24 weeks or later.

Contract of Employment (‘written statement of employment particulars’)

Workers now have the same right as employees to written contractual terms and conditions of service (a ‘written statement of employment particulars’) from their employer.
Employers must provide their workers and employees with their written statement on or before their first day of employment, no matter how long they are employed for.
The written statement must include details about:

• the hours and days of the week the worker or employee is required to work, and whether they may be varied and how
• entitlements to any paid leave
• any other benefits not covered elsewhere in the written statement
• any probationary period
• any training provided by the employer

Agency Workers’ Rights

The Swedish Derogation (referred to as ‘pay between assignments’ contracts) is abolished from 6 April 2020, so all agency workers are entitled to the same rate of pay as their permanent counterparts after 12 weeks.
All agency workers are entitled to a key information document that clearly sets out the type of contract they will have and the pay they’ll receive.

ICE (Information and Consultation of Employees) Regulations

From 6 April 2020, it’s been made easier to request an information and consultation agreement. A minimum of 2%, rather than 10% of employees (or at least 15 people), in workplaces with 50 employees or more can request a formal agreement to be informed and consulted about workplace matters.

Changes to Holiday Pay Calculations

From 6 April 2020, the period used to calculate a week’s pay for holiday pay purposes increases from the previous 12 weeks of work to the previous 52 weeks.

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If we can help you with this or any other issue, please don’t hesitate to contact a member of our HR team at HR Services Scotland Ltd on 0800 6522610.

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. The scheme is intended to apply to employers who cannot cover staff costs due to COVID-19.

At present the scheme is open to all UK businesses and applies to all employees listed on your PAYE payroll as of 28th February 2020, but the ability to furlough employees under the Coronavirus Job Retention Scheme will be in operation from the end of April.

HR Services Scotland have prepared a guide for employers detailing what is involved with the furlough of employees under this scheme.

View & Download our ‘Employers Guide to Furlough’

If we can help you with any issues relating to the Coronavirus outbreak, please don’t hesitate to contact a member of our team at HR Services Scotland Ltd on 0800 6522610.

HR Services Scotland have compiled a summary of the business support and guidance available for Scottish companies during the COVID-19 pandemic.

This includes information on:

• Coronavirus Job Retention Scheme
• Income Tax Payments Deferral
• Statutory Sick Pay Relief Package
• Scottish Government Coronavirus Business Support Fund
• Coronavirus Business Interruption Loan Scheme
• COVID-19 Corporate Financing Facility
  and more…

View & Download our ‘Business Support Summary’

If we can help you with any issues relating to the Coronavirus outbreak, please don’t hesitate to contact a member of our team at HR Services Scotland Ltd on 0800 6522610.

The Chancellor, Rishi Sunak, recently announced significant further measures to protect employees and the economy.

No significant announcements have been made concerning protection for the self-employed, other than access to universal credit, and the deferral of second instalment income tax payments due 31 July and VAT payments due up to 30 June, deferred until 31 January 2021 in both cases, but we expect more significant intervention this coming week on this front.

Those measures announced include:

Job Retention Scheme

For all employees who remain on the payroll with no work to do, the Government will pay up to 80% of their basic salary up to a maximum of £2,500 per month. They will also give employers the ability to top-up the salary to 100%. All businesses are eligible for this scheme.

In order to access this scheme, businesses will need to:

Designate affected employees as ‘furloughed workers,’ and notify your employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).

The Government has pledged these measures will be in place for three-months and available by the end of April but will take affect from 1 March 2020.

These arrangements will be reviewed every month so that if further extensions are required, this is possible.

Businesses can apply for this wage relief from Monday 23 March. HMRC will have to create a new IT software system to run the scheme. This will take until April to complete as it requires a new system to reverse pay staff normally paid under PAYE rules. HMRC will publish further guidance as soon as it’s available:

Coronavirus Business Interruption Loan Scheme (CBILS)

The Government intends to support businesses who have short-term cash flow needs and require the money before the end of April through the business loan mechanisms noted below which will be available through high street banks from Monday 23 March. These loans will now be interest free for 12-months, rather than the six- months previously announced.

Deferred VAT payments

Business VAT payments for the next quarter (until 30 June 2020) will be deferred until the end of the year.

Universal Credit

The self-employed will not have to make a tax payment on account in July and the payment will be deferred until January 2021. The minimum income floor for Universal Credit has been removed and it has been increased by £1,000 per year, ensuring the self-employed will get this Universal Credit at the statutory sick pay level. He also announced a further £1bn to cover 30% of house rental costs for the self-employed.

Additional measures

Additional measures to improve access to credit for medium and large businesses will be announced later this week.

Further guidance is expected today, Monday 23 March on all the measures above.
Once available we will comment further.

Coronavirus Business Interruption Loan Scheme

To support small and medium sized business, the Chancellor is extending the Business Interruption Loan Scheme. This will be administered through the British Business Bank and is due to launch in the week commencing 23 March.

The scheme provides the lender with a Government-backed guarantee against the outstanding facility balance.

The limit of funding has increased from the £1.2 million announced on the 11 March to £5 million for companies with a turnover of less than £45 million.

Finance terms are from three-months up to ten- years for term loans and asset finance and up to three-years for revolving facilities and invoice finance.

The Government will cover the first 12-months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital.

To be eligible for support via the Business Interruption Loan Scheme, the small business must:

• Be UK-based, with turnover of no more than £45 million per annum.
• Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations.
• Be able to confirm that they have not received de minimis State aid beyond £200,000 equivalent over the current and previous two fiscal years.
• Be unable to meet a lender’s normal lending requirements for a full commercial loan or other facility but would be considered viable in the longer-term.

Filings with Companies House

Companies House and the Financial Reporting Council have confirmed that all companies with imminent filing deadlines – predominantly 30 June 2019 year-ends which are due for filing by 31 March 2020 – will be granted a two-month extension.

If you are in the situation that your annual accounts are not yet finalised and may not get completed by the filing deadline, you must still contact Companies House.

However, they are automatically accepting Coronavirus as a reason and providing a two- month extension.

You will need to state:

• the Company number
• an e-mail address
• that you are extending due to coronavirus

It is critical that the application is made before the deadline or it will be rejected.

In addition, in extreme circumstances, they are prepared to offer a further one-month extension.

If you have passed the filing deadline and are receiving notices concerning the overdue accounts, it is always recommended that you contact Companies House to explain the circumstances behind the delay. If Coronavirus is a factor, you should let them know this. Email them at: [email protected]

Time to Pay HMRC

A dedicated helpline has been set-up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities to receive support with their tax affairs. Through this, businesses may be able to agree a bespoke ‘Time to Pay’ arrangement.

If you are concerned about being able to pay your tax due to Coronavirus, call HMRC’s dedicated helpline on 0800 0159 559.

Further measures announced by the Chancellor on 17 March 2020

£330bn of Government-backed loans

Equivalent to 15% of GDP, the Government has pledged that it will make £330 billion of guaranteed funding available to any business that needs it. The Chancellor has also stated that, if demand is greater than the £330 billion of funding, he will provide additional funds.

Cash grants for retail, hospitality and leisure sectors

For businesses with a rateable value of up to £51,000 in the retail, hospitality and leisure sectors, an additional grant of up to £25,000 per business will be made available.

The grant is intended to cover the cost of business disruption and, in particular, the payment of rent.

Please use the following link to determine your business’ rateable value:
https://www.gov.uk/correct-your-business-rates

Rates relief

All businesses in the retail, hospitality and leisure sector, irrespective of size, will have a 12-month holiday from 1 April and will pay no rates at all.

If businesses who qualify for this do not receive a letter from their local council, it is important they contact them directly to claim this relief.

Implementation

At the time of writing, very little detail has been published on implementation or the precise nature of the new regulations and measures announced by Rishi Sunak on 17 March. We will publish additional guidance as soon as we receive same.

HMRC guidance on IR35

HM Revenue & Customs (HMRC) have confirmed that the proposed changes to IR35, which were due to take place with effect from 6 April 2020, have now been pushed back to 2021.

Overseas businesses engaging with UK contractors via their personal services companies will also be pleased to learn that no further action in respect of the IR35 changes are currently required.

Note that the delay is only relevant to those companies that engage workers via their personal service companies and not those arrangements where companies are engaging workers directly.

Responses to the measures announced in the Budget on 11 March 2020 and other recommendations.

Filing of VAT and PAYE Returns

In the event of being unable to file a VAT or PAYE return due to staff absence, it is recommended that HMRC are contacted before the due date, to explain the situation to them and help mitigate any surcharges that may be levied.

Bank covenants and loan repayments

Many businesses will not be able to meet their banking covenants if there is a period of significant disruption, as envisaged. This could either be on performance covenants or simply the provision of financial information in case of staff disruption. Banks will be expecting this, and it is recommended that there is early communication with banks and, where possible, covenant waivers are sought. In those businesses with particular cash constraints, it is also recommended that the subject of payment holidays is raised with the bank early.

Sick pay

The Chancellor, Rishi Sunak, also announced in the Budget that for businesses with fewer than 250 employees the cost of providing 14 days of Statutory Sick Pay per employee would be funded by the Government in full. This will also apply to those who are in self-isolation.

The Government has announced that the three- day waiting period for statutory sick pay will also be removed, but legislation will be needed to implement this. Further details on the implementation of these measures are awaited.

If we can help you with this or any other Finance queries, please don’t hesitate to contact a member of our Finance team at HR Services Scotland Ltd on 0800 6522610.

Following the recent Chancellor’s unprecedented announcement about the Government covering up to 80% of employee costs if your business has no work for them, this will be a much needed lifeline for many of our clients during the current crisis. However, this does come with certain conditions which will require changing your existing employment contracts.

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At present, there is growing uncertainty both within the UK and worldwide since the onset of Coronavirus (COVID-19) and its ongoing spread. Given the effects and impact this has within the workplace and on business continuity as a whole, employers may need to consider placing their staff on short time working or temporary lay-off, in accordance with contractual and statutory rights.

This guide will provide further information for employers should they be in a position to ask their staff to stay at home or take unpaid leave if there is not enough work for them to do, and can act as measures to avoid compulsory redundancies.

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What is IR35?

IR35 is a piece of legislation that allows HMRC to collect additional payment where a contractor is an employee in all but name. If a contractor is operating through an intermediary, such as a limited company, and but for that intermediary they would be an employee of their client, IR35 kicks in. IR35 requires the intermediary to make an extra payment to compensate for the additional tax and NI that HMRC would have received on an equivalent employee’s wages.

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