Recently, on the Legally Speaking Podcast – Powered by KC Partners, our Host & Managing Director, Rob Hanna spoke with Employment Lawyer Sophie Vanhegan, who is a Partner at Boutique Employment Firm, GQ|Littler. They discussed many things, including current issues in employment law during COVID-19.
Employment law is a fairly counter cyclical market, and often during times of crisis, firms tends to see a rise in employment related matters as clients rush to seek solutions to save both their business and also their workforces. In January 2020, as the impact of COVID-19 began to spread to the UK, clients in sharply impacted sectors such as retail and hospitality were already taking measures to cut costs as quickly as possible and avoid the impact as much as they could. Sophie shares that at GQ|Littler, they saw lots of clients very quickly looking at whether there were redundancy measures they could take, but also what alternatives they could take to redundancy.
This all dramatically changed when the government announced the Coronavirus Job Retention Scheme, which was officially introduced on March 26th 2020.
Under the scheme, employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month. Plus, the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
Furloughed members of staff must not work for the employer during the period of furlough.
Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.
The scheme is available for employees on the payroll at 28 February 2020.
All UK businesses are eligible, ‘any employer in the country, small or large, charitable or non-profit’ to use the Chancellor’s words.
The scheme pays a grant (not a loan) to the employer.
The grant will be paid to the employer through a new online system which is being built for this purpose. There is no detail about the application process at the moment.
The employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be re-negotiated, but that is a matter for employment law.
The scheme will be administered by HMRC:
The maximum grant will be calculated per employee and is the lower of:
Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
Fees, commission and bonuses should not be included.
This gives a maximum cap of £2,500 +£245 (employers’ NIC) + £59 (auto- enrolled pension contribution) = £2,804 of total possible grant that can be applied for per employee per month.
This was introduced in a bid to reduce the number of redundancies in the UK. Sophie shared that at GQ|Littler, they have seen a vast number of enquiries surrounding furlough, as companies wish to keep their employees, despite the fact they are not working, so that they can return to work as soon as restrictions relax and the economy improves once again. The Coronavirus Job Retention Scheme will be reviewed at the end of May, but it will be interesting to see how it will be reviewed, “if we are still in the lockdown period that we are in at the moment, or if we are still in very much a muted level of economic activity, such that employers don’t yet have the work for those staff to come back to”.
What other issues have Employers faced as a result of COVID-19?
One of the major issues employers are facing are challenges as a result of working from home. One interesting development is the practical issues created by having to very quickly get ‘large amounts of people effectively all working from home’.
For example, getting enough laptops for your staff is becoming increasingly complicated. As Sophie points out, numerous factories in countries such as China that make a lot of the components for those laptops have been shut for a while.
Alongside the whole of the world looking to get more and more of their staff working from home, leading to serious laptops shortages. And what do you do with your staff if you can’t yet get them a laptop, but you know you’re going to get them one in two weeks?”
Another issue employers face during COVID-19, is who really needs to go into the office? Once you have worked out that issue, how do you manage staff who are understandably anxious about still having to travel into the office?
The FCA indicated that certain regulated persons fall into the key worker category. These may include staff that you wouldn’t necessarily think would need to go into the office.
Also, what do you do with people who can’t work from home? These people may include those who work in your post room or printing room. Furlough touches upon numerous issues, whether it’s your work from home policy or even your holiday policy. Within employment law its raised so many HR questions, due to huge changes employers are having to make to their workforce.
The impact of COVID-19 is really touching upon every aspect of people’s working lives.
With huge amounts of the workforce now off sick, another employment law issue arises due to COVID-19 – sick pay.
The government has introduced The Coronavirus Statutory Sick Pay Rebate Scheme to tackle issues related to this. The Scheme will repay employers the current rate of Statutory Sick Pay (SSP) (£94.25 per week) for periods of sickness starting on or after 13 March 2020 relating to COVID-19.
The repayment will cover up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:
Employees do not have to give you a doctor’s fit note for you to make a claim.
Find out if you’re eligible and what records you must keep by visiting the government website here.
Arguably, one of the largest challenges employers face as a result of COVID-19 is the mental wellbeing & motivation of their workforce.
*Disclaimer*: This article is purely opinion and cannot be taken as legal advice. Use the government webiste for the most up to date information.
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