COVID-19 FAQs for businesses

Last updated 04/08/2020
  1. Can I temporarily lay employees off or reduce their hours?
  2. I have had to stop trading due to the coronavirus. What is the government doing to help me meet my wages bill?
  3. What are the rules for apprentices?
  4. Can my employee work for another company when on the Furlough Scheme?
  5. Can I furlough employees more than once?
  6. Can furloughed employees do any work?
  7. What about directors?
  8. What is the position now if my employees are unable to take annual leave?
  9. Can employees take holiday when furloughed?
  10. Can I make an employee take leave whilst they are furloughed?
  11. What if an employee is furloughed during their notice period, what do I pay them?
  12. I want to make an employee redundant but they have been furloughed. What do I pay them?
  13. I have made a claim through the CJRS portal. Do I wait until the payment is received before paying my staff? I am concerned it may take a while.
  14. I need to close my company, what do I do?
  15. If an employee contracts COVID-19, what do I pay them?
  16. What do I pay my employees now that schools have closed?
  17. What do I pay my employees if they have been medically advised to self-isolate?
  18. What can I do if my employee refuses to attend work due to fears about coronavirus?
  19. Do my staff have to wear face coverings at work?
  20. Summary of financial support for small businesses

Can I temporarily lay employees off or reduce their hours?

In order to lawfully exercise lay-off or short-time working, the contract of employment must have a clause allowing you to do so. In this situation, your employees would not receive their normal pay and depending on the length of the lay-off or short-time working, they may be able to claim for redundancy pay.

I have had to stop trading due to the coronavirus. What is the government doing to help me meet my wages bill?

To encourage employers not to lay people off or make redundancies, the government initially announced a Furlough Coronavirus Job Retention Scheme (CJRS) that allowed all employers to claim back 80% of an employee’s or worker’s wages subject to a maximum of £2,500 per employee per month.

From 1 July 2020, we have had a ‘flexible furlough’. This change is designed to allow employees to be brought back from furlough on a part time basis. In practice, it means employees can work part time but still be on furlough for the remainder of their contracted hours.

Whilst it might be daunting and a bit of a logistical nightmare to organised, this is a really positive move for businesses that need workers for a percentage of the time but struggling with the requirement that during furlough, employees cannot work. Remember that difficulty we had around Directors being furloughed but not able to carry out any work other than statutory duties? Well that goes away now as those key individuals can be brought back to work but a saving still made whilst they are furloughed for a proportion of the time.

This change will assist those employees that are struggling with being isolated at home and perhaps those that can manage childcare now that some children will be returning to school. Importantly, employers need to ensure that when selecting those that are returning on a part time basis, this is considering objectively and without any discrimination.

August 2020

From 1 August the government will pay 80% of your workers’ pay up to a maximum of £2,500 for the hours the employee is furloughed but employers must pay the employees national insurance (NIC) and pension contributions, these will no longer be recoverable from the government via the scheme.

September 2020

From 1 September, instead of being reimbursed 80% of your workers’ pay up to £2,500, you will be reimbursed 70% of pay for your employees but importantly, the maximum is reduced to £2,187.50. Employers are required to pay 10% of the workers’ pay up to the £2,500 cap and pay employee’s NIC and pension contributions.

October 2020

From 1 October, the reimbursement will decrease again to 60%. The scheme will pay the maximum of £1,875. Employers will be required to pay 20% of the employees’ pay up to the £2,500 cap and pay NIC and pension contributions.

The furlough scheme will finally close on 31 October and employees will be released from furlough if they have not been already and employers will have to be ready to take them back to work at the agreed contractual capacity unless consultation has taken place with workers to amend working hours.

What about sick pay?

You cannot claim for employees whilst they’re off sick and getting SSP, but they can be placed on furlough leave when they are no longer receiving SSP The scheme does not apply if you are looking to reduce an employee’s hours or introduce short term working, and it is important to note that any size business in any sector can apply. If your employee gets guaranteed commission under their contract, you can claim 80% of this back from HMRC as well as the employee’s basic salary but the 80% does not include non-monetary benefits such as the value of health insurance or a company car.

Contracts of employment often allow for variation of terms and conditions, however it is rare that the wording will suffice for the variation to be made lawfully. Whilst the guidance on furlough is rapidly evolving, it is strongly advisable for an employer, in writing, to:

  • Confirm the employee’s new status of being placed on furlough;
  • Obtain the employee’s consent to furlough and the reduction in salary;
  • Instruct the employee to cease all work during the furlough period;
  • Obtain confirmation that the employee agrees to cease all work in relation to the furlough period.

You must ensure that you keep a record of the written notification and agreement for five years.

You may have followed the initial guidance (like many businesses) and notified employees rather than getting their consent. This has been recognised and there is a call for a judicial review around this should a business be penalised for not getting consent when following the original guidance.

If your employee refuses to accept the 80% pay then you may be in a position to make them redundant (or utilise a lay-off clause if you have one).

Once you have an agreement in writing, you should then register them with HMRC. This process, which began on 1 April, can be backdated to 1 March 2020.

The portal opened on 20 April 2020 with the first payments made on 30 April 2020. It is advisable that you take legal advice if you have any concerns. For further information visit the government COVID-19 business support pages.

DAS UK customers have access to templates and guides on www.dasbusinesslaw.co.uk to help with the furlough process which can be accessed via the activation code in your policy provider’s documentation.

On 28 May, the government launched the new ‘Test and Trace’ system in England. If a person is notified that they have had contact with a person with coronavirus, they will need to self-isolate for 14 days. As a result, the entitlement to statutory sick pay (SSP) has been extended to cover employees that in these circumstances have to isolate.

Furlough document

Visit DAS Businesslaw  Registration guide

It is advisable that you take legal advice if you have any concerns. HMRC is currently in the process of setting up the process. For further information visit the government COVID-19 business support pages.

What are the rules for apprentices?

You can furlough an apprentice and they can carry on training whilst on furlough. But you must ensure they are being paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage, whichever is appropriate at the time they are training. Take care when looking at wages for apprentices and applying furlough particularly if they are paid the national minimum.

Can my employee work for another company when on the Furlough Scheme?

Yes. If your contract of employment with them allows them to work elsewhere during their employment with you, they can work for a different employer whilst you furlough them. This means they could earn 80% with you and 100% for a different employer.

However, under guidance provided on 14 April, to claim furlough you must have agreed with the employee that they will not do any work for you. This has changed from the initial guidance as all that was required initially was ‘notification’. You will need to check this as it may mean that some employees already furloughed may not fall within the scope of the scheme.

Can I furlough employees more than once?

Yes. Employees can be furloughed multiple times. In respect to furlough up to and including the 30 June, each period of furlough must be for a minimum of three weeks (21 calendar days). As of 1 July 2020 there is no minimum period of furlough however any furlough arrangement agreed between employer and employee and reported in a claim to HMRC must still cover a period of at least one week.

Can furloughed employees do any work?

No. Employees that you furlough cannot do any work for the business which includes providing any service or carrying out jobs that will generate revenue. They can complete any mandatory training that may be needed to ensure they can return to work such as online training. You will need to bear this in mind when deciding who you will be placing on furlough.

What about directors?

Company directors can be furloughed but they cannot work other than to comply with their ‘statutory duties’ such as filing accounts and reporting to Companies House. The directors will need to ensure that any decision to furlough fellow directors is documented as a decision of the board.

What is the position now if my employees are unable to take annual leave?

On 27 March, the Government amended the Working Time Regulations 1998 (WTR) to allow workers to carry forward unused holiday for up to two years where they have been unable to take it due to Covid-19.

Can employees take holiday when furloughed?

The position around employees taking holiday whilst on furlough is not abundantly clear but there has been some recent clarification. Employees continue to accrue holiday whilst on furlough and they can still request and take holiday while on furlough. If they do, they are to be paid in the usual way and in accordance with their usual pay, not at a rate of 80% in line with what you can recover under the CJRS. So you will have to ensure they are paid 100% of pay whilst on leave during furlough.

Can I make an employee take leave whilst they are furloughed?

Employees can be required to take annual leave under the Working Time Regulations so long as you give them twice the amount of notice that they are to take notice of the amount of holiday they are to take. So, if you want your employee to take one week off as holiday, you would need to give them two weeks’ notice beforehand.

If you are making decisions around holiday for those on furlough, we recommend that you take advice or at the very least, keep a clear paper trail to record any decisions made and ensure that you discuss them with the employees concerned. Annual leave is intended to be a period of leisure and rest and so employers should consider if any period of absence for self-isolation or illness would prevent them from taking that rest when determining whether to force employees to take annual leave.

What if an employee is furloughed during their notice period, what do I pay them?

If an employee is serving a notice period but is furloughed, they are to be paid 100% of their contractual wage. So you would claim 80% through the CJRS and then top the payment up by 20%. This has now been confirmed in legislation

I want to make an employee redundant but they have been furloughed. What do I pay them?

You must pay your employee their full statutory redundancy payment calculated in line with their full contractual pay as opposed to the wage that they were being paid when furloughed. This has now been confirmed in legislation.

You must also ensure of course that your employees receive their notice pay or payment in lieu of notice (depending on the contract of employment) and payment equivalent to any accrued and outstanding benefits up to and including the end date i.e. holiday.

I have made a claim through the CJRS portal. Do I wait until the payment is received before paying my staff? I am concerned it may take a while.

Unless you have reached an agreement with your staff to change their payment date, this cannot be changed. You will still have to pay your staff 80% of their wages on the same pay date as this is a term in their contract of employment.

I need to close my company, what do I do?

In this situation, if you cannot furlough your employees and make use of the job retention scheme, you may need to place your employees at risk of redundancy. You will be required to consult with employees and consider ways of avoiding dismissals by way of redundancy.

Your employees may be entitled to redundancy; this is based upon their age, length of service and weekly pay. If you find yourself in this situation, we recommend that you take advice.

DAS customers have access to templates and guides on www.dasbusinesslaw.co.uk to help with the redundancy process, which can be accessed via the activation code in your policy provider’s documentation.

Redundancy superguide

Visit DAS Businesslaw  Registration guide

If an employee contracts COVID-19, what do I pay them?

Statutory sick pay (SSP) is payable if an employee has contracted COVID-19. The contract of employment may provide for enhanced pay. Employees whose incapacity for work is related to coronavirus are eligible to claim SSP from day one of a period of entitlement.

The government has also announced that small employers (fewer than 250 employees) will be reimbursed for any SSP paid in respect of the first 14 days of sickness related to COVID-19.

What do I pay my employees now that schools have closed?

Your employees have a statutory right to unpaid time off (time off for dependents) to deal with disruption relating to schools and they may request leave for this reason. However, employees who are unable to work because they have caring responsibilities resulting from COVID-19 can now be furloughed. So, if you have employees that need to look after children and find that they cannot work from home, they can be furloughed but there is no right to this.

You will need to make sure that you still follow an objective review of the workforce when making the decision of who to furlough to avoid any criticism of practices which may be discriminatory.

What do I pay my employees if they have been medically advised to self-isolate?

Employees will be entitled to SSP if they are self-isolating (the contract of employment may provide for enhanced pay). This also applies to employees who are self-isolating as a result of members of their household who have COVID-19 symptoms.

What can I do if my employee refuses to attend work due to fears about coronavirus?

It is likely that many employers have faced this dilemma. Previously a quick resolution to this issue would be to ask the employee to work from home if appropriate. If this is not possible and the employee could reasonably be asked to continue working, assuming that all health and safety and social distancing requirements can be adhered to, then it is possible for you to consider disciplinary action for unauthorised absence which would be unpaid.

The government have now set out that employers can require employees to return to work where the employer has put measures in place to ensure safety of staff. This is beneficial to employers that need to start bringing the workforce back.

We would always recommend taking legal advice before taking any form of disciplinary action in this area, particularly because an employee who is concerned about health and safety and discloses this to you may be a whistleblower, and treating them detrimentally will result in difficulty for you as an employer.

Employers should consider whether the employee has a disability as any action taken could be regarded as discriminatory. We recommend that before proceeding with action here, you should take advice to ensure you consider all options and avoid issues later.

Do my staff have to wear face coverings at work?

From 8 August 2020, many establishments across a number of industries in England will be required to wear a face covering. This includes the following:

  • funeral directors
  • premises providing professional, legal or financial services
  • cinemas
  • theatres
  • bingo halls
  • concert halls
  • museums, galleries, aquariums, indoor zoos or visitor farms, or other indoor tourist, heritage or
  • cultural sites.
  • nail, beauty, hair salons and barbers - other than where necessary to remove for treatments
  • massage parlours
  • public areas in hotels and hostels
  • place of worship
  • libraries and public reading rooms
  • community centres
  • social clubs
  • tattoo and piercing parlours
  • indoor entertainment venues (amusement arcades, funfairs, adventure activities e.g. laser quest,
  • go-karting, escape rooms, heritage sites etc)
  • storage and distribution facilities
  • veterinary services.
  • auction houses

If your business falls into one of the above categories, it is advisable to ensure that you discuss this with your workforce and try and resolve any issues that are foreseen.

This is a strict legal requirement so it is necessary to ensure that you have a robust policy in place to deal with any justifiable non-compliance. It is advisable to ascertain whether any staff members may be exempt from wearing a face covering and consider whether any changes may be needed.

We recommend that specific advice be taken before any internal processes are instigated in the workplace if there are employees that are non-compliant.

Additional COVID-19 government guidance for for employers and businesses can be found here.

Summary of financial support for small businesses during coronavirus (COVID-19)

UK

England

Wales

Scotland

Northern Ireland

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.