COVID-19 FAQs for businesses

Last updated 29/05/2020
  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. I have just acquired the company and the employees under TUPE – can I furlough employees?
  9. What is the position now if my employees are unable to take annual leave?
  10. Can employees take holiday when furloughed?
  11. Can I make an employee take leave whilst they are furloughed?
  12. What if an employee is furloughed during their notice period, 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. 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 has announced a Furlough Coronavirus Job Retention Scheme (CJRS) that allows 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.

In its fourth update (15 April), the government extended the start date of the CJRS from 28 February 2020 to 19 March 2020. So, this brings more scope for those employees that fell outside of the scheme originally to be furloughed. But, importantly, it is now a requirement that you must have started a PAYE payroll scheme on or before 19 March for those furloughed.

You may wish to ‘top up’ your employees’ wages by contributing the additional 20% that the government do not pay but that is a decision for you.

The CJRS scheme paying at 80% will not change until July 2020. The government has now confirmed that the scheme will continue until October 2020 but it is unlikely that the contribution under the scheme will be at the same level i.e. 80% for those businesses outside of the hospitality industry. Further guidance on this is eagerly awaited.

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 can be backdated to March 2020 – This scheme commenced on 1 April but has been backdated to 1 March.

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 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 28th May 2020, 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

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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 2020, 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. But each furlough period must last for a minimum of three weeks and a maximum of three months. So, you can furlough an employee for three weeks and bring them back to work and then re-furlough if needed, so long as each period is at least three weeks.

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.

I have just acquired the company and the employees under TUPE – can I furlough employees?

Yes, employees that were on the payroll on or after 19 March 2020 (previously 28 February) and have transferred under TUPE can be placed on furlough. You will need to ensure that you pay particular attention to ensure that their terms and conditions do not change other than for the temporary furlough period.

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.

The guidance around CJRS does not deal with this but ACAS guidance coincides with this approach suggesting it is correct. 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.

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%.

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

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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.

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 will face this dilemma. 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.

However, we would always recommend taking legal advice before taking any 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.

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.