Mishcon Academy: The Digital Sessions are a series of online events, videos and podcasts looking at the biggest issues faced by businesses and individuals today.
This live session was held on 16 April 2020. The information in the film is correct at the time of recording.
To review the key insights from the event, please view the film or read the write up below.
It enables employers to place employees on a form of leave (known as “furlough”) and to reclaim up to £2,500 or 80% of the employee’s regular wage (whichever is the lower) provided the following requirements are met:
- The employee needs to have been on the employer’s payroll (and reported as such to HMRC) as at 19 March 2020 (this includes those who may have left between 28 February and 19 March 2020, and who have been since re-employed).
- The employee must be furloughed for a minimum of 3 weeks at a time.
- The employee must give their consent to be placed on furlough.
- The employee is unable to undertake any work for their employer while they remain on furlough.
- Get your employees on board as early as possible and be transparent in communications with them. Not only is that likely to be beneficial from an employee-relations point of view, but it also has a practical benefit as employers need to obtain their employees’ consent before they can place them on furlough.
- Be mindful about which employees you designate for furlough. Some employees will be more enthusiastic about it than others. While there is no set “process” for selecting whom to furlough (as there is, say, for making redundancies), employers should still bear in mind the usual principles of fairness and non-discriminatory selections (and it would be good practice to document the same). Possible approaches include inviting employees to volunteer themselves for furlough, and rotating those who are placed on furlough.
- Get your numbers ready! Employers are required to undertake and submit their own calculations of how much they are reclaiming under the CJRS. The online portal is due to go live on 20 April 2020, so employers can be preparing those calculations now.
- Normal employment rights and obligations continue
- Think about how you will continue to engage and communicate with employees while they remain on furlough. Employers should be careful not to create inadvertently a two-tier workforce comprising those who are, and are not, on furlough.
- But remember that an employee must not do any work for their employer during furlough. They must not perform any services or generate any revenue for the employer or any associated employer. Do not ask employees to check emails or be on standby for emergencies as such activities could easily veer into the territory of work and risk invalidating the furlough. Think of ways other than work emails to stay in touch with staff on furlough.
- Training is expressly carved out, so employees on furlough are able to undertake any amount of training. But you must make sure that furlough pay is sufficient so that employees are paid at least the national minimum wage for any periods of training. Employees can also take part in genuine volunteering.
- The most recent government guidance (published after filming of the session) now makes it clear that holiday accrues as normal during furlough and that employees can take and be required to take holiday while on furlough leave. Payment for the holiday is at normal pay and so should be topped up by the employer for that period.
The CJRS does not prohibit employers from making employees redundant and it’s not mandatory to furlough as an alternative. That said, is the scheme was set up to prevent, where possible, employees from being made redundant in the short term. So, unless redundancies are inevitable (because, say, the business is closinganyway) employers should be cautious not to disregard the CJRS entirely and proceed straight to making redundancies without considering ways to avoid or mitigate them, including the possibility to furlough. In particular, for those employees with two years’ continuous service, making them redundant could amount to an unfair dismissal where alternatives to the redundancies – such as furlough – were not reasonably considered.
In some cases. Where the proposal is to place on furlough 20 or more employees from one establishment, and the fall-back position is that these employees would otherwise be made redundant or dismissed, an employer is required to undertake collective consultation with employee representatives for 30 or 45 days (depending on numbers) as it would in any collective redundancy situation. Consultation requirements may be reduced where there are “special circumstances”, and it is certainly arguable that COVID-19 constitutes a “special circumstance”. That said, given that the sanctions for failing to consult include having to pay up to 90 days’ salary per affected employee, it is advisable that employers strive to comply with these obligations as far as possible.
- Remember that all the usual employment laws continue to apply and other aspects of the employment relationship remain unchanged.
- We all hope that this will be a temporary state of affairs and that we will come back to a functioning and loyal workforce.
- Importantly, employers continue to have a duty of health and safety towards their employees. This will be particularly relevant in relation to employees who do not, or are unable to, work from home. Steps have to be in place to keep employees safe as far as possible, including thinking about how they can travel safely, providing hand washing facilities and facilitating social distancing at work.
- Day to day issues still need to be handled and grievance and disciplinary procedures still need to be carried out in the usual way.
- The underlying duty of “trust and confidence” which is implied into every employment contract will continue to impose obligations upon employers. It is a deliberately flexible concept, but it may have a very direct impact if courts feel that an employer has improperly attempted to use the crisis to disadvantage employees.
- Employers with fewer than 250 employees can be reimbursed for the first 14 days an employee receives Statutory Sick Pay (“SSP”).
- The rules regarding furloughing employees who are on sick leave remain unclear. At present, it seems to be the case that employees can only be furloughed after their entitlement to SSP has ended. But watch this space as we expect further clarity in due course.
- Family leave entitlements (e.g. maternity, paternity, shared parental leave etc.) will continue as normal. Employers will be able to reclaim in respect of enhanced contractual family leave pay that is paid to furloughed employees.
- Recent emergency regulations have removed the bar on carrying forward holiday which which means that employees are now able to carry over up to 4 weeks’ annual leave for up to two years, provided that it was not reasonably practicable to have taken that leave because of COVID-19. It applies to all employers but was aimed at key industries where workers may not be able to take their holiday as they are needed to keep those industries running. However, where possible and despite the current lockdown (or perhaps because of it), employers should ensure that employees continue to take regular periods of leave for the sake of their health and well-being.
- Look ahead and think about what’s coming next: identify and plan for future challenges.
- Involve employees as early as possible and put consultation mechanisms in place so that you are able to move quickly when circumstances change.
- Key to overcoming any current or future challenges will be employers’ relationships with staff. It is worth noting that many organisations were well-placed to rebound strongly after the last financial crash because they managed to retain and motivate their workforce. Willingness to communicate with staff transparently and meaningfully is key.
- Equally, employers need not to shy away from taking tough decisions. Certainly, employers should not use furlough purely to avoid having to take steps that are inevitable.
Is furlough available to employees on visas?
- Yes, provided the usual criteria in relation to furlough are satisfied, an employer is able to place Tier 2 workers on furlough in circumstances where it is experiencing a temporary reduction in output or trading functions. However, employers should continue to ensure that they treat sponsored workers in the same way as they do non-sponsored workers, and the decision to furlough Tier 2 workers must be part of a company-wide policy to avoid redundancies. Finally, the Home Office have made clear that the earnings of furloughed sponsored workers must return to what they were previously once the worker returns from furlough.
If we don’t furlough our Tier 2 workers, can we reduce our sponsored workers’ salaries to avoid redundancies. Is this ok?
- Sponsored workers salary must normally remain at or above the overall minimum level for the visa category. The overall minimum for a Tier 2 (General) visa is £30,000 per year and for a Tier 2 (Intra-company Transfer) visa is £41,500 per year. The salary must also be at or above the particular appropriate salary rate for the specific job the Tier 2 worker is doing (which may be above these stated overall minimums). The Home Office will allow employers to temporarily reduce the pay of sponsored workers to 80% of their salary or £2,500 per month, whichever is the lower. Similar with furloughing, any reductions must be part of a company-wide policy to avoid redundancies in which all workers are treated the same. Once the company-wide arrangements come to an end, the sponsored worker’s pay must return to what they were previously.
Some employers have seen their employees with Tier 2 (General) sponsored visas go back to their home country in the short-term and are working remotely. Is that ok from an immigration perspective?
- Yes, if a worker is on a on Tier 2 (General) general visa, they are entitled to return to their home country and to work remotely from there (subject, of course, to any travel restrictions in place). However, employers and employees should be mindful that, where the employee is intending to apply for indefinite leave to remain in the UK, periods of absence outside of the UK will be relevant to that application. Also, if a worker on a Tier 2 (General) visa has returned overseas to work and their visa expires while they remain out of the country, they may be prohibited from returning to the UK for up to 12 months (known as a ‘cooling off’ period).
Other immigration issues to be mindful of:
- Many employees on visas will find that COVID-19 means that cannot leave the UK and may outstay their visas (for instance, due to self-isolating or borders being closed). For those whose visas expire between 24 January and 31 May 2020, it is possible to extend their visas by completing a short online form. Where long-term visas are being contemplated, the Home Office guidance also says that until 31 May 2020 it is possible to switch visa categories in the UK even if you would normally have to make this type of application outside the UK – for instance, if you want to switch from a visit visa or a Tier 5 (Youth Mobility Scheme) visa to a Tier 2 (General) visa. This may in fact bring costs saving to employers, where the alternative would have been to pay for an employee’s travel costs of leaving and then returning to the UK.