In the last few days and weeks, there have been a number of clarifications and updates from the Government about the Coronavirus Job Retention Scheme and furlough leave, which we have summarised below:
Redundancy and notice pay
Employees who are or who were placed on furlough leave and are subsequently dismissed due to redundancy will be entitled to statutory redundancy payments based upon their full 100% normal pay, subject to the statutory weekly pay cap, rather than their reduced 80% furlough pay. For employees with irregular working hours, this means employers must base the 12 week average on pre-furlough salary payments.
If an employee is on furlough leave and their employment is terminated i.e. redundancy, employers are permitted to utilise the Coronavirus Job Retention for the employee’s notice period by keeping the employee on furlough leave. This can be used for both statutory and contractual notice periods, albeit employers will be required to top up an employee’s salary to 100% of their normal weekly pay. However employers are not permitted to use the scheme to subsidise statutory redundancy payments.
Coronavirus Job Retention Scheme
HMRC has published guidance for employers on what to do if they made a mistake or error under the Coronavirus Job Retention Scheme. In summary, if an employer has claimed too much furlough pay or made a fraudulent claim, they must notify HMRC and make repayments, failing which HMRC will be entitled to recover the full amount through an income tax charge together with interest and penalties, which could be up to 100% of the repayment.
The Chancellor has confirmed the Coronavirus Job Retention will not be extended beyond 31st October 2020 and therefore businesses must be prepared to take action if local lockdown restrictions are implemented in their area in the future, such as the local lockdown in Leicester.
The Government is frequently updating its guidance on countries where it is safe to travel to and from, but increasingly there is a risk that countries such as Spain may be added with little to no notice, resulting in employees having to self-isolate for 14 days upon return to the UK.
As this is more likely to happen around the world as people travel more, it is important employers understand their obligations.
The first point is that the requirement to quarantine when returning from certain countries is a legal requirement imposed by the Government. That means employees do not have a choice with respect to what they can do. If they fail to follow the guidance, they can be fined up to £1,000.
When employees are in a quarantine situation, they are not entitled to be paid Statutory Sick Pay. Although the Government extended the Statutory Sick Pay regulations to those who are self-isolating because they either have symptoms or because somebody in their household has symptoms or because they have come into contact with someone who has symptoms, that is not the case with employees who are returning from a foreign country and are required to quarantine unless of course they do have symptoms.
In these situations, businesses have a number of options:
- The employee, if possible, can work remotely from their home address;
- The employer could permit the employee to take annual leave if they have sufficient annual leave accrued;
- The business could insist the employee take the period unpaid but only if there is a lay off clause under the Contract of Employment. That means the employee may be entitled to receive guarantee pay in line with the Government scheme;
- If the employee has been furloughed previously, then they can be furloughed for the period they are required to quarantine; or
- The business could simply pay the employee their full pay.
Restructures and redundancies
Unfortunately we are seeing a significant increase in the number of businesses who are restructuring and undertaking redundancy consultations. The BBC has estimated over 150,000 redundancies have taken place so far, with the TUC predicting further redundancies will take place at the Government’s Coronavirus Job Retention Scheme comes to an end. This in turn is also resulting in a significant increase in the number of individuals claiming they have been discriminated or unfairly treated.