Daily Coronavirus Webinar: job retention scheme and employment law

It seems as though, understandably and rightly, we’ve discussed the government’s Job Retention Scheme (JRS) on all of our recent webinars.

But today we brought in the real experts to get into the real nitty-gritty: the CBI’s own Chief UK Policy Director, Matthew Fell; Sarah Jackman, a Counsel at Dentons and a specialist in employment law; and Phillippa O’Connor, a partner within PwC’s Reward & Employment Practice.

Naturally, their conversation was detailed and wide-ranging, just as we wanted it to be. But it seemed to that five major themes emerged:    

• The questions that remain about the JRS…
• …and the possibility of answers
• The parameters of furloughing
• Reputation management
• When and how companies should reopen.

Questions about the JRS…

There are, as Matthew pointed out, two big questions about the JRS. The first is: how long will it last beyond the end of May? As we know, 18th April is currently a cliff-edge date, when companies would need to embark on 45-day statutory consultations if they are to make staff redundant when the scheme is scheduled to end. Extending the JRS could spare them from having to make that call – but they need to know soon.

And the second big question is: when will companies actually get their hands on the money from the Treasury?

Of course, there is also a host of smaller (but still important) questions. As Sarah observed, it’s a bank holiday tomorrow – and there’s still no guidance on how bank holidays work alongside with furlough periods! “The government is moving at such speed,” Sarah added, “that it’s understandable they haven’t done everything yet.” But we will need answers eventually, and the CBI is pressing for them on a daily basis.

…and answers?

The good news is that, when it comes to the two big questions, we are expecting answers very soon. On the first, the question of what happens beyond the end of May, Matthew said: “We’re hopeful that the government will be able to provide that clarity very soon – possibly in conjunction with any announcement on the lockdown.”

On the second, the question of when and how companies get paid, Philippa anticipated that guidance might even emerge in the next 24 hours. We’re hearing that an online portal is likely to be launched on 20th April, and companies will be told in advance how to sign up and start claiming.

The parameters of furloughing

In this webinar, the questions feed was even busier than usual. Many employers wanted to know about how and when they can communicate with furloughed staff, and what they can ask of them.

There were too many answers to include here, but I shall highlight some of Sarah’s responses. Her thinking was that, yes, certain allowances, such as a car allowances, can be treated as pay for the purposes of the 80% calculation. She also believes that, while the guidance is unclear, it’s very likely that childcare, by itself, is enough of a reason for an employee to be furloughed.

Reputation management

The JRS is a test for companies’ reputations. Of course, it is a good thing for companies to use the JRS when they need to. But they should do so responsibly and with restraint. After all, as Matthew pointed out, “we don’t know how long this is going to go on for, or how much money will be needed”.

But there are other ways in which companies can act responsibly. Phillippa mentioned two in particular. First, companies should do all they can to support their staff, whether those staff are being furloughed or not (and, as Sarah pointed out, some staff members are more vulnerable than others – e.g. young people).

Second, there are those companies, such as the big banks, who are announcing curbs on executive pay. Phillippa expects to see more such announcements before this crisis is over.

Reopening

And what about the future, when companies may be reopening? The crucial point, both Phillippa and Matthew agreed, is that there is no one-size-fits-all answer. Different industries – indeed, different businesses – will need to reopen at their own paces and probably with staggered returns for different employees.

There are some steps, however, that all businesses should take: ensure that the workplace is safe, and communicate. As Sarah said, “People are still scared – and they’re still scared about losing their jobs. If they see some people going back but not them, they might be worried that they’re going to be made redundant. Maintaining communication is crucial.”

Key questions we answered:

1. Perhaps the most fundamental people issue is whether a business should be open or not. We’ve had some fresh guidance from the UK Government as well as further developments in the devolved nations. Will these be helpful for business?

• On Wednesday, the Government published important updates to the guidance for employees, employers and businesses on social distancing in the workplace. 
• The guidance offers more detail on how businesses in England can stay open through implementing a range of practices that will ensure the health and safety of their workplaces.
• The measures aim to reassure employees that - when they come to work - their health is protected; and they won’t be risking the health of the rest of their family at home. 
• But, while it’s positive to see some sector-specific information in guidance, these updates don’t set out an exhaustive list of scenarios– with some parts of supply chains/ sub-sectors missing. 
• This, in turn, means that some trade associations may find it challenging to translate this guidance into practice as asked by Government, for firms in certain parts of the economy.  
• In addition, we’re also continuing to see a lack of consistency in approaches across the devolved nations.
• For example, when we look to Northern Ireland – the Republic of Ireland’s Government has published a very clear, very detailed list of ‘essential services’. 
• This is very different to the UK government’s approach and is adding to the confusion for NI businesses operating across the all-island economy. 
• There’s also still a pressing need for an updated NI critical worker list - to provide extra clarity. 
• In Scotland, the CBI was one of 13 businesses that contributed to a public letter last week, emphasising the importance of cooperation, clarity, and consistency across all parts of the UK.
• That achieved real cut through and shows the impact (and importance) of a united business voice. 
• While, in Wales, the Devolved Administration introduced legal measures to require workplace social distancing. 
• These came into effect on Tuesday morning, with businesses required to take reasonable measures to ensure the 2m rule is maintained 
• The legal discrepancies that arise from these changes aren’t insurmountable.
• But, in practice, it’s extremely difficult for businesses to reassure staff and the public - if different levels of Government are implementing different measures.  
• And the CBI is continuing to emphasise in its discussions with the Devolved Administrations and UK Government, the need for greater coordination and consistency across the country.

2. The JRS and questions about businesses staying open have grabbed the headlines, but what other important employment issues should firms be aware of?

• The value of assets in DB pension schemes collapse when an economic crisis hits the stock market and gilt yields. This creates a deficit between the scheme’s liabilities and assets and it’s the sponsoring business that’s expected to plug the gap.
• But now is a terrible time to be trying to pull cash out of a business if you also want that business to survive.
• So, it’s important that the Pensions Regulator’s recently published guidance saying that scheme Trustees should be open to requests to reduce or suspend Deficit Recovery Contributions.
• We’re hearing that consultations with trustees are taking too long.
• And that employers need the unilateral option to suspend or reduce deficit recovery contribution payments for up to 3 months, with the possibility of extension, by issuing a simple notice to the scheme trustees.
• This should be subject to dividends and other forms of shareholder return being suspended for the same period. 
• On immigration, business taking on new workers have a responsibility to check the eligibility of the person to work in the UK. 
• The Home Office is relaxing these rules to enable checks to take place via video calls rather than in person, and that scans or photos of documents can be sent instead of the original copies. 
• They’ve also clarified what will happen to migrant workers whose visas are about to expire but can’t return home due to Coronavirus travel restrictions.
• Been clear – no individual in the UK legally, but whose visa is due to, or has already expired, and who cannot leave because of travel restrictions related to Covid-19, will be regarded as an overstayer, or suffer any detriment in the future.  
• For migrants whose leave expired since 24 January 2020, visas will be extended to 31st May 2020. Not automatic – individuals will need to contact the Coronavirus immigration team to update their records.  
• Also, confirmation for workers on Tier 2 visas, that non-EEA migrant workers are eligible for furlough. Employers can temporarily reduce the pay of their sponsored employees to 80% of their salary or £2,500 per month, whichever is lower.
• And, crucially, employers are not expected to top up the money they get from the grant to meet tier 2 thresholds.

3. What are the outstanding issues regarding the Job Retention Scheme?

• Companies are beginning to look at when this process ends and what should happen next.
• Government advice was drafted very quickly so confusion was initially created. However, recent clarity has helped.
• The issue of whether employees’ holidays are accrued remain an issue.
• Companies are focusing on how they can get cash through the door to implement the scheme.
• The end of May isn’t far away, and companies are considering what happens after that. What does the back end of the scheme look like and how long does it need to run for?

4. Can employers require furloughed employees to take holiday?

• The answer is yes.
• If people are scheduled to take holidays then they are still holidays, and can be taken without interrupting furlough
• Employees are entitled to be paid at their normal rate during the holiday period.

5. We understand furloughed employees can work elsewhere. Can we restrict them from working for our competitors?

• The guidance is clear that while people cannot work for their own employer, if they have the permission, they can work elsewhere. Ultimately, it is a question of agreement.
• Some employers may have concerns about employees working for rival companies. They can set that out as part of an agreement regarding what the employee is allowed or not allowed to do.

6. We have seen mixed messages on when the furloughing claim can be made from. Can you clarify this?

• The claim must be made on the day the employee was first formally placed on furlough. Confusion arose because some people were sent home before the scheme was introduced.
• If this applies to you, you will be eligible to be put on the scheme.

7. Can employee grievance procedures be continued while on furlough or is that barred?

• This would not count as providing services if someone is raising grievances. However, an employer can opt to put it on hold during the furlough period.
• Disciplinary issues would be assessed on a case by case basis.

8. When someone dips in and out of furlough, is there a legal requirement to inform them in writing on each occasion?

• You have to inform them every time in writing when they are going onto furlough and what the terms are.

9. For employees who are placed on and off furlough, is there a minimum period between those periods of furlough?

• There isn’t. There is only a minimum 3-week bloc for each set.

10. Are car allowances to be treated as an employees’ salary for the purpose of the 80% calculation?

• You can claim for the regular payments you are obliged to pay. If someone has a car allowance as a sum they are entitled to every month, then it should be included.

11. Are childcare issues on their own sufficient reason to furlough?

• Childcare alone would meet the standard for an employee to be placed on furlough.

12. How might the JRS be unwound and what would that look like?

• For companies, it is likely to require as much thought and care as the furloughing process. It is unlikely companies will be able to un-furlough all of their employees all at once.
• Businesses may need to implement some measures focusing on social distancing for a while after un-furloughing employees.
• The process for un-furloughing people will need to be thought through to help ensure they are fair.
• It is also important to consider that while businesses begin the process of un-furloughing people, some people may be scared to return to work.

13. What is the interplay between statutory sick play and JRS?

• The government’s guidance keeps them separate. You are either on JRS or statutory sick pay.
• Once your sick period ends, you can be furloughed. It is one or the other.