Who should read this?

All Employers, business owners and HR personnel.

What has been announced?

On 25^th March 2020 the Coronavirus Act 2020 was passed by the Houses of Parliament and received Royal Assent.

Whilst the Act deals with many substantive issues, Schedule 6 which deals with emergency volunteers, section 51 which deals with Tribunals, and section 37 which deals with Statutory Sick Pay, which will be important for employers.

You can read the entire Act by following this link: https://www.legislation.gov.uk/ukpga/2020/7/pdfs/ukpga_20200007_en.pdf.

What does the Act do?

• The Bill has four primary categories of effect:
  • enhancing capacity and the flexible deployment of staff;
  • easing of legislative and regulatory requirements;
  • containing and slowing the virus; and
  • managing the deceased.

The policies in the Bill are designed for use temporarily in an emergency.

Emergency Volunteers

The bill enables appropriate authorities to maximise the pool of volunteers that they can draw on to fill capacity gaps by addressing two primary deterrents to participation: risk to employment and employment rights, and loss of income.

It therefore, creates a temporary new form of statutory unpaid leave for employees and workers who wish to volunteer – Emergency Volunteering Leave.

The clause also includes certain rights and protections for employees and workers who take Emergency Volunteering Leave, including, for example, the maintenance of terms and conditions of employment during any period of leave and protection from detriment for taking the leave. The clause also provides an obligation on the Secretary of State for Health and Social Care to establish a compensation scheme to compensate eligible volunteers for some loss of income and expenses incurred.

Three working days before an employee is due to start emergency volunteer leave, they must notify their employer in writing of their intention to be absent from work on leave for the period specified in the emergency volunteering certificate, and provides their employer with a copy of the emergency volunteering certificate.

An employee who takes emergency volunteering leave is, during any period of leave entitled to the benefit of all of the terms and conditions of employment which would have applied if the employee had not been absent, and bound by any obligations arising under those terms and conditions.

A worker has the right not to be subjected to a detriment by any act, or any deliberate failure to act, by their employer on the grounds that the worker took emergency volunteering.

• A worker may present a complaint to an employment tribunal that they have been subjected to a detriment due to emergency volunteering.
• An employee who is dismissed will be regarded as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee took, sought to take, or made use of the benefits of, emergency volunteering leave.

What does this mean for employers?

The introduction of a new temporary form of unpaid statutory leave will impact employers and businesses at a time when the overall economy will be hit hard by reductions in productivity and disrupted supply chains.

To mitigate this, the measure limits the total consecutive amount of Emergency Volunteering Leave an individual can take to 4 weeks in any volunteering period of 16 weeks.

The measure also provides exemptions for micro businesses (those with 10 or fewer employees), civil servants, the military, police and parliamentary and commission staff; there is also a power to make regulations to add to the list exemptions.

Courts and Tribunals: use of video and audio technology

Proceedings can now be conducted in more circumstances then currently allowed and also entirely by video and or telephone to avoid the risk of the spread of disease through public congregation in public places. These arrangements would enable the use of fully video and video enabled courts, so that proceedings could be conducted with all parties at remote locations.

The clauses would:

• permit the expansion of the use of fully video and video-enabled hearings in various criminal proceedings
• make provision for public participation in those fully video hearings to ensure that the principle of open justice is protected
• provide for all parties to an appeal to the magistrates’ court against a quarantine order to participate by video link unless the court directs otherwise

Statutory Sick Pay (SSP)

Currently, employers are obliged to pay Statutory Sick Pay (SSP) to eligible employees who are unable to work because of sickness. It is paid at a flat rate of £94.25 (increasing to £95.85 from 6 April 2020) for up to 28 weeks. The full cost of SSP is met by the employer.

The government wants to ensure that small and medium enterprises (SMEs) receive financial support where they incur additional SSP costs due to absences relating to coronavirus. The ability to recover SSP in this scenario is important to ensure that these employers are supported in a period when their payments of SSP are likely to escalate, and that employees are incentivised not to attend work when advised not to for reasons of public health security.

The provisions in the Bill will allow for a rebate to be paid to employers to refund employers the costs of SSP for absences relating to coronavirus.

Statutory sick pay (SSP) is paid from the fourth qualifying day of sickness absence. The first three days are known as waiting days.

There is concern that not paying sick pay for the first three days of sickness absence will encourage people to go into work even if they are sick, or if they are not sick but have been advised to self-isolate. This will reduce the effectiveness of efforts to contain or limit the spread of the virus.

The provisions in the Bill will allow for the government to temporarily suspend waiting days in the event of a severe outbreak/pandemic and lapse once the outbreak is over.

What this means for Employers

The change will only apply to absences relating to coronavirus. In practice it will be for employers to determine which cases of sickness absence relate to coronavirus and which are due to other sickness reasons.

Temporarily suspending waiting days will place a direct financial burden on employers.

• As a result of the suspension of the rule, employees will also receive the daily rate of SSP for the first three qualifying days of absence, meaning SSP can be claimed from day 1 of absence in respect of coronavirus.

The cost to the employer per employee will vary depending on the number of qualifying days that the employee has in a week.

To offset some of these costs, the provisions in the Bill will also allow for a rebate to be paid to employers to refund employers the costs of SSP for absences relating to coronavirus.

What other measures have the government announced?

Furloughed workers

If you cannot cover staff costs due to COVID-19, you may be able to access support to continue paying part of your wage, to avoid redundancies. All UK businesses are eligible for this scheme.

If you intend to access the Coronavirus Job Retention Scheme, you should  designate affected employees as ‘furloughed workers,’ and notify your employees of this change.

Furloughed workers will be those who either cannot perform their duties from home (manual workers for example), or, those who the employer does not have sufficient work for, to meet their contracted hours i.e. the employee is entitled to 37 hours in their contract but the employer is not receiving sufficient work to supply the employee with this work, meaning they cannot afford to pay the employee for their contracted hours.

Changing the status of employees’ remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation with the employee.

Furloughing workers would mean that the employee is kept on the employer’s payroll, rather than being laid off or made redundant.

You should submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

To qualify for this scheme, the employee should not undertake work for the company while they are furloughed.

This will allow the company to claim a grant of up to 80% of the employee’s wage for all employment costs, up to a cap of £2,500 per month.

To be clear, the employee will remain employed while furloughed.

This change is key. It avoids the need for the employer to dismiss the employee. Any dismissal carries the risk of an employee bringing a claim against the employer for, amongst other things, unfair dismissal. This option effectively removes that risk,

As an employer you could choose to fund the differences between this payment and the employee’s salary, by way of top-up, but you do not have to. We expect this to be an area where arguments could arise from disgruntled employees who are furloughed on 80% of their pay.

HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If the employee’s salary is reduced as a result of these changes, they may be eligible for support through the welfare system, including Universal Credit.

The Government intends for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.

VAT deference

VAT payments will be deferred for 3 months. The deferral will apply from 20 March 2020 until 30 June 2020. All UK businesses are eligible.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.

Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. If you are self-employed you are eligible.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

You are eligible if your business:

• pays tax to the UK government
• has outstanding tax liabilities

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

Business rates holiday for retail, hospitality and leisure businesses

There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• for assembly and leisure
• as hotels, guest & boarding premises and self-catering accommodation

There is no action for you in order to access the scheme. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch this week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

You are eligible for the scheme if:

• your business is UK based, with turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from week commencing 23 March.

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.