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Option Agreements - A Move Towards Strategic Land & Things to Consider

With COVID-19 impacting on the way we work and do business, it is not surprising that we are seeing an increase in demand for strategic land opportunities. More and more landowners are being approached by developers wanting to take an Option over their land and we have set out below some points to consider.

In simple terms, what is an Option Agreement?

In return for a usually non-refundable sum, the landowner grants the developer an option to purchase their land subject to them obtaining planning permission.

The attractiveness of an Option Agreement

Option Agreements can be attractive from both the landowner and the developer’s perspective.

From a Landowner’s perspective

  • A landowner can achieve a much higher price for the land than they would do selling at its agricultural value if planning permission is obtained.
  • A landowner may also continue to use the land up until the developer chooses to exercise the Option.

From a Developer’s perspective

  • An Option Agreement affords greater flexibility in terms of whether they would like to purchase the land in future.
  • The initial option sum payable to the landowner is often a fraction of the full purchase price and therefore a significant amount of money is not being parted with up front.

Things to consider

  • TIME – is there adequate time for the developer to obtain planning permission? Extensions to option period for appeals?
  • LAND – what is the extent of the land to be transferred – will a plan need to be drawn up and is sale by phases likely?
  • TITLE – does the registered title cause any issues?
  • PRICE – will this be fixed or based on a % of market value?
  • TAX – what tax implications are involved?
  • RETAINED LAND – unlocking for future development
  • CONSTRAINTS- restricting land dealings during option period
  • PROMOTION – land promoted into local plan for future development

We would advise that you always seek legal assistance when proceeding with an Option Agreement due to their complex nature. For further information, please contact me and I will be happy to assist.

Too Early to Say - Part 2

Yesterday we looked at some news from the Probate Registry about a mid-May drop in Probate applications and discussed whether the reasons for this were entirely COVID-19 related.

Today we look at the question of whether there is going to be a surge in Probate applications in the coming months and ask whether, if there is, that it is as a result of COVID-19.

Speaking for our department, we have seen a greater number of files relating to Probate applications or administration of estates opening during the last couple of months than we experienced in the same period in 2019. However, only a small number of these estates have resulted from deaths where COVID-19 was mentioned on the death certificate. So we do not feel that we can attribute the increase compared with 2019 to the pandemic. Indeed, we are not, at this stage, able to explain it at all.

Big data

Looking at our matter opening history, it is difficult to discern any patterns that give you a reliable basis for prediction at all. Moreover, we are one firm with offices in a few counties of the UK. I would not dare suggest our experience is a pattern that extrapolates to the whole nation.

It is, however, possible to make some observations on ONS statistics relating to registration of deaths over the course of the last five years and, more immediately, the first 21 weeks of 2020:

  • The total number of deaths registered in the first 21 weeks of 2020 was 286,779.
  • The five year average for registrations of deaths for the same period is 235,293. This may have been what led to some headlines over the course of the last few weeks that talked about 50,000 more deaths in 2020 because of COVID-19. Of course, nobody can know yet how many of the extra deaths that have occurred this year compared with the five year average would have occurred in any event over the course of the year as a whole.
  • Also, bear in mind that the minimum numbers of deaths registered in each of the first 21 weeks of the last five years totalled 214,876. If you compare this year’s figures with that statistic, there would have been more (a great deal more) than 50,000 extra deaths. However, if you look at the maximum number of deaths recorded in each of the first 21 weeks over the course of the last five years, the total would have been 256,843. This indicates (if you are comparing that with the total number of deaths experienced this year in the first 21 weeks) an extra number of deaths significantly less than 50,000.
  • The data also indicates that there were 117,252 deaths registered in the first 10 weeks of 2020. In that period there were no deaths where COVID-19 was mentioned on the death certificate – after week 11 there is not a week where COVID-19 is not mentioned. This compares with a five year average for the first 10 weeks of a year of 121,960. The minimum number of deaths registered in the first 10 weeks over a five year period was 110,870 and the maximum was 132,705.
  • In that same 10 week period there were 22,843 mentions of Influenza and Pneumonia on death certificates. It would be quite common to see a significant number of Influenza and Pneumonia mentions on death certificates in that period in any year.

Cold snap

The one time where we are pretty sure we could see a correlation between an increased number of deaths over a fairly short period of time and a greater number of new estate matters was over the winter of 2017 / 18. If you remember, that was quite a sharp cold spell. The ONS statistics indicate that this led to a considerable national spike in deaths recorded in that period. However, when you get spikes in particular months (which may be weather related or not) historical data suggests that this does not necessarily have a considerable impact on the annual total of deaths registered. Instead, what often seems to happen is that deaths that would otherwise have occurred over the course of the year in any event are concentrated into a particular period.

Predictions?

Precisely what this implies for us all as we start to emerge from this situation, I think it is best not to make any predictions. Sorry to disappoint but I’m a lawyer, not a clairvoyant! I would prefer to follow the policy of the former Chinese leader we discussed in yesterday’s blog: strategic patience.

However, do not confuse that with complacency. We will continue to keep an eye on the national data and we will closely monitor what is happening with and listen to our clients. We will take the long view but will retain the capacity for flexibility and nimble adaptability where that is required.

We are resilient and determined and, most importantly, we are here. We are open for business - not necessarily as usual but in a new and slightly different way.

We have reconfigured the way that we work. We now want to consolidate our focus on support, service and delivery for our clients.

Too Early to Say - Part 1

We have recently had an interesting update from The Law Society Gazette about an apparent surge in Probate applications being received by The Probate Registry.

Apparently, HM Courts & Tribunal Service (The Probate Registry is part of this) has told The Law Society that it has stepped up efforts to deal with Grants of Probate. It says that existing HMCTS employees have been retrained to handle Probate applications and new staff members have been hired. The Law Society Gazette describes this as occurring in “...the wake of the pandemic”.

As with many statistics and much commentary relating to COVID-19, it is difficult to discern at this stage exactly what might be happening here. We may do well to remember erstwhile Chinese premier Zhou Enlai’s response to President’s Nixon’s question about the impact of the French Revolution: “Too early to say”.

Improving Service from the Probate Registry

On the subject of Probate applications in particular, government figures now indicate that Grant of Probate applications are typically being turned around within five – six weeks with 4,329 Grants (according to The Law Society Gazette) being issued in week commencing 15 June.

The most interesting thing about that is that, until around two years ago, all Probate applications (unless there was something wrong with them) were issued within two weeks of submission and had been for years. The difference in the timescale would, in the view of most Probate practitioners, have nothing to do with COVID-19. The difference coincided with a reorganisation that took place (for better or worse) in the Probate Registry in 2019. Six weeks is not as good as two weeks. However, it is much better than the turnarounds for Probate applications that we were experiencing this time last year where 18 weeks was not uncommon.

The Law Society Gazette states that Probate applications were at half their normal levels in mid-May “...as solicitors struggle[d] to gain access to offices to collect Wills”. It goes on to say that a surge in applications due to COVID-19 deaths, as well as demand from lawyers who have been unable to work as they normally would, is expected over the summer.

Our experience (and those with whom we are in touch) would suggest that there was not really a struggle to gain access to Wills held in solicitor strong rooms. With the move to much more home working, it may have (for example) taken more time to collate the necessary authorities to send Wills of deceased parties off to executors but I do not think it would be right to say either us or our competitors’ systems were overwhelmed.

New Forms

What actually happened in mid-May that was of significance in the Probate application process was rather more mundane - the introduction of a new form by the Probate Registry. This occurred on 18 May. Prior to that date, Probate practitioners obtained a Grant of Probate with a statement of truth (formerly an oath) signed (previously sworn) by executors.

A statement of truth / oath could be a complicated document to draft and interpret and its format sat most uneasily with the new processes and work practices instituted by the Probate Registry last year. So the ability to obtain a Grant of Probate with a statement of truth ended in mid-May. A new form has replaced it. Practitioners or personal applicants for Probate have to complete all relevant boxes in the form which is then submitted to the Probate Registry.

Change averse?

I would suggest that many practitioners were working against the clock to try and get as many Probate applications in under the old Probate application process prior to the change in mid-May - especially where they feared that if they did not meet that deadline, they would have to redraft all their paper work again in a completely new format. If probate applications were half their normal levels in mid-May (which coincides almost exactly with the Probate Registry changes), I think it is likely that this was because of steady stream of applications from the end of March to 15 May (timed to beat the changes) followed by a slump as practitioners caught up with learning their way round new unfamiliar forms.

It may well be the case that there is a surge in Probate applications over the course of the coming months. Whether that is going to be as a result of COVID-19 deaths is most unclear. But tomorrow we will discuss our department’s experience so far and have a look at some big data from the ONS.

Will we be able to draw any conclusions and make some predictions? Follow the guidance of our erstwhile Chinese leader and exercise some patience - at least until tomorrow .......

Corporate Insolvency and Governance Bill

In an attempt to provide for businesses in need, following the COVID-19 crisis, the Corporate Insolvency and Governance Bill is set to assist these businesses to ensure their future security and to allow for any necessary restructuring to increase their chances of survival.

What needs to be recognised by business owners, and solicitors alike is that, due to the speed at which the Bill has been drafted (in an attempt to provide solutions as soon as possible) amendments, alterations and additions should be expected. As well as this, there are temporary and permanent measures, meaning that the legislation needs to be followed carefully to ensure that as a business, you are able to benefit as much as possible.

There are three main aims of the Bill:

  • To introduce new corporate restructuring tools.
  • To temporarily suspend parts of insolvency law to support directors to work through the COVID-19 crisis without fearing personal liability.
  • To amend company law and other legislation to provide businesses with temporary easements on company procedure.

Overall, the Bill aims to provide businesses, who were trading successfully before COVID-19, with the breathing space and necessary tools to maximise their chances of survival.

There are certain protections that have been put in place to prevent a company from going into liquidation. Firstly, a company moratorium is available to be obtained by the directors of the company when, and if, they make a statement to an appointed monitor, that the company is, or is likely to become, unlikely to pay its debts. This moratorium allows the company a protection period of 20 working days’ to restructure and rescue the company. During this time, no creditors can bring legal action against the company.

Secondly, a restructuring plan has been proposed which is similar to the existing Scheme of Arrangement. This plan allows a company in difficulty, its creditors or its members/shareholders to propose a restructuring plan. Court approval is required to approve the plan and the aim is to enable a company to restructure in an attempt to save itself from liquidation.

Thirdly, on a more temporary basis, and very importantly for a lot of businesses, Companies House formalities have been eased. This decision is down to practical and logistical challenges being faced by businesses.

There are a number of other changes that are to be brought into force through this Bill, covering wrongful trading and winding up provisions. These provisions aim to prevent directors from personal liability when they act to try and rescue the company, when in normal circumstances, their actions would be condemned.

The Corporate Insolvency and Governance Bill received Royal Assent on 25 June 2020 and may be able to provide assistance for your Company. For more information or for any advice on your company needs, please contact our Corporate and Commercial department.

New Treasury Direction Covers Flexible Furlough

On 25 June HM Treasury issued a further Treasury Direction on the Coronavirus Job Retention Scheme (CJRS), or ‘furlough scheme’, modifying the effect of the previous Directions made on 15 April and 20 May.

The new Direction sets out the rules that will apply under the CJRS from 1 July 2020 until 31 October 2020, when the scheme will end, including in relation to ‘flexible furlough’ arrangements and compulsory employer contributions to furlough costs.

As it should, the Direction essentially reflects the HMRC’s published guidance as last updated on 19 June in anticipation of the changes to the CJRS that are to take place after the end of June. The latest guidance for employers is here and that for employees is here.

For details of the changes to the scheme that are to take place after the end of June, see our 15 June blog and also the following points.

A point of note is that we questioned in our 15 June blog that HMRC’s guidance for employees stated that women on maternity leave must provide 8 weeks’ notice of an early return to work if they are to be furloughed on their return. However, the 19 June iteration of that guidance clarifies that this stipulation only applies to employees who are in receipt of maternity allowance. (As reflected in our 15 June blog, any employee can be required to provide 8 weeks’ notice of her early return from maternity leave if the employer complied with its obligation to notify her of the date that her full 52 weeks’ maternity leave was to end within 28 days of (i) the employee notifying it of her chosen start date for her maternity leave or, if applicable (ii) the automatic triggering of maternity leave by pregnancy-related absence in the 4 weeks before the expected week of childbirth or by premature birth – but the employer may, in its discretion, waive that requirement completely or agree to a shorter notice period.)

Note also that, subsequent to our 15 June blog, it was stated in the 19 June iteration of the guidance that an employee who is a military reservist returning to work following a period of mobilisation after 10 June may still be furloughed for the first time.

The conditions to the exemption for military reservists are that:

  • The employer has already claimed for another employee for a furlough period of at least three consecutive weeks between 1 March and 30 June.
  • The employee was away on a period of mobilisation that started before 10 June and returned after that date.
  • The employee was on the employer's PAYE payroll and the employer submitted an RTI submission for them on or before 19 March.

This exemption gives military reservists whose period of mobilisation ends after 10 June the same protection under the CJRS as employees whose statutory parental leave terminates after 10 June.

Also, when an employer is calculating the maximum number of employees that they can claim for under the CJRS from 1 July, the number of employees being furloughed for the first time after returning from military mobilisation should be added to any previous maximum (in same way employees being furloughed for the first time after statutory parental leave). This means the maximum number of employees an employer can claim for in any pay period after 1 July is the maximum they claimed for in any one claim period before 30 June, plus any employees they are furloughing for the first time due to them returning from statutory parental leave or military mobilisation.

CJRS - Guidance Updated on 12 June

The government updated its guidance on its “furlough scheme”, the Coronavirus Job Retention Scheme (CJRS), on 12 June to reflect changes announced by the Chancellor in recent weeks.

As always, the devil is in the detail and, as has been a feature of the scheme since the outset, some aspects have not been explained as clearly as they might have been or otherwise leave some room for doubt. Further, an important change to the Treasury Direction (which sets out the formal rules which govern how HMRC is to operate the scheme) relating to employees with variable pay who have been on statutory parental leave or sick leave has not been reflected in the updated guidance.

Restrictions on the application of the scheme

The guidance states that only employees who have been (past tense) subject to a successful claim under the scheme prior to 1 July can be furloughed under the scheme from 1 July onwards – unless, subject to certain conditions, they returned, or return, from statutory maternity, paternity, adoption, shared parental or parental bereavement leave (which the guidance refers to as “statutory parental leave”) after 10 June (see further below).

However, employers will have until 31 July to make any claims for employees who were furloughed for at least 3 consecutive weeks at any time between 1 March and 30 June – so the guidance should more accurately state that only employees who have been or are to be subject to a successful claim under the scheme in respect of the period prior to 1 July can be subject to the scheme from 1 July onwards.

In any event, it is clear that in order to be subject to the scheme going forward, the last day an employee could have started furlough for the first time (including with their previous employer, in the context of a TUPE transfer that took place after 10 June) was 10 June, unless they return from statutory parental leave after that date.

An employee who returns from statutory parental leave after 10 June can be furloughed as long as the employee was on the employer’s PAYE payroll on or before 19 March (i.e. an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before that date) and the employer has claimed (or is to claim) for at least one other employee who has been furloughed for at least 3 consecutive weeks between 1 March and 30 June.

The guidance adds the following qualification:-

If your employee agrees to be put on furlough and end their maternity leave early, they will need to give you at least 8 weeks’ notice and they will not be eligible for furlough pay until the end of the 8 weeks.

However, under the law relating to maternity leave, an employee can only be required to provide 8 weeks’ notice of her early return if the employer complied with its obligation to notify her of the date that her full 52 weeks’ maternity leave was to end within 28 days of (i) the employee notifying it of her chosen start date for her maternity leave or, if applicable (ii) the automatic triggering of maternity leave by pregnancy-related absence in the 4 weeks before the expected week of childbirth or by premature birth.

Further, even where it is open to an employer to insist that an employee provides not less than 8 weeks’ notice to return early from maternity leave, the employer may waive that requirement completely or agree to a shorter notice period.

Logically, therefore, it should be open to an employer to agree to an employee returning early from maternity leave and be furloughed without the 8 week delay (as long as maternity leave is no shorter than the legal minimum of 4 weeks in the case of factory and workshop settings and otherwise 2 weeks). However, as things stand, in the event of an audit, any employer who does agree to such an arrangement would seem to be at risk of being required to repay any grant received under the scheme relating to the first 8 weeks after the employee’s return date, and perhaps also facing penalties.

No reference is made regarding minimum notice to commence furlough in the context of an early return from shared parental leave or adoption leave. An employer can insist on being provided with up to 8 weeks’ notice to end such a period of leave early but, like any requirement for an employee to provide notice of an early return from maternity leave, this can be waived.

The number of employees who can be claimed for in any claim period starting from 1 July can’t exceed the maximum number of employees who were claimed for in respect of any claim period ending by 30 June – ignoring any employees who returned from statutory parental leave after 10 June and subject also to TUPE related considerations, where relevant.

From 1 July, there will no longer be a requirement that a period of furlough must last for at least 3 consecutive weeks – a period of lay-off (i.e. no work) or short-time working (see below) of as little as a single day can be claimed for.

To emphasise, however, where a previously furloughed employee starts a new furlough period by 30 June which continues beyond that date, this furlough period must still be for a minimum of 3 consecutive weeks. The guidance provides an example of a previously furloughed employee who starts a new furlough period on 22 June, and makes the point that this would have to continue for at least 3 consecutive weeks, ending on or after 12 July.

Note also that after 1 July, employers can’t make claims that cross calendar months, so for any period of furlough that straddles June and July the employer will need to make separate claims (i) for the period up to 30 June (to be made no later than 31 July) and (ii) for the period after 30 June (to be made not before 1 July).

Flexible furlough

For claim periods up to 30 June, there was, and is, a prohibition on an employee doing any work for their employer other than training (subject to limited exceptions in the case of directors and pension scheme trustees).

However, for claim periods starting after 1 July, employees can work less than their “usual hours” and employers can claim a grant under the scheme for such of their “usual hours” that aren’t worked. There are two different calculations that are to be used to work out an employee’s usual hours, depending on whether they work fixed or variable hours. For the guidance in this regard click here.

The guidance refers to employers being able to “bring furloughed employees back to work for any amount of time and any shift pattern”, which on its face might suggest that “flexible furlough”, as it is termed, applies only to employees who have been completely laid off at the time short-time working arrangements are implemented. However, it is apparent that this is not to be taken literally. As long as an employee was furloughed for at least 3 consecutive weeks at any time between 1 March and 30 June, flexible furlough arrangements can be applied to them at any time after 30 June – even if they have returned to working their normal hours for a period of time.

Putting employees on flexible furlough

The guidance states:

If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll need to:

  • make sure that the agreement is consistent with employment, equality and discrimination laws
  • keep a written record of the agreement for five years
  • keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).

The first port of call should be to consider the contract of employment. Some contracts contain lay-off and short-time working provisions, which allow the employer to lay the employee off without pay, or to reduce their hours and reduce their pay proportionately. Just as these clauses allow employers to readily furlough employees completely on no more than 80% of their pay (subject to the applicable cap), they will allow employers to dictate part-time furlough arrangements and to pay employees no more than the amount recoverable under the scheme for such hours that are not worked.

For employers without the benefit of such contractual provisions, if they are not going to pay affected employees in full regardless of any reduction in working hours, to act lawfully, they will need to do one, or a combination, of two things: obtain the binding consent of employees, or impose the arrangement after applying appropriate procedures. What will constitute “appropriate procedures” will be a matter for legal advice according to the particular circumstances.

Where consent alone is to be relied upon (i.e. if contractual changes are not to be imposed on any dissenters), collective consultation will not be a consideration.

However, if that is not the case and 20 or more employees are to be affected at one establishment within a 90-day period, this will require a collective consultation process – and there will be a moratorium on effecting the required contractual changes of 45 days from the commencement of that consultation if 100 or more employees are affected, or 30 days if fewer than 100 are affected. (Employers who are also contemplating redundancy dismissals should bear in mind that any employees they propose to dismiss may be part of the head-count for collective consultation thresholds, depending on the circumstances.)

Adding in time to plan and execute the process and then give contractual notice of changes, plus considerations about by when affected employees are expected to return to work full time or else be made redundant, means that in many cases an approach which involves collective consultation won’t be practicable. How to address such considerations, to include possible commercial solutions, is a matter for legal advice according to the particular circumstances.

Claim periods

A claim period is the period for which a grant is claimed under the scheme. The position regarding claim periods is not without its complexities.

There is no maximum length for claim periods that end on or before 30 June - but any periods starting before 1 July must end on or before 30 June and be claimed for by 31 July. This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July, even if employees are furloughed continuously.

Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days, unless they include either the first or last day of the calendar month and the employer has already claimed for the period ending immediately before it.

Only one claim can be made for any period: claims can’t overlap. Therefore employers must include all of their furloughed / flexibly furloughed employees in one claim even if they pay them at different times. Where employees have been furloughed / flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.

When claiming for employees who are flexibly furloughed, employers should not claim until they are sure of the exact number of hours they will have worked during the claim period. If they claim in advance and an employee works for more hours than were reported, the excess grant will be repayable to HMRC. Overclaimed amounts can be reported in the next claim and the employer should keep a record of this adjustment for six years. The guidance states that HMRC are working on a process that will allow employers who do not intend to make further claims to report and repay overclaimed amounts.

If the employer makes an error that has resulted in an underclaimed amount, it should contact HMRC to amend its claim.

The full section of the guidance relating to claim periods is here.

Scheme funding

The updated guidance reflects the following:

From 1 August, employers will have to pay employer's national insurance contributions (NICs) and pension contributions on furlough pay. Currently, the government meets the employer’s NICs and the equivalent of the minimum employer’s auto-enrolment pension contributions.

From 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers will be required to top-up to 80% (or more, depending on what the arrangement is with respective employees).

From 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).

The furlough scheme will close on 31 October.

Update to Treasury Direction awaited

We still await an update to the Treasury Direction which sets out the formal rules which govern how HMRC is to operate the scheme to reflect the above, but it is, of course, reasonable for employers to act in accordance with the published guidance.

Calculating furlough pay for returners from statutory family leave or sick leave

An important oversight is that the updated guidance doesn’t reflect a key change relating to the reference salary for those taking furlough after a period of statutory parental leave or sick leave.

The guidance still states that for such of those employees who have variable pay, their reference salary is to be the higher of the average pay received in the last tax year or the corresponding month in 2019. However, under the latest Treasury Direction, the reference salary is to be calculated as if the employee had been on paid annual leave receiving normal pay required under the Working Time Regulations during those periods – which is obviously more favourable to the employees.

It is the Treasury Direction that HMRC must apply, so this omission does not affect the true legal position – but, of course, it is the guidance that most employers will look to when applying the scheme and so this omission may result in underpayments, and potentially also disputes with employees who are aware of their entitlements under the Treasury Direction.

For a published summary of the changes to the scheme that take effect on 1 July, click here. This doesn’t deal with all aspects of the changes, but it does set out a handy table illustrating the changes in the government’s level of contributions to payments made under the scheme over the coming months. The full updated primary guidance (with further links to more detailed guidance on making claims under the scheme) is here.

Furlough and Return from Family Leave

The government announced on 29 May that from 1 July the Coronavirus Job Retention Scheme (the “furlough scheme”) can be utilised only in respect of employees who have been furloughed for a continuous period of at least 3 weeks at some time prior to 1 July. This meant that there would be a cut-off date of 10 June for placing an employee on furlough for the first time.

However, the government announced yesterday that parents on statutory maternity, paternity, adoption, shared parental or parental bereavement leave who return to work after 10 June will still be able to be furloughed under the scheme.

More details of the change will be provided in updated guidance to be published on 12 June.

For further details relating to the furlough scheme, click here.

Alternative Dispute Resolution & Family Law

The COVID-19 pandemic has seen the world go through very radical changes (some probably for the better, in the long run), very fast. It will probably be some time before we are back to anything resembling the old “normal” and we have all adapted to doing things very differently.

As a firm we have embraced technology to ensure we can continue to serve our clients. However, the Court Service took a very difficult direct hit from the pandemic and was soon inundated with urgent cases concerning adults and young people immediately made more vulnerable by the lockdown at a time when, practically speaking, it was even harder to accommodate all those cases. It is quite right that the most vulnerable are prioritised, but it required us to think inventively to minimise the impact of the delays on our clients, who were waiting to have their less urgent financial and children matters decided.

The Court system must, by necessity, be fairly standard for all situations. This can result in a situation where unnecessary work has to be carried out that won’t be of any benefit to the parties in their particular case.

Furthermore, the increasing Court workload means their staff are under tremendous pressure to move cases through the system. It is inevitable that sometimes there is insufficient time for a case to be completed on the allocated day, or for the most appropriate level of judge to decide it, resulting in more delays for the Court and the parties, and extra costs and disappointment.

This is where ADR (Alternative Dispute Resolution) makes its grand entrance. In reality, it has always been bubbling away happily in the background, used by our colleagues in civil law but the rules meant that, until recently, the opportunities to use it in family law were much more limited when, in fact, it is ideal for the issues many of our clients face.

Thankfully those rules have been addressed and now we have a full array of options we can offer clients for resolving their disputes, whilst avoiding the potential delay and cost of Court.

Many forms of ADR are as binding as a Court decision and therefore provide the same level of certainty and assurance at potentially less cost and in less time, whilst others are designed to give people a “taste” of what a Court might decide. Equipped with that knowledge after an opportunity to explore the issues with an impartial expert, people can be helped to negotiate a settlement and feel that they have really participated in the process leading to the final decision.

ADR also enables parties to agree, with the help of their solicitors, what the most important issues are and equally what they don’t need to be looked at, which once again saves time and the frustration of having to go over issues that they may not feel are relevant.

Essentially, ADR can be tailor-made to the particular circumstances of the case to ensure best use of time and money, and bring about a swift and economical conclusion to a problem.

Our team are well-versed in the various forms of ADR available for family law and would be happy to discuss them with you and explore how your case could benefit.

How Many Balls Can you Juggle?

This was a question I asked myself when the government had no choice but to “lockdown” our country to protect us all from the COVID -19 virus – something that we will hopefully never have to experience in our lifetimes again.

Prior to the announcement Lanyon Bowdler had already started making plans about how we could ensure our clients needs could be met, and their legal requirements dealt with in the event our offices would need to close. One of the first objectives was to ensure as many staff as possible had remote access to allow them to work from home as though they were in the office. Friday 20 March was the big test day – the day when we were all to work from home and test to see if the system could cope – so glad I was not part of the IT team that day!

The system coped and so we were all ready to go when the lockdown announcement was made on 23 March. But what about the other issues we were all going to have to face? I confess this was a struggle for me – I like working, I like my work family who I spend the majority of my week with, and I enjoy working with clients and getting them the results they deserve. Suddenly I had to work at home, my daughter’s school had to close, my son and husband were furloughed and I had moved my Dad in, as he lives alone and I was worried about him – not to mention three dogs who were completely confused about how the quiet house they are used to having to themselves was suddenly full of five people, and who really did not have a clue about what was going on. It’s okay I thought, I’ve got this, it’s only for a couple of weeks!

So it begins…logging on early in the morning, before everyone gets up, wearing pyjamas and thinking that it is actually quite nice not to have to worry about combing your hair, putting your make up on (although I do brush my teeth!), reading through emails that may have been sent the evening before and setting what the days work will be, and ensuring that the files can be progressed as far as possible.

But then it starts, the issues of not working in your normal environment! Your family slowly appearing making their breakfast in the kitchen whilst you are on the telephone to a client, playing music on their phones without their headphones, asking you questions “what can I have to eat” “look at this piece of work I have done for school”, “Mum what’s the answer to this question” (thank god for Google!), or just being in your eye line, knowing that they are bored and they want you to try and entertain them whilst you are working on your computer, the dogs barking because a pigeon dared to wander into the garden whilst you are reading a complex document, the washing machine going on to its spin cycle just as your boss calls to check in and then… the worst of all….wanting to use the bathroom, but being worried that if you are away from your desk and someone calls they won’t believe that you are actually working!

I confess the first few weeks were stressful. Suddenly I am working in a bubble at home with only virtual contact with the outside world, I am a mother, a professional, a teacher, a cook, a cleaner, a counsellor, a doctor and even a hairdresser! I’m all of these things, but not actually feeling like myself.

So when it became apparent that the “couple of weeks” were more likely going to be a few months I took stock and realised that I can actually juggle all of these balls. I can be the teacher to support my daughter, the tea can be cooked at the end of the working day as it normally would be, the floors can be moped at the end of the day (even if its at 9pm in the evening), I can be positive in unprecedented times and it’s okay to use the bathroom even though you are working at home!

So 10 weeks or so in and I’ve got this. I can work at home and still do a good job for my clients and they can call and email me whenever they need to, I can still speak to new clients who need help, cases can be moved forwards and rehabilitation can be arranged, even if it has to be virtual and cases can still be settled. I can support my daughter with her schooling and I can keep house all at the same time. And best of all we have got less time in lockdown to go than we have already done.

Test & Trace & SSP

Under the Test and Trace system that launched on 28 May, a person who has been notified that they have had contact with a person with coronavirus is to self-isolate for 14 days. The rules relating to statutory sick pay have been amended to include employees who are self-isolating in these circumstances.

If such a person develops symptoms of coronavirus, they are to apply for a test, and if that is positive they must self-isolate for 7 days from when they developed symptoms.

For further details relating to SSP in the context of coronavirus, including the ability of employers to reclaim up to 2 weeks’ SSP per affected employee, click here.

New CJRS Treasury Direction

On Friday 22 May 2020 the Treasury published a further Direction (dated 20 May) modifying the legal framework for the Coronavirus Job Retention Scheme (CJRS).

A first Direction was issued on 15 April 2020. The new Direction replaces it and will apply to claims under the CJRS which are made after its publication, and to claims made on or before that date where they would have been compliant with its terms.

The new Direction extends the CJRS only until 30 June 2020, so a further Direction will be needed for the extension of the current terms until 31 July, and for the new terms applicable from August – for details of which click here.

Many of the changes are on issues where the first Direction conflicted with HMRC’s published Guidance and are in line with that Guidance or have clarified areas of uncertainty. There are also some new provisions, which presumably will be reflected in further iterations of the Guidance in due course.

Requirements for placing an employee on furlough:

In general terms, perhaps the most significant change is the amendment to the requirements for placing an employee on furlough.

The first Direction required a written agreement between employer and employee that the employee would cease all work in relation to their employment – notwithstanding that HMRC’s Guidance initially suggested that only written confirmation of being furloughed was required for the purposes of eligibility under the CJRS, and subsequent versions stated that furloughing should be consistent with employment law but didn’t otherwise need a written agreement. This caused quite a degree of turmoil, and debate over the sense of this element of the Direction and whether it would be amended or, if not, actually enforced.

There has indeed been an amendment. The new Direction provides that, for the purposes of eligibility to make a claim, the required instruction to cease work is satisfied if:

  • the employer and employee have agreed that the employee will cease all work in relation to their employment – and this can be made by means of a collective agreement between employer and trade union
  • the agreement specifies “the main terms and conditions upon which the employee will cease all work”
  • the agreement is incorporated expressly or impliedly in the employee’s contract
  • the agreement is in writing or is confirmed in writing by the employer (and writing includes in electronic form)
  • the employer keeps the agreement/collective agreement/confirmation until at least 30 June 2025

Employers who did not obtain written agreements from furloughed employees (whether because they were not varying any contractual terms, or because changes were agreed orally) will welcome this change. They may also be able to rely on the new Direction in respect of past claims (if those claims complied with all the provisions of the new Direction).

However, it is unfortunate, in our view, that reference to the employee agreeing to cease work remains. In general terms, where an employer continues to pay an employee in full, it is not obliged to provide the employee with work, and so does not require the employee’s consent that they cease work. Similarly, if there is a lay-off clause, the employer has the right to direct the employee to not work. That said, in our view it is unlikely to be an issue if employers in those circumstances simply record in writing that the employee ceased work from the relevant date, as opposed to seeking the employee's agreement in that regard – including because this will not be inconsistent with the published guidance and HMRC are unlikely to take the point when carrying out audits; and if they do, they will be vulnerable to judicial review applications.

Reference salary for women returning from maternity leave and others family leave or sick leave:

Another key change is to the reference salary for those taking furlough after a period of statutory family-related leave or sick leave.

For fixed rate employees, the reference salary has always been, and continues to be, the normal, full salary as at 19 March. However, for other employees, this had been stated to be the higher of the average pay received in the last tax year or the corresponding month in 2019 – which would cause many women returning from maternity leave, and others in this category, to be much worse off.

However, under the new Direction, the reference salary is to be calculated as if the employee had been on paid annual leave receiving normal pay required under the Working Time Regulations during those periods.

The published Guidance already stated that for employees who have been on unpaid sabbatical or unpaid leave, their reference salary for furlough pay should be the amount they would have been paid if they were on paid leave when calculating 80% of their wages. The new Direction reflects this.

Other changes:

It seems that, consistent with HMRC Guidance, the employer and employee can now agree to end a period of SSP in order to start furlough (notwithstanding that the employee would otherwise continue to be eligible for SSP).

Where a period of unpaid leave started before 1 March, and the employer and employee reached an agreement before 20 March 2020 to end it earlier than originally planned, the employee can be put on furlough after the revised end-date.

No claim under the CJRS can be made for a period of unpaid leave between 1 March and 30 June and furlough cannot begin during that period - although there is no express prohibition on ending that leave earlier than planned in order to furlough.

A director will not be treated as doing work (and therefore outside the CJRS) where they are simply making a CJRS claim for, or paying wages to, an employee of the company.

The carrying out of duties as a trustee or manager of an occupational pension scheme is also permitted (save where the employer’s business is the provision of occupational pension scheme independent trustee services).

Furloughed employees can now study or do training even if it is not directly relevant to the employee’s job and agreed in advance – its purpose can be to generally improve an employee’s effectiveness in the employer’s business or the performance of the employer’s business, provided it does not contribute to business activities, generate income or profit, or significantly contribute to the production of goods or services for sale.

It is now clearer that, when calculating the reference salary (80% of which is to be paid, subject to the cap of £2,500 per month), benefits provided through salary sacrifice are not included, but variable payments for overtime, timing of shifts or additional duties will be included provided there is no discretion about how the amount is to be calculated.

The relevant date for TUPE transfers has been changed to 28 February in line with the current Guidance. A new provision extends the CJRS coverage to TUPE business transfers from an insolvent transferor (where the automatic transfer of employment contracts does not apply) and transferors will be able to claim for employees whose pre-transfer furlough periods do not last 21 days where the employees continue on furlough with the transferee.

Changes to the CJRS

The Chancellor has announced reforms to the Coronavirus Job Retention Scheme (CJRS). We are awaiting updates to the Treasury Direction (the formal rules which govern how HMRC is to operate the scheme) and the published guidance for employers for the finer detail - but these are the headline points that have been announced:

10 June 2020 will be the last day that employers can place employees on furlough.

From 1 July, 'flexible furlough' is being introduced, meaning employees will be able to work part-time and be furloughed part-time.

From 1 August, employers will have to pay employer's national insurance contributions (NICs) and pension contributions on furlough pay. Currently, the government meets the employer’s NICs and the equivalent of the minimum employer’s auto-enrolment pension contributions.

From 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers will be required to top-up to 80% (or more, depending on what the arrangement is with respective employees).

From 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).

The furlough scheme will close on 31 October.

The Chancellor warned earlier in May that employers would be expected to bear some of the costs of furlough after the end of July, and this has already prompted many to implement, or at least start planning, the redundancy dismissals of employees for whom furlough has been only a reprieve.

On the other side of the coin, the introduction of the ability for employers to have employees working shorter hours and claim funding under the CJRS in relation to the balance of their hours is intended to help businesses re-start and build up their operations as lockdown measures are relaxed.

The big unknown is how the scheme will operate in this respect. The government has stated that further guidance, including as to how employers should calculate such claims, will be published on 12 June. We know that it will be for employers to determine the split between working and non-working hours, to be claimed for in minimum blocks of a week.

On the face of what has been announced, this arrangement will only apply to employees with normal working hours. But what about employees who do not have normal working hours? Will provision be made for them, perhaps with similar principles being applied as when determining furlough pay for such employees, with reference being made to average hours worked in the previous tax year and the hours worked in the corresponding month in 2019?

For the current formalities to be complied with when putting employees on furlough under the CJRS and my comments in the context of part-time furlough, see my blog on the latest Treasury Direction here.

To emphasise, however, consideration should always be given to the contract of employment before furloughing employees, and the same applies when newly introducing part-time furlough arrangements. Some contracts contain lay-off and short-time working provisions, which allow the employer to lay the employee off without pay, or to reduce their hours and reduce their pay proportionately. Just as these clauses allow employers to readily furlough employees completely on no more than 80% of their pay (subject to the cap under the CJRS), they will allow employers to dictate part-time furlough arrangements and to pay employees no more than the amount recoverable under the CJRS for such hours that are not worked.

For employers without the benefit of such contractual provisions, if they are not going to pay affected employees in full regardless of any reduction in working hours, to act lawfully, they will need to do one, or a combination, of two things: obtain the binding consent of employees, or impose the arrangement after applying appropriate procedures. What will constitute “appropriate procedures” will be a matter for legal advice according to the particular circumstances.

Where consent alone is to be relied upon (i.e. if contractual changes are not to be imposed on any dissenters), collective consultation will not be a consideration.

However, if that is not the case and 20 or more employees are to be affected at one establishment within a 90-day period, this will require a collective consultation process – and there will be a moratorium on effecting the required contractual changes of 45 days from the commencement of that consultation if 100 or more employees are affected, or 30 days if fewer than 100 are affected. (Employers who are also contemplating redundancy dismissals should bear in mind that any employees they propose to dismiss may be part of the head-count for collective consultation thresholds, depending on the circumstances.)

Adding in time to plan and execute the process and then give contractual notice of changes, plus considerations about by when affected employees are expected to return to work full time or else be made redundant, means that in many cases an approach which involves collective consultation won’t be practicable. How to address such considerations, to include possible commercial solutions, is a matter for legal advice according to the particular circumstances.

The self-employed grant is also being extended, with applications opening in August for a second and final grant. There will be parity with the reducing furlough scheme, paying 70% (not 80%) of average earnings up to £6,750.

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