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Debt Recovery During COVID-19

With the COVID-19 pandemic bringing uncertainty and exceptional circumstances to businesses, cash flow should be a top priority. Our debt recovery experts are here and able to assist both existing and new clients with their queries and provide commercially focused, practical advice on options available to them.

Whilst it is likely that some businesses and individuals may not be able to repay their debts in full during this time, companies should not let this discourage them from taking action if an agreement cannot be reached. Our team will be able to assess your needs and provide advice on letters of claim, negotiating repayment plans, issuing claims and obtaining a County Court Judgment and thereafter enforcement during, and after, the current government restrictions. It is vital that action is taken now to ensure you are put to the forefront of a potentially long list of creditors resulting in a more positive outcome.

For further information about out debt recovery services, please contact me on 01952 211024 or by emailing debtsolve@lblaw.co.uk

CJRS - Latest Guidance and Treasury Direction

After it was announced on 17 April that the Coronavirus Job Retention Scheme (“the Scheme”) has been extended from 31 May 2020 to the end of June, the government issued the fifth iteration of its guidance on the Scheme. The latest guidance for employers, updated yet again on 20 April, is here and that for employees is here.

The HMRC portal through which employers can claim under the Scheme went live on 20 April. For details of how to claim and further link to the portal click here.

On 15 April the Treasury issued a direction to HMRC regarding the operation of the Scheme (“the Direction”) which, unlike the guidance, has statutory force. In certain key respects, the Direction contradicts the guidance, and in others is at best ambiguous. In this blog, I highlight the latest developments in the government’s guidance and consider how the Direction and the guidance inter-relate.

Holiday

A long-standing frustration was that the government’s guidance was silent as to the inter-relation between furlough and holiday. The Direction also did not shed any light on the matter.

However, the guidance for employees and the part of the guidance for employers relating to what they can claim now state that it is possible to take holiday while on furlough, and that the holiday pay paid must be the full entitlement in accordance with the Working Time Regulations (“the Regulations”). Although the guidance is silent on the point, holiday pay entitlement in respect of any element of annual leave beyond the 5.6 week entitlement under the Regulations will be governed by the contract of employment.

The guidance is silent on whether an employer can compel an employee to take annual leave while on furlough. This is a matter for advice in individual circumstances.

The guidance concludes this section by saying: "During this unprecedented time, we are keeping the policy on holiday pay during furlough under review." Therefore, this might not be the final position.

The reason for furlough

The Direction states that the purpose of the Scheme is “to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease“.

It goes on to provide that no claim may be made “if it is abusive or is otherwise contrary to the exceptional purpose” of the scheme, and that claims can only be made for a employees who are furloughed “by reason of circumstances arising as a result of coronavirus or coronavirus disease“(but it is expressly not a condition that furloughed employees would otherwise have been made redundant).

The guidance is not at all as explicit that the decision to furlough must be causally connected with circumstances arising due to the pandemic. It states that the Scheme “is designed to help employers whose operations have been severely affected by coronavirus… to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.” It is the case, though, that employers who are identified in the event of an audit to have claimed in relation to employees who have been furloughed for reasons unconnected with circumstances arising from the virus outbreak will be at risk of having to reimburse monies received and, perhaps, facing penalties including, depending on the circumstances, prosecution for fraud.

Consent to furlough

There has always been confusion in some quarters as to whether the agreement of an employee is required to place them on furlough. This will not have been helped by the wording of some of the government’s guidance to employees. The current iteration states:

If you and your employer both agree, your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19). This is known as being ‘on furlough’.

and

Both you and your employer must agree to put you on furlough - so speak to your employer about whether they can claim. Once agreed your employer must confirm in writing that you have been furloughed to be eligible to claim.

This contrasts with the guidance to employers. The first iteration stated that an employer merely needs to write to the employee notifying them that they have been furloughed. The second, third and fourth iterations repeated this, and added that the employer needed to keep a copy of the written notification for five years.

Specifically, the current iteration states under the heading ‘Agreeing to furlough employees’:

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.

And under the heading ‘Before you claim’, it states:

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

So the only context in respect of which the guidance for employers requires the agreement of the employee is in relation to any changes in their contract of employment. Changes in the contract of employment will be required only if the employer is not to continue to pay the employee in full and the contract of employee does not provide the employer with the right to apply the relevant reduction in pay (such as under a lay-off clause, which will typically provide the employer with the power to reduce pay to nil, subject to an obligation to pay statutory guarantee pay of £30 per day for up to one week every three months). This reflects the position under the general law, and the reference to the general requirement for employee consent in the guidance for employees is otiose.

However, the Direction not only stipulates at paragraph 6.1 that there must be an instruction by the employer to the employee to cease all work in relation to their employment but, out of nowhere, adds at paragraph 6.7 that:

An employee has been instructed by the employer to cease all work in relation to their employment only if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment.

Of course, this is completely at odds with the guidance to employers, and it also goes beyond what is stated in the guidance to employees – which does not require a specific agreement that the employee “will cease all work”, or require that any agreement with the employee is in writing. Indeed, there will be many instances where an employee has been, or will be, furloughed when they will already have ceased work, and therefore where it would not be practicable to direct the employee to cease work or to obtain their agreement that they will do so, e.g. where their employment had previously terminated and they are being reinstated to be furloughed, they are returning from unpaid leave or maternity/paternity/parental/adoption leave, or they have been on sick leave or off work in isolation.

There will be many thousands of employers who have furloughed employees without any kind of agreement with them at all, including where agreement has not been required in accordance with the government’s guidance to employers. Where some form of agreement has been obtained, it will be relatively rare that there is written agreement in terms that the employee “will cease all work”.

In my view, the stipulation in paragraph 6.7 is likely to have been made without due consideration and, in any event, without the intention of imposing a requirement that employees must have consented to cease work, whether in writing or otherwise. Accordingly, I consider that this stipulation is likely to be overridden by a future direction or else not enforced by HMRC when auditing employers’ claims under the Scheme (to the extent that it is to do so). There are several reasons for this, which include that:

  • Paragraph 6.7 is contrary to what has been the government’s guidance for employers from the outset, and indeed as restated on 17 and 20 April, after the Direction was issued.
  • Paragraph 6.7 defies all logic and common sense. The government introduced the Scheme in order to provide much needed relief to employers and their employees to help mitigate the catastrophic economic impact of virus outbreak. It would be massively politically damaging to the government to apply a needless and unjustifiable technicality that would prevent employers who have acted in accordance with their published guidance from recovering payments under the Scheme – including to the extent that this could contribute to employers ending up having to make redundancies, or indeed going out of business altogether, when the principal aim of the Scheme is to protect jobs.
  • If paragraph 6.7 stands and HMRC enforce it, the Treasury will doubtlessly be the subject of countless applications for judicial review on the basis that employers had a legitimate expectation that HMRC would act in a way consistent with the published guidance. Such applications will be costly and time consuming to fight, and seemingly destined to succeed.

In any event, a practical point to bear in mind is that HMRC will be paying claims as submitted, so even if paragraph 6.7 stands and will ultimately be enforced (subject to any application for judicial review), this will only be an issue for employers who are without the relevant written agreements if they happen to be audited in the future.

Those points having been made, unless and until there is a future direction to override paragraph 6.7, it would be prudent for employers to obtain from employees who are furloughed in the future their written agreement that they will cease all work and, to the extent it has not already been obtained, also written agreement to this effect from employees who have already been furloughed. It is unclear whether, to the extent that paragraph 6.7 is to stand and is to be enforced, such agreements can be effectively backdated, but they should at least purport to have effect from the date that furlough commenced. If backdating turns out not to be permitted (and any application for judicial review regarding the entire effect of paragraph 6.7 were to fail), at least agreement will be in place going forwards.

Sickness absence and furlough

The guidance originally stated that a period of furlough subject to funding under the Scheme could not be commenced for employees who are on sick leave or who are self-isolating and are entitled to statutory sick pay (“SSP”) until the period of entitlement to SSP ends. However, in the third iteration of the guidance, released on 9 April, the position was reversed and since then, including as updated on 17 and 20 April (i.e. after the Direction was made), the guidance has expressly stated that employers may place on furlough employees who are on sick leave, if they so wish. For further details of how sickness and furlough inter-relate according to the government’s guidance, click here.

The guidance also expressly states that employees who are shielding in line with public health guidance can be furloughed. Following a statutory amendment on 16 April, with retrospective effect to 13 March, such employees are also entitled to SSP.

However, paragraph 6.3 of the Direction stipulates, counter to this, that if an employer gives an instruction to cease work at a time when an employee is entitled to SSP, the period of furlough cannot commence under the Scheme until the period of entitlement to SSP has ended. My view is that rather than the Treasury having made a deliberate decision to adopt a contrary position to the guidance, this is likely to have been the mistaken incorporation of an aspect of an outdated iteration of the guidance. Nevertheless, if this is not addressed in a future direction, it will be open to HMRC, in the event of an audit, to demand repayment of sums claimed under the Scheme in respect of employees who were entitled to SSP at the date that the employer purported to commence furlough until the earlier of the end of the period of entitlement to SSP and the end of furlough. This could of course cover a prolonged period, whether for an employee with a medium or long-term condition or one who is shielding in accordance with public health guidance. Again, however, any such stance by HMRC would be vulnerable to judicial review on grounds of the employer’s reasonable expectation.

Qualifying employers

The guidance has always stated that the Scheme excludes public sector or publicly-funded employers. However, there is no such exclusion in the Direction. Arguably, the guidance on this point is no more than an encouragement to public sector and publicly funded employers not to draw on public funds through applying to the Scheme and, absent a further direction to preclude it, public sector and publicly funded employers are just as eligible to apply to the Scheme as any other employer.

TUPE and successor businesses

The guidance was originally silent as to whether a transferee employer could apply the Scheme to employees who transferred to it under TUPE or the Employment Rights Act.

However, the third iteration of the guidance stated that transferees can claim under the Scheme for employees who transferred to them after 28 February 2020 – which was the original qualifying date for employment for employees who could be furloughed under the Scheme. When the qualifying date was changed to 19 March, the guidance was updated to refer to transfer after that date. This will be subject to the employee having been on the transferor’s payroll and having been subject to an RTI submission as of 19 March. The Direction also reflects this position.

However, as things stand, employees who transferred after 28 February but before 20 March cannot be furloughed under the Scheme – notwithstanding that all other employees who were on an employer’s payroll and subject to an RTI submission as at 28 February can be furloughed with effect from 1 March.

It has not been provided that transferees are to have the right to access transferors’ payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme.

Further, it has not been stated that the period of furlough will be deemed to be continuous as between the transferor and the transferee. This will be important to the extent a pre-transfer and/or a post-transfer period furlough is shorter than the 3 week period necessary to be subject to the Scheme.

Calculation of payments

The most complex aspect of the guidance and the Direction relates to the payments that employers can claim.

The Direction states that that employees will be treated as on variable pay for the purposes of calculating their “reference salary” (80% of which can be reclaimed, subject to the £2,500 per month cap) unless they are a “fixed-rate employee”. A “fixed-rate employee” is defined as an employee entitled under their contract to be paid an annual salary (and no other payment) in respect of basic hours determined by the contract, paid in equal instalments per pay period (of a number of weeks or a month) regardless of the number of hours worked in that period, and where the basic hours do not normally vary according to business, economic or agricultural seasonal considerations.

For variable pay employees, the employer can claim the higher of the employee’s earnings in the same month the previous year or the employee’s average monthly earnings for the 2019/2020 tax year. For fixed-rate employees the reference salary is the rate as at the last pay period before 19 March 2020.

It would appear that, in accordance with the direction, a salaried employee who earns contractual commission or bonuses during their normal working hours will be a variable pay employee, not a fixed-rate employee.

However, the guidance to employers relating to what they can claim tells employers to:

Choose the calculation you think best fits the way your employee is paid. For example, if you pay your employee a regular salary, use the calculation for fixed pay amounts. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made.

This suggests that whether an employee is salaried should be the determining factor as to whether to treat them as a fixed-rate employee. However, the direction takes precedence over the guidance and, particularly as the guidance states that HMRC will not decline or seek repayment of any grant based on the choice of pay calculation as long as it is reasonable, it would seem to be open to employers to treat salaried employees who receive additional contractual remuneration for work performed within their normal working hours as variable pay employees, so that they can claim all aspects of remuneration covered by the Scheme, including that earned outside the employee’s normal, basic working hours.

Whether on fixed-rate or variable pay, the reference salary only includes “regular” salary or wages. This excludes “conditional payments” and benefits in kind, and only includes payments which arise from “a legally enforceable agreement, understanding, scheme, transaction or series of transactions”. It can include pay that varies according to the business’s performance, the employee’s contribution to the business’s performance, the employee’s performance of employment duties, or otherwise at the employer’s discretion only where pursuant to such a legally enforceable arrangement.

Taken literally, this leads to absurd results. All payments of wages are “conditional on a matter” in the sense that, in the normal course, the employee’s work is a condition of payment. That cannot be intended, of course. But what about overtime payments – which are “conditional” on working in excess of contractual hours, particularly if the overtime is not compulsory or guaranteed. And if it is included at all, how regularly must it be earned in order to be “regular” under the Scheme? The guidance states that any regular payments the employer is obliged to pay employees includes “past overtime”, without any qualification – so perhaps all and any overtime can be included for variable pay employees?

An on-line calculator for working out payments became available from 20 April, but this applies only to some employees who receive the same amount every pay period and is “aimed at organisations with only a small number of employees”. The guidance states that the online services will continue to be improved on a frequent basis, including supporting more employment situations with the calculator. Hopefully that will be done quickly and that this, and/or further updated guidance and Treasury directions, will help to provide clarity.

In any event, it seems inequitable that some salaried employees will have certain aspects of their remuneration excluded that could be recovered in the case of variable pay employees. This would seem to include overtime and call-out payments for salaried employees who receive nothing but their basic salary for working their normal, basic working hours.

For our observations on the main aspects of the Scheme, updated to take account of the above points, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

Statutory Sick Pay and Shielding

On 16 April the legislation relating to statutory sick pay (“SSP”) was amended, with retrospective effect from 13 March, so that a person will be deemed incapable of work for a reason related to coronavirus, and so entitled to SSP, when they are isolating themselves because:

  • they are defined in public health guidance as extremely vulnerable and at very high risk of severe illness from Covid-19 because of an underlying health condition and
  • they have been advised by a notification (sent to, or in respect of, them) that, in accordance with that guidance, they need to follow rigorously shielding measures for the period specified in the notification.

This is the latest in a series of legislative amendments that give effect to promises made by the Chancellor in his budget on 11 March in relation to SSP in light of the coronavirus outbreak.

For further details of the promises made by the Chancellor and the extent to which they have been implemented, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

Extension to the Coronavirus Job Retention Scheme

HM Treasury has announced that the Coronavirus Job Retention Scheme (the ‘furlough scheme’) has been extended from 31 May 2020 to the end of June. See here for details.

The Chancellor said he would keep the scheme under review and extend it further if necessary.

The announcement comes two days after the Treasury caused much consternation with the wording of its direction to HMRC regarding the operation of the scheme, which in certain key respects contradicts the current published government guidance, and in others is at best ambiguous. I am in the course of digesting that document and preparing a blog in respect of its ramifications.

For our observations on the main aspects of the Scheme, and a link to the government’s current published guidance, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

The Coronavirus Job Retention Scheme - Fourth Version of Guidance

The government has published the fourth version of its guidance on the Coronavirus Job Retention Scheme (“the Scheme”). The full guidance for employers is here and that for employees is here.

The date, when an employee has to have been on the employer's payroll in order to be subject to the Scheme has, subject to the below, changed from 28 February to 19 March 2020 – the date just before the Chancellor announced details of the Scheme. However, this is subject to the important qualification that there must also have been an RTI submission to HMRC on or before 19 March notifying it of payment in respect of the employee - so many employees who commenced employment after 28 February but by 19 March will still miss out.

It is still the case that employees who have been made redundant, or otherwise have been dismissed or have resigned, can only be re-employed and furloughed subject to the Scheme if their employment ended on or after 28 February (and this applies even if they have not been re-employed until after 19 March).

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

The Coronavirus Job Retention Scheme - Third Version of Guidance

The government published its third update to guidance on the Coronavirus Job Retention Scheme (“the Scheme”) late on 9 April. The full guidance for employers is here and that for employees is here.

Frustratingly, this does not include any clarification as to whether an employee can be on holiday whilst furloughed under the Scheme without “breaking” the period of furlough. We comment on this at the end of our commentary on the Scheme, which has been updated to incorporate the below points, which is accessible here.

The main areas of developments are as follows.

Sickness

Previous guidance stated that employees who are off sick and are entitled to statutory sick pay (“SSP”), or who are self-isolating in circumstances where they qualify for statutory sick pay, could not be furloughed under the Scheme until the relevant absence had ended. This has changed. The updated guidance states that employees who are off sick can be furloughed just like any other employee, and if that is done, a relevant employee will no longer receive sick pay and will be treated as a furloughed employee.

The guidance also states in relation to employees who become sick whilst furloughed that they retain their statutory rights, including their right to SSP, and this means that furloughed employees who become ill must be paid at least SSP, but it is up to employers to decide whether to move these employees on to SSP or to keep them on furlough, at their furloughed rate. A qualifier to this, which the guidance does not acknowledge, is that if the employer has placed the employee on furlough by agreement, it can only switch the employee on to sickness absence if that is in accordance with the agreed terms. For example, if the employer has committed to keeping the employee on furlough until 31 May (when the Scheme is currently due to end), it will be in breach of contract if before then, without agreement, it treats the employee as being on sick leave.

The guidance states further that:-

If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.

Therefore, if a furloughed employee whose furlough pay is less than the level of their entitlement to SSP (£95.85 a week from 6 April, and previously £94.25 a week) falls sick, the employer must pay them not less than the equivalent of their full SSP entitlement, albeit that it is the employer’s choice as to whether to:

  • end furlough and pay actual SSP (and recover this to the extent that it is able) or
  • continue furlough and recover under the Scheme 80% of the amount paid.

Of course, if the employer elects to treat a period as sickness absence less than 3 full weeks after furlough commenced, it will forfeit the right to recover any payments under the Scheme in respect of that period. Similarly, employers considering their options in these circumstances who wish to place employees back on furlough after the period of sickness absence should take into account whether the renewed furlough will be able to run for at least a further 3 weeks, taking into account the end date for the Scheme.

Shielding

Previous guidance stated that employees who are shielding in line with public health guidance, or who “need to stay home with someone who is shielding” can be subject to the Scheme “if they are unable to work from home and you would otherwise have to make them redundant”. It would have been surprising if an employer actually had to demonstrate that such an employee would otherwise have been made redundant in order for the entitlement to funding to arise, as that is not an express requirement for any other employee who is furloughed. Nevertheless, this caused a great deal of uncertainty.

This has been addressed, as the updated guidance states under a heading ‘Shielding Employees’ simply that:-

Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed.

The guidance also states elsewhere that:-

Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees.

It is noted that this part of the guidance goes on to state:-

If a non-furloughed employee becomes ill, needs to self-isolate or be shielded, then you might qualify for the SSP rebate scheme, enabling you to claim up to two weeks of SSP per employee.

It should be remembered, however, that employees do not qualify for SSP by virtue of shielding. Entitlement to SSP is explained here.

TUPE

It has been confirmed that a transferee employer can apply the Scheme to employees who transferred to it under TUPE after 28 February – which will be subject to the proviso that they were on the transferor’s payroll on 28 February.

It has not been made clear, however, whether transferees are to have the right to access transferors’ payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme.

Further, it has not been stated that the period of furlough will be deemed to be continuous as between the transferor and the transferee. This will be important to the extent a pre-transfer and/or a post-transfer period furlough is shorter than the 3 week period necessary to be subject to the Scheme.

Restrictions on working

It is now stipulated that furloughed employees cannot work for organisations that are “linked or associated” with the employer, as well as not working for the employer itself. The terms “linked” or “associated” are not defined, however. It seems logical that this will include –

  • any group company, in the sense of any subsidiary or holding company of the employer, and any subsidiary of a holding company of the employer, with “holding company” and “subsidiary” having the meaning in section 1159 of the Companies Act 2006; and
  • any associated employer within the meaning of various pieces of employment legislation, where one organisation is a company of which the other (directly or indirectly) has control or both are companies of which a third person (directly or indirectly) has control.

But what about organisations which have a lesser level of common ownership?

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

Planning & COVID-19

We have already published a blog and updated our website on this matter and the planning industries responses to the current crisis and in those articles we said how quickly things were changing. The planning industry is proving to be agile and responsive.

I was due to have a telephone conference with a barrister on Thursday last week, but it had to be changed at short notice due to the fact that the High Court had sprung on him an emergency hearing for an injunction at very short notice which needed to be conducted by telephone, hence I had the opportunity to write another brief blog on how the system is responding.

  • The government has now issued regulations for English local planning authorities to hold virtual public meetings, by phone or video link or other technological means during the current lockdown.
  • In England and Wales, separate legislation has been introduced for temporary Permitted Development Rights which will allow local authorities or health service bodies in England (and in Wales the NHS or any developer acting on its behalf) to use their buildings for public health emergency purposes without seeking Planning Permission during the crisis caused by the pandemic. This different wording and criteria in both sets of regulations highlights the continued divergences between the English and Welsh Planning systems.
  • One planning committee, in Waltham Forest, has already granted Planning Permission for a major - 750 home – residential development scheme at a virtual planning meeting. With such a large development it is possible that some of those who might otherwise have wished to object to such development may feel aggrieved at the mode of determination. They may feel that the Council’s process is undemocratic, although there is a counterargument to be put that such virtual meetings might also allow people to attend remotely to observe and possibly participate in proceedings when previously they might have been at work or otherwise unable to attend in person.

Generally speaking, the planning market, which tends to be ancillary to the property industry, seems to be holding up quite well with the current arrangements which are being put in place. The Planning Portal has introduced a COVID-19 business continuity plan to ensure it can maintain 'operations, service and support functions'. This goes hand in hand with ongoing government guidance. We are also starting to wonder how councils and developers will address the impact of delay on projects, which will necessitate flexibility on both sides, possible variation of conditions and planning obligations, as well as the Community Infrastructure Levy (CIL) regulations, but that’s a blog for another day.

We will continue to provide brief updates for clients as developments like this emerge, as they undoubtedly will in the coming days and weeks, but in the meantime please let us know if there is anything we can do to assist you or provide clarification on how you can participate and respond to planning issues.

The Coronavirus Job Retention Scheme - Further Update

The government last published updated guidance on the Coronavirus Job Retention Scheme (“the Scheme”) on 4 April.

The House of Commons Library, which issues briefing notes for MPs, issued FAQs on the Scheme on 8 April. It does not say anything new, but it provides a useful summary of the Scheme. For our updated observations on all of the main aspects of the Scheme, taking into account the contents of this blog, and links to the government’s current published guidance, click here.

The latest government guidance still provided no details as to how employers will claim payment under the Scheme, other than that HMRC is to set up a portal by the end of April, and it still said nothing on the key issues of how holiday and furlough inter-relate or the application of the Scheme in a TUPE situation.

However, although we await confirmation via further updated government guidance, there is more to report on these points.

Holiday

Given that we are about to go into the Easter weekend, I comment first on the question of whether an employee can be on holiday whilst furloughed under the Scheme without “breaking” the period of furlough.

If the answer to that question is “no”, then as a period of furlough must last for at least 3 weeks in order for it to qualify for the Scheme, if Good Friday and/or Easter Monday, or any other days within 3 weeks of an employee having commenced furlough, are treated as holiday, a relevant employer will not be able to claim payments under the Scheme for the period preceding the holiday.

Although guidance published by Acas originally stated that it was “not practical” for employees to take holiday whilst on furlough, its guidance has now been amended to read:

If an employee or worker is temporarily sent home because there’s no work and the employer intends to claim for their wages under the Coronavirus Job Retention Scheme ('furloughed'), they can still request and take their holiday in the usual way. This includes bank holidays.

Employees and workers must get their usual pay in full, for any holidays they take.

However, it is not known whether this merely reflects the view of Acas (i.e. their guess is only as good as anybody else’s) or whether they have received an indication from the government or HMRC as to how the Scheme will operate in this regard. Also:-

  1. Note that Acas state that an employee can request to take holiday: what if they prefer to not do so, and to keep the holiday (including that would otherwise have fallen on a bank holiday) back to use at a later date?
  2. Query whether, if employees can (one way or another) take holiday without breaking the continuity of furlough, the Scheme will require that employees must receive full pay, or whether an employee’s entitlement to holiday pay will be subject to the general law – which has its complexities (see further below).

To add to the mix, it is reported that HMRC customer support has responded to an enquiry on twitter as to whether the Easter bank holidays will break furlough as follows:

If an employee is on holiday or has a scheduled bank holiday whilst on furlough, they are entitled to still receive this holiday. Employers must ensure that any employee on holiday or a bank holiday is paid their full salary for that holiday.

This is consistent with the Acas guidance, but leaves the same questions posed above outstanding.

The state of uncertainty on this issue is reflected in the FAQs issued by the House of Commons Library, but these developments do provide cause for hope that there will be further government guidance clarifying that holiday can be taken during furlough.

In the meantime, it remains prudent that in order to preserve funding, unless and until the government confirms that the position is to the contrary, employers ensure that no days during furlough (including bank holidays) will be treated as paid annual leave if this will, or might, be contrary to the Scheme – whilst reserving the right to reinstate as holiday any days which were treated other than as such because of this proviso in the event that the government confirms that this is not contrary to the Scheme.

To the extent employees are to take holiday whilst furloughed, absent any special provisions related to the Scheme, the extent of the holiday pay entitlement will depend on the contract of employment or, as regards the element of it which constitutes part of an employee’s minimum entitlement to 5.6 weeks’ holiday under the Working Time Regulations, if more favourable, then as provided for under those regulations.

TUPE

It has been reported that David Johnston MP emailed HM Treasury with an enquiry as to the application of the Scheme in a TUPE situation, and that it replied on 6 April that:

…employers that have undertaken a TUPE transfer or a similar transfer after 28 February are eligible for the Coronavirus Job Retention Scheme.

Hopefully, therefore, we can expect further updated guidance from the government to the effect that employees who were on a transferor’s payroll on 28 February and who subsequently transferred, or transfer, to a new employer under TUPE can be furloughed under the Scheme.

If so, then;-

  1. Will it also be clarified that for any period of furlough which commenced less than 3 weeks before the transfer, the transferor can claim payment under the Scheme even though transferring employees will not have been on furlough with the transferor for 3 weeks?
  2. Will the transferee be provided with the right to access to transferor’s payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme?

The operation of the Scheme

On 8 April, senior representatives of HMRC appeared before a parliamentary select committee to answer questions around the Scheme. Their answers included the following:

  • The portal is to be open on 20 April and the first payments should be made on 30 April.
  • Live testing on the portal started on 8 April with a small number of employers.
  • Guidance is to be published within the next week which will enable employers to get their first claims ready for 20 April.
  • Employers will be able to make one claim per pay period – weekly, if they operate weekly payroll, or otherwise monthly.
  • Employers will be able to submit claims up to 14 days ahead of pay dates and the aim will be for HMRC to make payments within 4 – 6 working days of receiving claims.
  • There are no plans to extend scheme to the employees who started after 28 February.
  • There is to be a hotline for employees who are made to work whilst supposedly furloughed under the Scheme to report employers.
  • HMRC will investigate employers for possible breaches of the rules of the Scheme. If there is evidence of breaches of rules, employers’ claims won’t be paid out and in appropriate cases there could be criminal prosecutions for fraud.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

COVID-19 Guidance Relating to Apprentices

The government has published further guidance for apprentices, as well as for employers, training providers, end-point assessment organisations and external quality assurance providers in the context of the virus outbreak. The full guidance is here.

Some of the main points are as follows:-

  • It confirms (although this was already apparent) that apprentices on furlough can continue their training without this jeopardising funding under the Coronavirus Job Retention Scheme, as long as they do not provide services or generate revenue for their employer.
  • It encourages training and assessment to take place remotely.
  • It states that extensions will be granted, where appropriate, to the timetable for assessments.
  • It provides for breaks in learning and explains how they should be recorded.
  • It confirms that the Treasury will not be pausing apprenticeship levy payments for employers.

The Coronavirus Job Retention Scheme – Further Details

The government published update guidance on the Coronavirus Job Retention Scheme (“the Scheme”) on 4 April.

The main points are these:-

  • It has been made expressly clear that employees can start a new job when on furlough without jeopardising funding under the Scheme.
  • An employer can reclaim 80% of not just salary or wages, but any “regular payments” that they are obliged to pay employees, including overtime payments, “fees” and compulsory (presumably meaning contractual) commission payments – up to the cap of £2,500 per month. Although not given as a listed example, this must surely include car allowance. Whilst payments for private fuel under a fuel allowance by means of a card or account directly by the employer to the supplier will be excluded (as they will not be payments to the employee), arguably where the employee pays for private fuel and is then reimbursed by the employer, these payments will fall within the Scheme.
  • Expressly excluded from Scheme funding are discretionary bonus (including tips) and commission payments and “non-cash payments”, so non-monetary benefits (e.g. cars or life or medical insurance) are not included.
  • It has been made expressly clear that salaried company directors (including of personal service companies) can be furloughed under the Scheme. A board resolution must be passed to effect this, and it must be noted in the company records Furloughed directors can still perform their statutory duties, provided they do no more than would reasonably be judged necessary for that purpose, e.g. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
  • It has been made expressly clear that members of LLPs who are treated as employees for tax purposes can be furloughed under the Scheme.
  • It has been confirmed that employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then furloughed again – subject to funding being available only for any furlough period which lasts for at least three weeks.
  • It is newly stipulated that employers must not only notify employees of their furlough status, but that they must do so in writing and keep the record of that written notification for five years.

Some areas remain unclear. Two of the main ones are these:-

  • Are employees whose continuous service commenced on or before 28 February 2020 but who transfer to a new employer after this date under TUPE covered:

For any period of furlough which commenced less than 3 weeks before the transfer, even if, taking into account a period extending beyond the transfer, it lasts for at least 3 weeks in total?

Otherwise for any period of furlough post transfer?

Unless the government expressly provides for this in due course, it would appear not, as although the rights and obligations of the employee under the employment automatically transfer, as between employee and employer, by virtue of TUPE, it will remain that the employee will not have been furloughed with the transferor from the point of the transfer and nor will they have been on the transferee’s payroll as of 28 February.

  • Can an employee be furloughed under the Scheme and on annual leave at the same time?

Guidance published by Acas states not. It therefore remains prudent that in order to preserve funding, unless and until the government clarifies that the position is to the contrary, employers ensure that no days during furlough (including bank holidays) are treated as paid annual leave such that this might prevent a period of furlough continuing unbroken at least 3 weeks.

For our updated observations on all of the main aspects of the Scheme, taking into account the above, and a link to the government’s published guidance, click here.

For my article on changes to legislation effected on 28 March relating to statutory sick pay for employees off sick or in self-isolation due to COVID-19, click here.

For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.

For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.

How is COVID-19 Affecting Life Within The Corporate World?

There is no corner of the UK which is not being affected in some way by the impacts of COVID-19, so it is not surprising that the world of corporate law is experiencing some changes.

With the UK population having been told to remain at home, except for a handful of reasons, a significant impact is being felt by companies as face to face meetings cannot be held. In order to carry on making business decisions and to make the necessary decisions to reflect the current economic climate, meetings need to happen.

It is considered by government that the attendance of shareholders at meetings will not satisfy the definition of “essential work”. Therefore, to follow these rules, alternative measures will need to be taken when meetings are held.

One way around this is to hold board meetings and shareholder meetings remotely.

Companies are being told to make clear in their notices of meetings that shareholders and/or directors may not attend in person and that they will be refused entry if they try to attend in person. The meeting should be held by a maximum of two people, if it is to be held physically at all, in order to establish a valid quorum, and then the voting is to be done by proxy or by the distribution of a written resolution. As this can be done electronically, this is the most convenient option and the option which creates the least level of disruption. Another option in these trying times, is to use video conferences in order to hold the meeting.

These rules are applicable to shareholder meetings, board meetings of directors and AGMs of public limited companies, but whichever bracket your company falls into, the process of decision making will be affected in some way.

It is best that you receive legal advice to ensure the validity of your decision making. Please contact the corporate and commercial team at Lanyon Bowdler if you wish to discuss this further.

Planning Decisions in a Global Pandemic

The coronavirus pandemic, lockdown measures and the need to practice social distancing will have a significant impact on the area of planning decision making, just like virtually every other area of public and private life right now.

The Rules

Determining planning applications and other planning decisions are local government functions which, despite the current crisis, still need to be made in accordance with public law rules, legislation and the Councils’ constitutions. Some planning decisions have to be made by planning committees while others, which are usually less complex or controversial, have been delegated to senior planning officers.

All local authority meetings, including full Council and committee meetings, have rules, set out by legislation relating to publicity. These include publishing the officer’s report to committee in advance of the meeting and making all documents which are relevant to the planning decision publicly available. Thanks to technology, many of these processes take place online and will perhaps be less vulnerable to disruption.

Planning committee meetings are required to be held in public with sufficient suitably trained members to make up a quorate. For certain types of decisions such as determination of planning applications, members of the public have rights to address the meeting (‘public speaking rights’).

Effect of Lockdown on Planning Committee Meetings

The laws enabling the nation-wide lockdown clearly make the usual planning committee meetings unfeasible. Regulation 6 of the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (in force from 26 March 2020), states that “no one is allowed to leave their house except for specific reasons, which include travelling for the purposes of work or to provide voluntary or charitable services, where it is not reasonably possible for that person to work, or to provide those services, from the place where they are living”. Regulation 7 prohibits the gathering of more than two people in a public place subject to exceptions which include a gathering which is essential for work purposes. Contravention of regulations 6 and 7 are criminal offences.

While the exceptions in regulations 6 and 7 may, if there were no other means of meeting, possibly enable officers and members to meet, the regulations would definitely prevent any members of the public from attending those meetings. Since the crisis started, Councils have been preparing themselves for the obvious need for change and have mooted the idea of remote meetings. Some Councils already stream their planning committee meeting via live webcasts allowing a wider audience to attend.

New Regulations on Remote Local Government Meetings

Regulations have now been made to enable local authorities to hold meetings remotely and fulfil their constitutional and legislative requirements regarding public access. The Local Authorities and Police and Crime Panels (Coronavirus) (Flexibility of Local Authority and Police and Crime Panel Meetings) (England and Wales) Regulations 2020, contain temporary measures, which specify that the definition of local authority meetings include meetings held virtually, online, by video conference or even telephone conference calling, so long as the members attending these meetings can be heard by, and where practicable, seen by other members and members of the public.

Under the regulations, a meeting is considered open to the public if it is accessible by remote means including video conferences and live webcasting. The regulations come into effect on Saturday 4 April.

Like working from home during this crisis, there is likely to be a practical difference between voluntarily making meetings accessible to some people online and having to conduct every planning meeting remotely. Adjustments will need to be made and resources, including staff time which itself is likely to be under strain, will be required to test systems, train members and ensure that everything runs smoothly. Notwithstanding this, it is extremely useful that technology has provided a potential solution to this particular aspect of the crisis which will hopefully prevent the system from grinding to a halt.

The rate of change is dramatic at the moment and we are all on a rapid learning curve to engage with new circumstances and technological solutions. What we will find is that local planning authorities’ responses will not be consistent and that the issues surrounding the delay caused by the crisis will impact on all aspects of the economy.

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