| HR & EMPLOYMENT LAW
Jackie le Poidevin, Editor-in-Chief, HR Adviser |
The Chancellor’s Christmas Present to Businesses: New Furlough Extension to End of April
Rishi Sunak announced last week that he is extending the furlough scheme until the end of April 2021 and the government will continue to contribute 80% towards wages. Read on to find out what the position is now on financial support during the pandemic and what this may mean for your business.
When the Chancellor initially extended the CJRS to the end of March 2021, he said he would review the level of support in January. However, he has now brought that decision forward to help businesses to plan ahead.
As well as announcing the 1-month extension, he also said that the government will continue to pay 80% of furloughed employees’ salary for hours not worked until the end of April. In contrast to the position last September and October when the original scheme was wound down, you will not be required to pay a percentage of furloughed employees’ wages. You will only have to continue paying National Insurance and pension contributions for unworked hours.
The eligibility criteria for the UK-wide scheme will remain unchanged in April.
Sunak also confirmed that he would be extending the government-guaranteed Covid-19 business loan schemes until the end of March. These schemes – the Bounce Back Loan, Coronavirus Business Interruption Loan and Coronavirus Large Business Interruption Loan – had been due to close at the end of January.
So far, the Treasury said the CJRS has protected 9.6 million jobs across the UK, with more than one million businesses accessing over £68 billion in loans.
A further Self Employment Income Support Scheme grant will also be made available from February to April 2021.
The Chancellor will announce the next phase of economic support and a successor business loan scheme in the Budget on 3 March.
Impact on Your Business
With hard lockdowns increasingly likely after Christmas thanks to the new strain of the virus and with London and large parts of the South East and East of England already in Tier 4, this is a welcome announcement.
It provides certainty about what support is available in the early part of next year, with nearly a 2-month buffer between any changes that will be announced in the Budget and the end of the current scheme. This may allow you to postpone any redundancy proposals until after 3 March, as you will still have time to collectively consult if the Chancellor announces that financial support will end on 1 May or be scaled back.
In the best case, if the most vulnerable members of society have been vaccinated by the Spring and the virus is in retreat, there may be enough of an economic recovery to allow you to minimise the number of redundancies you need to make or even avoid them altogether.
Good to Know
- Collective consultation must commence at least 30 days before the dismissals take effect if you’re proposing 20 to 99 redundancies, or 45 days beforehand for 100 or more redundancies.
- Although the government’s guidance doesn’t explicitly say so, it appears to be permissible to carry out collective or individual consultation on proposed redundancies while employees are on furlough.
- Once you put a furloughed employee on notice of dismissal, you must stop claiming a CJRS grant for them.
| PAYROLL
Sarah Bradford, Editor-in-Chief, Pay & Benefits Adviser |
Discover the Position on Virtual Christmas Parties and Tax-free Gifts
The Covid-19 pandemic and associated social distancing and lockdown restrictions have made 2020 the year that the annual Christmas party could not happen. However, in the same way that the pandemic has moved meetings to Zoom, many organisations, reluctant to forgo an annual celebration entirely, have opted to hold a virtual Christmas party. Others have instead decided to send seasonal gifts to employees. The good news from a tax perspective is that it is possible to do both with triggering a benefit-in-kind tax charge.
Virtual Christmas parties
The tax legislation contains a well-known exemption for annual parties and functions allowing employers to provide a Christmas party (or other annual function or functions) for employees and their guests tax-free, as long the cost per head does not exceed £150 (including VAT), and the event is open to employees generally or to those at a particular location. It must be remembered that this is an exemption not an allowance, and if the cost tops £150, the full amount is taxable, not just the excess over £150.
HMRC have confirmed that the exemption applies equally to annual functions provided virtually using IT, as long as the other conditions are capable of being met. Where this is the case, the expenses of hosting a virtual event, including the provision of equipment, entertainment and refreshments will fall within the scope of the exemption, as long as they are provided principally for the enjoyment or consumption by employees during the event.
As the exemption is not limited to Christmas parties – it applies to annual functions – it will also apply should the employer decide to put the traditional Christmas party on hold for now and hold a function later when the restrictions have eased, as long as this takes place before the end of the tax year and the cost per head is not more than £150.
Seasonal Gifts
This year has been a difficult year for all; many employees have been placed on furlough or been required to work from home. Understandably, employers may wish to show their appreciation, and one way of doing this is by giving employees a Christmas gift.
Fortunately, the statutory exemption for trivial benefits enables employers to give seasonal gifts to employees without an associated tax charge under the benefit-in-kind rules.
The exemption applies to benefits which cost £50 or less to provide, as long as the benefit is not in the form of cash or a cash voucher, it is not provided as a reward for service and there is no contractual entitlement to the benefit. Where the gift is provided to a group of employees and it is impracticable to work out cost of the benefit provided to each individual, the average cost is used instead.
The exemption can be used to provide seasonal gifts, such as a turkey, a hamper or a bottle of wine. While anything goes as regards the nature of the gift as long as the cost is £50 or less, there are some traps associated with gift cards. HMRC take the view that where an employee is given a gift card which can be topped up, the cost of the benefit is the total cost of the top-ups in the tax year, rather than each top up comprising a separate trivial benefit. For example, topping up a gift card with £30 at Christmas and £30 on the employee’s birthday would mean the benefit is not trivial as the total cost is £60, despite each individual gift being less than £50. To avoid this, separate vouchers should be given each time. Similar problems can arise with season tickets and apps allowing access to goods and services.
Season’s Greetings
The exemptions allow employers and their employees to enjoy some seasonal cheer in the time of Coronavirus. Happy Christmas and New Year to all!
| HEALTH & SAFETY
Paul Smith, Editor-in-Chief, Health & Safety Adviser |
We’ve Had Enough of 2020’s Battles, So Bring On 2021
Our resident health and safety expert Paul Smith takes stock of the challenges 2020 has created for managers in general, and those advising on health and safety in particular. As new Tier 4 restrictions are announced for London and the South East, he shares his hopes for the New Year that is fast approaching.
At War with the Virus
It’s the Prime Minister’s darkest hour. The government’s handling of the crisis is being criticised even by its own MPs, but there is hope in sight. Sounds familiar? The Prime Minister, though, is not No. 10’s current occupant but his hero Winston Churchill, and the hope in sight is not mass vaccination but the US’s entry into WW II following Pearl Harbour. Yes, I’m taking refuge in history here and talking about events of winter 1941 not winter 2020!
Of course, I’m not the first to draw a parallel between our current situation and the twentieth century’s world wars. But for most of 2020, it has indeed felt as if we are on a war footing, and we have faced the same pressures, not least:
- Profound disruption of normal life.
- Separation from friends and family.
- Ongoing uncertainty about what will happen next.
- Concern about whether normal business can ever resume.
- Constant worry for our own safety and that of others.
We’ve ridden the same emotional rollercoaster that our parents and grandparents experienced: our hopes rise sharply when there is a small victory, only to be dashed again as the latest casualty figures are announced (‘next slide, please’).
Who’d be an Employer, or a Health and Safety Adviser?
For anyone with health and safety responsibilities, including our many readers who have had to advise their colleagues at all levels, 2020 has brought unique challenges. Suddenly, we have all had to become experts on coronavirus. It’s a subject that was never covered in our training, is not mentioned in any of the health and safety text books and yet has so far killed more than 400 times the number who on average die each year in workplace accidents.
Then there is the pace of change. On most health and safety issues, law and guidance changes slowly, with new advice perhaps every other year and legal changes every 5 years or so. With Covid-19, we have needed to be far more agile, keeping track of advice that changes week by week. And for many firms, getting that right has been the difference between being able to operate or shutting up shop. Add to that concerns about mental health, where it’s generally accepted that we have yet to see the pandemic’s full effect in terms of people damaged and lives lost.
Homeworking – the New Norm for Many
Homeworking has presented particular issues. Never before has the government directed that people should work from home where they can, and many employers have needed to purchase extra equipment for their homeworkers, as well as develop new ways of working. Thames Water, for example, told us they have issued 1,000 chairs and 1,300 risers (along with cordless keyboards and mice) so that people can set up proper workstations. On top of that, they have provided hundreds of webcams so that groups can use their computers to stay in touch using online meeting platforms such as Teams, Zoom and Google Meet.
Towards 2021
As we face the New Year, the outlook is not rosy. Not only is there a new coronavirus strain but many now fear a third spike just at the time when the NHS faces its peak pressure. But at least we go into 2021 with:
- One vaccine already in use and more to follow.
- New practical knowledge of how best to treat those who are seriously ill.
- A constantly expanding testing regime to give us better data about what’s not working and what is.
As everyone undertakes their personal risk assessment of how best to celebrate this Christmas, we wish you all the best for the New Year. We commit to doing our utmost to keep you fully informed, and hope our leaders can be as visionary as those who rebuilt our country in the late 40s and early 50s, creating the NHS on which we now all depend.