| HR & EMPLOYMENT LAW
Jackie le Poidevin, Editor-in-Chief, HR Adviser |
The Chancellor’s Summer Statement: Just What Help is Available?
On Wednesday, the Chancellor announced a new package of COVID-19 support measures. These include a surprise £1,000 bonus for each furloughed worker you bring back into employment and a ‘kickstart’ scheme to fund the creation of new jobs for young people. So what help is on offer and is it likely to be of any practical assistance?
Job Retention Bonus
Under this scheme:
- For each furloughed worker you employ continuously until 31 January 2021, you’ll receive £1,000.
- You’ll receive a payment if the worker earns more than the Lower Earnings Limit (£520) on average each month between 31 October 2020 and 31 January 2021.
- Employers in England, Scotland and Wales will be entitled to the bonus.
- Payments will be made from February 2021.
- More details will be published by the end of July 2020.
What this Could Mean for You
The devil will be in the detail but these are some initial thoughts:
- If you’ve furloughed any staff, the good news is that you’re likely to be entitled to at least some money from the Government. For each furloughed worker who’s still on your books on 31 January 2021, you’ll receive £1,000. This seems a scattergun approach, though, as those businesses that are struggling least and can afford to retain more furloughed workers may benefit the most.
- If you’re already planning redundancies, £1,000 isn’t much of an incentive to defer. To get your hands on the money, you must first be able to afford to keep the workers furloughed until the end of October, despite dwindling Government support. Then, you must have the means to pay the employees’ wages, National Insurance and pension contributions until the money comes through in February. Businesses in financial distress are unlikely to be able to wait that long before making redundancies.
- It might be worth holding out for the bonus if you have a lot of low-paid or part-time workers. If someone’s at the lower earnings limit, their pay across November, December and January will be £1,560 but you’ll get £1,000 of this back. If business picks up sufficiently, this may avoid the need for dismissals.
- Throughout the 6 months from August to the end of January, service will continue to accrue. Once an employee reaches 2 years’ service, they’ll be entitled to a redundancy payment and can claim unfair dismissal. Despite the offer of a bonus, you should watch out for this and dismiss them before they acquire these rights if necessary.
- It might be worth negotiating reduced hours with staff who come off furlough. Let’s say you have five furloughed workers but only enough work at the end of October for four. Instead of making one person redundant immediately, you might, with their agreement, move everyone onto a 4-day week. You would get a £5,000 bonus instead of £4,000 and, if business recovers, you can reinstate the extra hours. We don’t know yet if this will be permitted, though, or if employees will have to retain their original hours.
- Another unknown is if you’ll only receive the bonus if employees have been furloughed for a certain amount of time or if they are still on furlough at the end of October. If you furloughed someone for the minimum 3 weeks back in (say) June, will you really get £1,000 if they’re still in employment next January?
- Although £1,000 isn’t a huge amount of money, it might seem tempting to make someone who hasn’t been furloughed redundant (as you won’t receive a bonus for keeping them on) instead of someone who has been on furlough. However, your redundancy process must be fair and non-discriminatory to avoid tribunal claims, so it would be risky to try and skew the outcome.
Kickstart Scheme, Traineeships and Apprenticeships
Under the Kickstart scheme, the Government will pay you to create new jobs for young people. The rules are as follows:
- The Government will fund 6-month work placements up to a maximum of £6,500.
- You can claim the funding for people aged 16-24 who are on Universal Credit and at risk of long-term unemployment.
- The Government will pay for the relevant National Minimum Wage for at least 25 hours per week, as well as employer National Insurance and pension contributions.
- There’s no cap on the number of placements that can be funded.
- The scheme will open for applications in August, with the first jobs expected to start in the autumn. It will run until December 2021 but may be extended.
- The scheme will cover England, Scotland and Wales, with extra funding to be provided for a similar scheme in Northern Ireland.
The Government will also pay you £1,000 for each new trainee aged 16-24 you take on this year under the existing traineeship scheme. In addition, for any new apprentices aged under 25 whom you hire between 1 August and 31 January, it will pay you £2,000. For apprentices aged 25 and over, it will pay you £1,500.
What this Could Mean for You
This funding is welcome but you’ll need to watch out for the small print once we know all the details. To receive kickstart funding, you must be able to prove you’re creating a new job – you can’t make someone redundant, give their job to a 16-24-year-old and claim the money. You must also provide the young person with support and training to help them find permanent employment. In other words, there will be obligations you have to meet in return for your money.
| PAYROLL
Sarah Bradford, Editor-in-Chief, Pay & Benefits Adviser |
Impact of Coronavirus on Tax-advantaged Share Schemes
Employee share ownership is generally regarded as a ‘good thing’; having a stake in the company in which they work encourages employees to work hard, so that productivity increases. The tax system seeks to promote employee share ownership by means of various tax-advantages schemes, which offer tax concession where the associated conditions are met.
In June 2020, HMRC published an Employed Related Securities Bulletin setting out the implications of the COVID-19 pandemic on certain aspects of the various tax-advantaged share and share option schemes.
Save as You Earn (SAYE) Share Option Schemes
Under a SAYE share option scheme, employees save money into a savings contract, which lasts for 3 or 5 years, and are granted options to buy shares with the money saved when the contract matures. Money is deducted from the employee’s salary and paid into the savings contract. The scheme is an all-employee scheme.
Employees can already delay the payment of monthly contributions on up to 12 occasions without triggering the cancellation of the savings contract. HMRC will allow the payments to be postponed on more than 12 occasions where the additional missed months relate to Coronavirus. The option to delay contributions due to Coronavirus is available to employees who had a savings contract in place on 10 June 2020.
Where contributions are delayed, the maturity date of the contract is extended by the number of missed months. For example, if 15 months are missed of which at least 3 are due to Coronavirus, the savings contract is not cancelled and the maturity date is delayed by 15 months.
In a situation where the employee is unable to make contributions by deduction from salary because they have taken unpaid leave due to the COVID-19 pandemic, HMRC will allow contributions to be made in another way, for example by standing order.
Share Incentive Plans (SIPs)
Under a SIP, employees can receive different types of shares – free shares, partnership shares, matching shares and dividend shares. Partnership shares are shares that an employee can buy from their pre-tax salary.
HMRC have confirmed that where an employee is furloughed during the COVID-19 pandemic, the furlough grant can be treated like salary payments and deductions can be made from the furlough grant in accordance with the SIP.
The rules already allow an employee to stop deductions from their salary, and employees may choose to do this during the pandemic. However, HMRC have confirmed that SIP participants will not be allowed to make up any deductions that they miss due to the pandemic.
Company Share Option Plans (CSOPs)
A CSOP is a discretionary share option plan that can be used to reward some employees and not others, and is often used as an executive share option plan.
HMRC have confirmed that options granted to employees and to full-time directors under a CSOP continue to remain qualifying share options, where the full-time director or the employee is furloughed on the basis that at the time that the options were granted, the recipient was a qualifying employee or full-time director.
Enterprise Management Incentives (EMIs)
EMIs are share options designed to attract high-calibre individuals to smaller higher-risk companies.
The company can contact HMRC to agree a valuation when the options are ready to be granted. Once a value is agreed, the options normally need to be granted within 90 days.
Where the COVID-19 pandemic has led to delays in granting the options, HMRC have confirmed that as long as there has been no change that may affect the appropriate value, EMI valuation agreement letters already issued where the 90-day period expires on or after 1 March 2020 can be treated as automatically as having been extended by 30 days. Where an EMI valuation letter is issued on or after 1 March 2020, it is valid for 120 days.
| HEALTH & SAFETY
Paul Smith, Editor-in-Chief, Health & Safety Adviser |
Masks and Face Coverings: What’s Required?
As many businesses now re-open under the UK Government’s ‘release from lockdown’ guidelines, there is increasing confusion about Respiratory Protective Equipment (RPE), masks and face coverings. We set the record straight and clarify what’s needed, when.
This week I’m taking advantage of businesses re-opening to sort out some personal issues: I have too little hair for the hairdresser to be a priority, but my regular eye test and dental check were postponed by the lockdown, and so good news: I have appointments this week! I will also, as usual, be spending one day volunteering for the NHS at my local teaching hospital. The optician, dentist and hospital have one thing in common: they are asking me to wear a mask!
The Rationale Behind Wearing Masks and Face Coverings
When lockdown began, the HSE was quick to distinguish between masks and face coverings, but the Government ‘COVID-Secure’ guidelines do not encourage using RPE outside of care settings such as hospitals and care homes. They underline that measures such as handwashing, social distancing, cleaning/disinfection and the use of screens are more likely to be effective against COVID-19 and should therefore be given priority.
Since then, mandatory wearing of masks or face coverings has been introduced on public transport, although there are exemptions e.g. for the young (under 11s) and people with breathing difficulties. Hospitals now require staff/volunteers to put on a surgical mask as soon as they enter the premises, while visitors are strongly encouraged to wear a mask or at least a face-covering.
Current Government Advice on PPE
All the 12 COVID-Secure guidelines include a PPE section so it’s worth capturing the key points:
- PPE includes RPE (such as face masks) that protects the user against health or safety risks at work.
- Where people already use PPE in their work activity to protect against non-COVID-19 risks, they should continue to do so.
- The main exception is clinical settings: there is separate detailed guidance on this, but in practice it requires staff to wear an FRSM (fluid-repellent surgical mask) or, if there is a high risk of airborne droplets, an FFP3 Filtering Facepiece Respirator.
- Current guidance is that other workplaces should not encourage the precautionary use of extra PPE except when responding to a suspected/confirmed COVID-19 case.
- If your risk assessment shows that any PPE is required, then you must provide it free of charge to workers who need it.
- Face coverings help protect others if you are infected but are asymptomatic (don’t show any symptoms): ‘my mask protects you, your mask protects me’, so workers and visitors who want to wear a face covering should be allowed to do so.
Of all the guidelines, the one on ‘close contact’ services (e.g. hairdressers) is where you would expect a stricter recommendation on masks, but here the guidance favours clear visors, which can be disposable or re-useable. The guide goes on to say:
- Clients do not need to wear a mask or face covering, as long as the practitioner is wearing a visor.
- There is no benefit to either the client or the practitioner of wearing additional PPE to that which they would usually use, other than the clear visor.
However, professional bodies are also getting involved and sometimes their guidance is stricter. For example, my dentist is following the British Dental Association guideline that ‘patients should attend wearing a mask if possible or be prepared to wear one’. And, in the last few days, Royal Society President, Professor Sir Venki Ramakrishnan, has called for face coverings be worn ‘whenever you are in crowded public spaces’, pointing to new evidence that they reduce the risk both to the wearer and to those around them.
Links
For England, you can access the complete 12 COVID-Secure guides at https://tinyurl.com/yaolw3rb . Guidelines for Scotland, Wales and Northern Ireland are slightly different and can be found at:
Scotland: https://tinyurl.com/y8v25afp
Wales: https://tinyurl.com/y85txrz9
Northern Ireland: https://tinyurl.com/y9mza5hf