Coronavirus Employment Implications - FAQs for Charities
In this article, we respond to charities' most common questions around sick pay, travel, and the Job Retention Scheme announced on Friday.
We also recommend all employers consider the ACAS guidance and the government guidance which is updated daily.
Coronavirus FAQs
- Coronavirus Job Retention Scheme
- Coronavirus Job Retention Scheme - what do we know?
- Are employees in quarantine or self-isolation entitled to pay?
- How has SSP changed?
- What if employees do not want to come to work due to fears of being exposed to the virus?
- What steps should charities take in relation to employees who are planning to travel?
- What if employees need to take time off to care for dependants?
- What about childcare arrangements due to school closures?
- What if the charity has to close its offices or suspend its activities?
- What if an employee falls ill at work?
- How can charities reduce the risk to employees?
- What are the options if measures put in place to slow the spread of the coronavirus lead to a shortage of work for our staff?
- What does lay-off mean?
- What does short-time working mean?
- Can all employers lay-off or place their employees on short-time working?
- What if there is no express or implied contractual right to lay off charity workers or reduce their hours?
- How long can an employee be laid off or placed on short-time working?
- Do employees have the right to receive any payments during lay-off and short-time working?
- Can I ask staff to take holiday?
- What are the long-term options if there is a sustained reduction in work, or we are forced to suspend some of the charity's activities indefinitely?
- What can the charity do if we have made an offer of employment to a new starter but there is now no work to provide to them, can the offer be withdrawn?
- What measures are the Government introducing to help?
Coronavirus Job Retention Scheme
In a speech on Friday 20 March, the Chancellor announced a package of measures to support “[a]ny employer in the country – small or large, charitable or non-profit”, including:
- a Coronavirus Job Retention Scheme
- deferring VAT and Income Tax payments
- a Statutory Sick Pay relief package for SMEs
- a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
- the HMRC Time To Pay Scheme
There is not yet much guidance on the detail. Many will be wondering what the practical impact for charities will be. We have set out below initial comments on the Job Retention Scheme and plan to address other aspects of the scheme in future updates.
Below are links to the government webpages:
Coronavirus Job Retention Scheme: What Do We Know?
The Scheme envisages that all UK employers will be able to access support to continue paying part of their employees' salary for those employees that would otherwise have been laid off or otherwise at risk of redundancy "as a result of the crisis". The Scheme does not appear to be open to employees whose employment would have ended for reasons other than the measures imposed in response to the coronavirus pandemic.
A couple of background points:
- 'Lay off' is a concept that has always existed under the law in England. It allows employers to provide no work (and therefore no pay) but retain the affected employees in employment. There would normally need to be express wording in the contract of employment to allow this.
- 'Furlough' is a term used in the US for a similar type of situation.
The links above set out (in broad terms) how to access the scheme:
Designate affected employees as "furloughed workers"
There is no guidance yet as to whether there will be an eligibility criteria to qualify as a furloughed worker.
From a practical point of view, it looks like charity trustees will need to distinguish between key operational staff and those who can be furloughed (and therefore do no work). We would recommend that the criteria used to assess who can be furloughed is recorded in writing to show that the business has taken an objective and reasonable approach to selection, much as it would be required to do in a redundancy situation.
Notify the employees of the change
Whilst this looks straight forward, the guidance specifically states that changing the status of employees remains subject to existing employment law.
This means that the charity should consider a consultation process but more details may be provided in due course.
If an employee does not agree it is unclear what would happen if the charity unilaterally imposed a "furlough", in effect a change in contractual terms. Traditionally, given such a change would involve providing no work and potentially reducing pay, this would give an employee the option of resigning and claiming constructive unfair dismissal. Alternatively the employee could remain in employment but 'under protest' and pursue an unlawful deductions claim to recover the balance of their pay. It is unclear what the practical risks of such a claim would be. However:
- if a charity is seeking to furlough employees there are likely to be critical business reasons why this decision is being taken.
- it is not yet clear what might be fair or unfair in these circumstances, and the position will depend on the specific circumstances. However, if there has been a reasonable process of identifying furloughed workers and there has been an attempt to consult and reach agreement, a charity may have a viable defence to a claim of constructive unfair dismissal.
Submit information to HMRC about the employees that have been furloughed
At the moment there is little detail about how this will be done but it appears there will be an online portal which will set out the details required.
Other considerations
The situation for zero hour employees may not be so straight forward. It is unclear at the moment whether they would qualify under the scheme given that the organisation could simply cease to provide work under the zero hour contract. Further as the hours and pay of zero hours employees can vary significantly, it may be difficult to determine what 80% of their usual pay would be unless an average is taken over an extended period.
The scheme appears to apply to employees only, meaning that the organisation would not be able to apply under the scheme for "workers".
It appears that the Scheme will cover the cost of wages backdated to 1 March and will be open before the end of April. This gives a period of time for charity trustees to put a strategy in place. Please note that it is proposed that the Scheme will reimburse employers a month in arrears. Therefore charities will need sufficient cash flow to cover the payroll in the first instance.
Are employees in quarantine or self-isolation entitled to pay?
Where staff are sick:
- Where an employee is self-isolating because they are suffering from the symptoms of COVID-19, they will be entitled to receive sick pay in the usual way as they are unwell.
Where staff are self-isolating on medical advice but have no symptoms:
- Under the new Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020 (SI 2020/287), from 16 March 2020 if an employee self-isolates in accordance with government guidance they are deemed to be incapacitated and entitled to statutory sick pay (SSP).
- Charities should check contractual sick pay terms to identify whether contractual sick pay would be payable. Or they should consider the extent to which they are prepared to exercise their discretion to pay such employees sick pay in these circumstances.
- ACAS has recommended that it is good practice for employers to treat any period of self-isolation as sick leave, because otherwise there is a risk staff will attend work in order to get paid - this may enhance the risk of them spreading the virus.
- Note that unions have stated that their expectation is that all employers provide full pay in accordance with ACAS guidance, regardless of whether they are required to contractually.
Where staff choose to self-isolate:
- Where an employee chooses to self-isolate (but not in accordance with government guidance or medical advice), then they will not be entitled to SSP or contractual sick pay.
- Charities should explore the employee's reasons as to how to treat the employee and whether to exercise their discretion to continue to make any payment. If they are unreasonably refusing to perform their employment duties, they will forego their right to pay and could be subject to disciplinary action. However, in the present circumstances it may be difficult to establish that their actions are unreasonable.
Where charities ask staff to self-isolate:
- Where a charity has concerns about an employee spreading the virus and asks them not to work (outside of government guidance), the employee should receive their usual pay in the normal way - as such absence is at the request of the charity.
The new Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020 (SI 2020/287) state that an employee self-isolating in accordance with government guidance is entitled to SSP - even if they are not showing any symptoms.
The government has stated that SSP will be paid from day one as part of its emergency coronavirus legislation where an employee is self-isolating.
The Chancellor also announced in the budget delivered on 11 March 2020 that the government will reimburse small employers (with less than 250 employees) any SSP paid to employees for the first 14 days of sickness absence. We await further details on how this will be implemented.
What if employees do not want to come to work due to fears of being exposed to the virus?
Charities do not have to agree to employees taking time off as holiday or unpaid leave. However, they do have obligations to protect the health and safety of their staff. They must listen to any concerns of their employees, particularly those who are in groups who have been identified by the World Health Organisation as being higher risk. It may be possible for charities to offer flexible working arrangements in these circumstances or to put in place temporary measures to promote social distancing in the workplace, reducing the risk of transmission.
However, for those engaged in some activities, for example social care, it may be impossible for them to perform their duties from a distance. In which case, the charity will need to consider adjustments to working practices, eg provide suitable protective wear. Appropriate training and protocols will need to be provided to reduce the risk of exposure to service users.
In normal circumstances, if an employee refuses to attend work, the charity would be entitled to take disciplinary action. The reasonableness of any sanction (including dismissal) will depend on the circumstances of the case and a full examination of the employee's reasons for refusal. This includes whether any action could reasonably have been taken to accommodate the concerns. In cases involving COVID-19, it may be difficult to justify disciplinary action and there are likely to be reputational risks involved in taking this approach, particularly in light of the latest advice from the Government for employees to work from home, if possible.
Charities should also be mindful of their duties under the Equality Act 2010, ensuring reasonable adjustments are made for employees with a disability which puts them at a higher risk of contracting severe COVID-19.
What steps should charities take in relation to employees who are planning to travel?
Few employment contracts will include terms enabling their employer to restrict personal travel for their staff.
Issues surrounding travel should be dealt with on a case by case basis. There will be a number of factors to consider before and after such travel if the area becomes high risk whilst the employee is there - or if quarantine rules are introduced which prevent them from returning home.
Many employees may have been planning travel abroad during the Easter holiday period. These plans may have been curtailed by the decisions of airlines and tour operators to suspend certain routes. However, where travel plans have not been affected in this way, charities should consider:
- Whether the employee is going to an affected area, where they know that they are going to need to self-isolate when they return. If so, can the employee work from home through the period of self-isolation once they return? This will be unlikely.
- Alternatively, taking into account the reason for travel, is the trip necessary or could it be rearranged? Consider whether the employee can cancel without being financially penalised?
- What is the employee's perception of the risk?
- What is the employee's role at the charity and what would be the practical effect of their absence?
- What pay would the employee be entitled to if they had to self-isolate on their return?
Where travel is at the charity's request:
The WHO recommends that, in relation to essential work-related travel, employers should avoid sending employees to areas where infection levels are high. Additionally, employees travelling to high-risk areas should be briefed by a qualified health professional. Charities should not require employees who are at a higher risk of serious illness to travel if they have been advised to self-isolate.
What if employees need to take time off to care for dependants?
Employees are entitled to a reasonable period of time off work to care for dependants in an unexpected event or emergency.
They may need to care for a child or dependant if they are ill, have to self-isolate or go into hospital. There is no statutory right to be paid for this time off, but some charities may offer paid time off for a limited period under a contract or policy.
What about childcare arrangements due to school closures?
As schools has been advised to close to all but the children of key workers and those with special educational needs, employees with children will need to balance childcare and work. This may involve agreeing a different work pattern with the charity under the right to request flexible working. Alternatively, parents are entitled to up to 18 weeks unpaid statutory parental leave to care for children up to the age of 18. Charities should discuss and seeks to agree appropriate work patterns and leave arrangements or a combination of both with their employees.
What if the charity has to close its offices or suspend its activities?
It is a good idea to forward-plan in case the charity needs to suspend some or all of its activities. For charities providing social care or supporting vulnerable groups, careful planning and cross-agency working will be required to ensure continuity of care.
In this situation, we recommend that charities ensure staff have a way to communicate with their colleagues and the charity. For example, ensure staff have contact details for other members of their team.
- Consider whether work can be carried out remotely by staff - eg through Skype or telephone meetings.
- Ask staff to take laptops, mobile phones and any essential equipment home with them so if something changes overnight, staff are able to keep in touch and/or work.
- If possible, arrange paper based tasks for staff that do not work on computers.
- If the charity has to suspend its activities, unless agreed otherwise or contractual provisions are in place that allow for a reduction in pay where employees cannot work, it is likely that staff will be entitled to pay throughout this period - unless a pay reduction can be agreed with employees.
What if an employee falls ill at work?
Charities should consider identifying a room or area behind a closed door which can be used if a member of staff falls ill at work. It is advised that in this situation the employee should be at least two metres away from other people, go to the room identified above, and avoid touching anything.
The sick employee should use their own mobile phone to call 111, or an ambulance if they are seriously ill or their life is at risk.
How can charities reduce the risk to employees?
All charities have a legal duty to carry out risk assessments surrounding all risks to the health and safety posed by their operations. This includes assessing the risks posed by the current coronavirus outbreak. Charities should carry out written risk assessments in respect of the risks posed by coronavirus, ensuring that they are taking reasonable steps to control risks posed by the virus to its employees, and anyone else affected by its operations. This could include volunteers, service users, beneficiaries or anyone else who may be affected.
As part of the risk assessment, charities should identify and put in place adequate control measures to respond to risks posed by coronavirus. Charities should provide employees with adequate information about these measures and ensure that they are understood and that training is provided to employees, where necessary.
Given the rapidly changing position, charities should keep the risk assessment under close review and update it regularly to respond to any change in the risk profile.
Practical steps that charities can take now:
- Keep staff updated on measures being taken to reduce the risk of exposure in the workplace.
- Encourage all who can work remotely to do so.
- Encourage employees and volunteers to be extra-vigilant with washing their hands, using and disposing of tissues etc.
- Consider providing alcohol hand cleaning products.
- Provide a link to the government guidance on the situation which is updated every day.
- Summarise the current guidance about travel to countries which are at risk and action which may need to be taken after such trips.
- Ask staff to speak to their manager/HR if they have any trips planned, particularly during the Easter break, and encourage staff to inform you of any trips they have coming up so that you can discuss the risks and any possible consequences of them in advance.
- As the situation changes, charities may need to update their guidance to staff. This can be done briefly at regular intervals by email.
- Consider which employees are critical to the continuity of the charity and the selection criteria that may be used if the charity might consider furloughing workers under the Job Retention Scheme.
Charities have a number of options available to them in terms of managing work shortages. These options include agreeing with staff to work fewer hours, laying-off employees temporarily, placing employees on short-time working arrangements or asking them to use accrued holiday while there is a shortage of work.
When an employee is 'laid off', they are not provided with work or pay. Their employment relationship with the charity continues, and their rights and length of service continue to accrue. Lay-off is intended to preserve the employment relationship where there is a temporary and short term shortage of work. However, if it lasts for a prolonged period, the employee is entitled to assert that they are, in fact, redundant and then claim a statutory redundancy payment.
What does short-time working mean?
Short-time working is where a charity provides an employee with less work and less pay than usual and, due to the reduction in work, the employee's remuneration for the week falls below half their usual pay. Where hours are reduced but remain above half of the employee's normal working hours, this is not classed as short-time working. Instead, it is considered a temporary variation to their work pattern and pay.
A week, for the purposes of short-time working is for a weekly-paid employee, the seven days ending on the day to which their pay is normally calculated. In the case of all other employees, it is the seven days from Sunday to Saturday. The calculation date, for the purposes of a week's pay, is the day before the first day of the lay-off or short-time working.
Can all employers lay-off or place their employees on short-time working?
This depends. Some employers reserve an express right to do so in their employment contracts. In this situation, the employee can be placed on lay-off or short-time working in accordance with the terms and conditions of their contract and the statutory provisions.
For employers who operate in sectors where temporary work shortages can be common place, such as construction or hospitality, they may have an implied right to lay off or place staff on short-time working through custom and practice. However, for most charities it is unlikely that an established custom and practice in relation to lay off and sort term working exists.
Unless employees agree, there will be a breach of contract where an employer lays off an employee, reduces their hours or rate of pay or puts them on short-time working when they do not have an express or implied contractual right to do so. This may entitle employees to either:
- seek damages for breach of contract or make a claim for the unlawful deduction of wages
- claim that the charity's action amounted to a constructive dismissal, giving rise to potential claims for unfair dismissal and/or redundancy pay
To reduce the likelihood of such claims, employers should consult with staff with a view to obtaining their consent to vary their terms of conditions of employment to expressly allow for lay off, short time working or reduced hours. Employees should be advised that they are being asked to agree to these changes as an extraordinary measure. This is to preserve the employment relationship and delay (or hopefully avoid) compulsory redundancies as a consequence of the temporary cessation of work due to the recommended measures to manage the transmission of Coronavirus.
How long can an employee be laid off or placed on short-time working?
Unless there is an express clause in the employee's employment contract, there is no limitation on the amount of time that an employee can be laid off or placed on short-time working. However, after a prescribed period has lapsed, employees may be entitled to make a claim for statutory redundancy.
The prescribed period for an employee to become eligible to make a claim for statutory redundancy is at least:
- four or more consecutive weeks
- a total of six weeks (of which no more than three are consecutive) in any period of 13 weeks,
during which time the employee was laid off or kept on short-time working (or both).
The usual rules for employees to qualify for statutory redundancy payments continue to apply, ie the employee must have two or more years' continuous service.
However, please note that where there is no genuine prospect of an increase in work, and an employee is kept on lay-off or short-time working so that their employer can avoid making a statutory redundancy payment, that employee may have a right to claim that this is a breach of the implied term of mutual trust and confidence and could pursue a constructive unfair dismissal claim.
Do employees have the right to receive any payments during lay-off and short-time working?
Employees may be entitled to claim for a statutory guarantee payment (SGP) from the charity during periods of lay off or short-time working when they have not been provided with work. SGP is not payable where an agreement has been reached to reduce the employees hours of work, but they have not dropped below 50% of their normal weekly hours.
Full-time employees can make a claim for SGP for up to 5 workless days in any three month period. This is pro-rated for part-time employees who work less than a 5 day week. A 'workless day' is any day that the employee would normally work under their employment contract, but is unable to do so because the employer does not provide work.
SGP is calculated based on the employee's normal daily working hours and must be paid up to a statutory daily cap of £29 a day, or £145 in any three months. The rates are low and as such, SGP may not be of much comfort to employees. The rate does go up in April each year but in recent years has only increased by £1 per workless day per year.
An employee will be eligible for a SGP if they:
- have at least one month's continuous employment with their employer
- by virtue of the current pandemic, the workless day is not due to industrial action
- they have not unreasonably refused an offer of alternative work
- they comply with the reasonable requirements imposed by their employer
Alternatively, some charities may have their own guarantee pay scheme which applies in place of the statutory scheme. Such schemes cannot be less than the statutory amounts.
If employers do not pay SGP to eligible staff, this would amount to an unlawful deduction of wages and employees would be entitled to make a claim against their employer.
Can I ask staff to take holiday?
It may be sensible for charities to encourage its workers to use up any accrued but untaken holiday during periods when there is less work, or the charity is forced to suspend its activities. Under reg. 15 of the Working Time Regulations 1988, a charity does have the right to require staff to take their statutory holiday, if an agreement cannot be reached.
The charity must ensure that it informs staff at least twice as many days before the intended holiday, as the amount of days' holiday it requires staff to take (ie if staff need to take 3 days holiday), they should be notified 6 days in advance of this.
Best practice is to have clear communications with staff about why they need to use their holiday instead of coming into work. Seek to resolve any concerns about how it will affect further holiday entitlement or plans.
Many employers could be impacted in the medium to long-term by the economic implications of the coronavirus. such as supply chain disruptions, site closures and reduced customer footfall/orders. If there is a sustained reduction in the work available for staff rather than just a temporary dip, employers may have no other option but to consider redundancies. This is the case for charities too.
Initially the preference may be to carry out a process of non-compulsory redundancies, where the charity can ask employees if they would like to volunteer for redundancy or take early retirement. In such circumstances, it is important to have a fair and transparent selection process and tell employees that they will not automatically be selected just because they applied. The offer of both voluntary redundancy and early retirement must be made across the whole workforce. Employers cannot single out specific individuals as this could lead to discrimination claims.
If compulsory redundancies are still necessary, the charity must follow a fair consultation and selection process. They must identify which employees will be made redundant by scoring the pool staff who are at risk against objective and relevant selection criteria. Scoring must be consistent and without discrimination. If an employer is likely to make 20 or more redundancies at one site, they must ensure that they comply with the collective consultation requirements. These include engaging in consultation with recognised trade unions or employee representatives, and ensuring that there is moratorium on any dismissals during the prescribed consultation period and notifying the Secretary of State. Failure to follow the collective consultation requirements could result in the employer being required to pay up to 13 weeks' pay in compensation for each employee.
It is important to note that if an employee is unfairly selected for redundancy as a result of asserting their right to statutory parental leave, for example to look after children where schools have closed due to COVID-19, the employee will be entitled to make a claim of unfair dismissal.
If the job offer is dependent on references or other checks, it is a conditional job offer and can be withdrawn if such conditions are not met. Where a job offer is not conditional, a binding contract is formed once the offer is accepted.
The correct legal position is that the contract should properly be terminated by giving notice or payment in lieu of notice. Retracting the offer without properly terminating any contract could give rise to a claim for breach of contract by the employee. The prospects of success of a claim depend on whether the employee has already resigned from existing employment and has suffered any loss. If there are no losses, they cannot recover any compensation. If the offer has been made but not accepted, there is no binding contract and the offer can be retracted. In either case there are of course reputational issues if potential employees feel they have been poorly treated.
If employers wish to defer the start dates of employment then the same principle applies. If there is a binding contract with an agreed start date, then employers can only defer this with the agreement of the employee. If the offer has not yet been accepted, employers could revise the offer by changing the start date and the employee can then choose to accept or reject the revised offer.
What measures are the Government introducing to help?
The government has introduced a package of measures to support public services and businesses through disruptions caused by COVID-19. Measures for businesses include:
- Statutory sick pay relief package for SMEs. Employers with less than 250 employees will be able to reclaim up to two weeks Statutory Sick Pay (SSP), paid for sickness absence caused by COVID-19. Employers should maintain records of such absences and SSP but note that a note from a GP is not required.
- A Business Rate Relief for small businesses and pubs. The Business Rates retail discount in England will be increased to 100% for properties below £51,000 rateable value. The relief will also be expanded to the leisure and hospitality sector.
- A small business grant funding of £3,000 for all business in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief. Small businesses which already benefit from the SBRR or Rural Rate Relief are eligible for a one-off grant of £3,000 to meet their ongoing business costs. Eligible businesses will be contacted by local authorities.
- The Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance. This will be launched in the upcoming weeks to help businesses access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan up to £1.2 million in value to promote confidence in lending.
- The HMRC Time To Pay Scheme. Businesses and those who are self-employed may be eligible to receive support with their tax affairs if they have outstanding tax liabilities.
Not all of the above measures will be applicable to charities but they could assist their supply chain and more generally support businesses that partner with charitable organisations.
If you have any other questions, please contact Kathy Halliday in our Charities team on 0121 227 3711, or complete the form below.