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Coronavirus: employment

This article outlines the support available relating to employment, including ‘furloughed’ workers, sick pay, self-employment income support, and for people who cannot work for other reasons.

Estimated reading time: 7 Minutes

This article was last updated on 11 June 2020

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

A large proportion of the workforce in Wales has been affected by coronavirus, through sickness, self-isolation, ‘furloughing’, redundancy, or because of caring responsibilities.

This article outlines the support available relating to employment, including ‘furloughed’ workers, sick pay, self-employment income support, and for people who cannot work for other reasons.

We have published a separate article on coronavirus and welfare benefits.

Decisions about employment are made by the UK Government, and it has published coronavirus guidance for both employees and employers.

Employees ‘furloughed’ through the Coronavirus Job Retention Scheme

The UK Government’s Coronavirus Job Retention Scheme is designed “to support employers whose operations have been severely affected by coronavirus”.

It allows employers to ‘furlough’ (i.e. put on a leave of absence) employees that cannot work because the business has been forced to close, or because there is no work to do, as a result of coronavirus. The aim of the scheme is to make sure that employers who cannot afford to pay staff wages do not make redundancies.

The scheme will pay 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month (not including bonuses, fees or commission). Employers can top up the remaining 20%, or any amount in excess of the £2,500 limit, but they are not required to do this.

Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. The cut-off date was extended from 28 February to cover people who changed jobs in early March. People who changed jobs after this date can ask their previous employer to re-hire and then furlough them, but the employer doesn’t have to agree to this.

The guidance outlines how to calculate wages for employees whose pay varies month to month (like people on zero hours contracts).

Employees who were put on unpaid leave after 28 February can be furloughed. Employees on sick leave or self-isolating should take Statutory Sick Pay, but can be furloughed after this. Apprentices and people on fixed term contracts can also be furloughed.

Office holders (including company directors), salaried members of Limited Liability Parentships (LLPs), agency workers, and limb workers (dependent contractors)can be furloughed if they are paid via PAYE.

People who are ‘shielding’ because they are in a vulnerable group or need to stay home with someone who is shielding (and cannot work from home), or people with caring responsibilities can also be furloughed.

Employees who are working but on reduced hours or reduced pay are not eligible for this scheme.

Employers cannot discriminate when choosing which employees to furlough. If an employee refuses to go on furlough and is made redundant, it is also possible that the selection criteria for furloughing could be a factor in any subsequent unfair dismissal claim.

Furloughed employees cannot do any work for their employer, but they can volunteer.

The scheme is open to businesses, charities, and recruitment agencies inthe UK that had a PAYE payroll scheme on or before 28 February 2020. Public authorities are also eligible in some limited circumstances.

On 29 May, the Chancellor announced that from 1 July businesses will be able to bring back furloughed workers to work part-time. Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages while in work.

From August, the scheme will start to taper off, so that employers will start to pay a share of furloughed workers’ wages. In August, employers will pay employer National Insurance Contributions (NICs) and pension contributions.  In September, as well as pension and employer NICs they will also pay 10% of wages, with the UK Government paying 70% up to a maximum of £2,187.50. In October, this will rise so that employers pay 20% of wages as well as NICs and pension contributions, with the UK Government paying 60% of wages up to a maximum of £1,875.

The scheme will close to new entrants on 30 June, with employers only able to claim for employees that they have furloughed for a three-week period prior to this. The final date on which an employer can newly furlough an employee is 10 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.  To reflect the changes to the furlough scheme, from 1 July employers will no longer be able to submit claims for periods that overlap calendar months.  They will also not be able to claim for a greater number of furloughed workers in a claim period than they have done previously.

Employers can apply to the Coronavirus Job Retention Scheme through the UK Government’s website. Employees cannot apply for the scheme themselves.

Statutory sick pay

Employees that take time off work because they are sick with coronavirus or self-isolating are entitled to statutory sick pay (SSP). This applies retrospectively from 13 March.

On 16 April, SSP was extended to cover people who have been identified as extremely vulnerable and need to stay at home for 12 weeks.

To qualify, an employee’s average weekly earnings must be above £120 a week (from 6 April). SSP is the minimum level of pay employees are entitled to – from 6 April it is £95.85. But many people will have a right to enhanced sick pay under their employment contract.

Some agency workers and people on zero hours contracts are classed as employees, so are eligible for SSP. Self-employed people are not eligible for SSP, so most ‘gig economy’ workers will not be eligible. But some firms have chosen to provide sick pay to such workers.

SSP is normally paid from the fourth day of sickness, but the UK Government has relaxed this rule for people affected by coronavirus so SSP can be paid from day one.

Employees can ‘self-certify’ for the first 7 days off work. After that, they need to get a ‘self-isolation’ note from the NHS Wales Direct online symptom checker to give to their employer.

Employers with fewer than 250 employers can reclaim some SSP costs during the coronavirus outbreak. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of coronavirus.

Self-employed people

The UK Government’s Self-employment Income Support Scheme allows self-employed people whose income has been negatively affected by coronavirus to claim a taxable cash grant of 80% of their average monthly trading profit, up to £2,500 per month

It is available to people whose annual trading profits were less than £50,000 in 2018-19 (or averaged less than £50,000 a year in the period 2016-17, 2017-18 and 2018-19) and where more than half of their income comes from self-employment. It is only available to people who traded in the 2019-20 tax year, and have submitted their 2018-19 tax return (although people have until 23 April to file).

The scheme also applies to members of partnerships. People who pay themselves a salary and dividends through their own company are not covered by the scheme, but may be able to access the Coronavirus Job Retention Scheme if they are paid via PAYE (see above).

Grants will be paid in a single lump sum instalment covering all three months, and the process for applications is now open. Before making a claim, self-employed people should use HMRC’s eligibility checker to see if they are able to claim for this support. If someone is eligible to claim, HMRC will give them a date they can make their claim from, and the online service is now up and running to do this. Once a claim has been received, HMRC will check it, and pay the grant into the claimant’s bank account within six working days.

Individuals can continue to apply for the first grant until 13 July.

On 29 May, the Chancellor announced that the scheme will be extended, so that those eligible will be able to claim a second and final grant in August. The grant will be worth 70% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant.

Self-employed people on a low income may also be eligible for benefits. See our benefits article for more information.

People who cannot work for other reasons

Workplaces can still operate if they provide key services or have not been required to close, and where homeworking is not possible.

But people with caring responsibilities, who are ‘shielding’ in line with government guidance, who live with a vulnerable person, or are afraid of catching coronavirus, may be unable or unwilling to go to work.

The UK Government’s guidance was updated on 6 April to say that people who are ‘shielding’ because they are in a vulnerable group, or need to stay home with someone who is shielding (and cannot work from home), or have caring responsibilities can be furloughed through the Coronavirus Job Retention Scheme (see above).

The Advisory, Conciliation and Arbitration Service (Acas) advises employers to listen to the concerns of their staff, and take steps to protect everyone. But workers who refuse to follow instructions could still face disciplinary action.

People may be able to take the time off as holiday or unpaid leave. But employers do not have to agree to this.

If an employee has urgent caring responsibilities, they may be able to take a ‘reasonable’ amount of time off for dependents. The time off does not have to be paid, but employers can choose to do so.

Employers of pregnant women must do a risk assessment, and if it is unsafe for them to attend work, they have to be suspended on full pay. If that is within 6 weeks of their due date, they are entitled to start their maternity leave at that point.

Universal Credit and other benefits may be available to people who are in or out of work and on a low income as result of taking unpaid leave (see our benefits article for more information.)

Advice

Advice services can provide help with employment issues, including:


Article by Hannah Johnson, Senedd Research, National Assembly for Wales

We’ve published a range of material on the coronavirus pandemic, including a post setting out the help and guidance available for people in Wales and a timeline of Welsh and UK governments’ response.

You can see all our coronavirus-related publications by clicking here. All are updated regularly.

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