Furlough Guidance Update
There was certainly a sigh of relief for many businesses and their employees when the Government confirmed that the Coronavirus Job Retention Scheme was to be extended until 30th September 2021.
However, again, like we saw last year, the current terms whereby the Government pays a contribution of 80% (up to £2,500.00) and employers pay national insurance contributions and pension contributions will be phased out between the start of July and what is currently stated to be the end of September.
So from 1st July 2021, employers will be required to still pay their furloughed employees 80% of their wages (capped at £2,500.00 per month) but, the Government’s contribution will reduce to 70%.
The Government’s contribution will be reduced by a further 10% in August to 60%.
Employers can choose to top up their employees wages above 80% (and the £2,500.00 cap) for hours not worked at their own expense.
Whilst this is good news, many employers will need to assess the affordability of continuing to employ their staff and meeting the cost of National Insurance contributions, pension contributions and then an additional 10% of their employees’ salaries as of 1st July (£312.50 based on the full £2,500.00 cap) and then, a further 20% in August (£625.00 based on the £2,500.00 cap).
There will also be the continued cost of accrued holidays to also be taken into account.
We have been advising organisations throughout the pandemic on all aspects of managing the continued viability of their businesses and the retention of employees. Many are discussing options of how to best cut costs whilst retaining their valued workforce. If you have concerns in respect of how you may need to manage employee retention, any other concerns or options that maybe open to you then, please do not hesitate to call us. We are always here to talk through any concerns that you have.
New Guidance on Shielding
New Guidance has been issued by Public Health England in respect of those individuals who were extremely clinically vulnerable due to the Covid pandemic.
The New Guidance stipulates that as of 1st April 2021 there will no longer be advice to individuals to shield.
This will mean that they will also no longer be eligible for Statutory Sick Pay or Employment and Support Allowance as a result of previous advice that they had to receive to shield.
The guidance stipulates that everyone is advised to work from home where possible and if, individuals cannot work from home then they should go to work.
However, you should be mindful that applicable lockdown laws still apply and, basic protective measures must be in place as stipulated by the Government Guidance.
Employers should also be mindful that some employees may find the transition from shielding for a year to suddenly being expected to leave their homes and return to their work place extremely difficult and employers should deal with such employees sympathetically and provide them with assurances that they need and the steps taken to minimise any risk.
If you find that you have employees that are struggling to return to work please contact us and we would be happy to provide you with suggestions to help you.
COVID – Health and Safety Detriments
To most employers there is a little known section in the Employment Rights Act 1996 which allows employees to claim in the Employment Tribunal if they are subjected to a detriment because, they reasonably believe that being at work would place them (or someone else, such as a household member) in serious, imminent danger.
Whilst this section was rarely used in the past, it is now being quoted and relied on by employees on a frequent basis when they are subjected to a disciplinary procedure or disciplinary sanction or dismissed for refusing to return to work due to their fears in respect of COVID.
This is a real concern for both employees and employers. Employers need to tread very carefully and support employees so far as possible by taking steps to minimise any risk, informing them of steps that have been taken to minimise risks, ask them what steps make them feel safer and, generally to deal with them sympathetically and reach an agreement whereby they feel comfortable travelling to and attending the workplace. If they still refuse then advice should be taken before any further action.
The current legislation only covers employees but, the Government have laid new Regulations before Parliament that will also cover “workers”. If approved, which we have no doubts they will be, it will apply to any detriment that take place on or after 31st May 2021.
Harassment- Need to Update Training
The case of Allay v Gehlen in the EAT comes as a stark warning to employers in respect of their liability for perpetrators in harassment cases even if they have provided training in the past.
Under the Equality Act, employers can defend a claim resulting from unlawful discriminatory action of any employee if they can demonstrate that all reasonable steps were taken to prevent the employee from doing the discriminatory act.
The Claimant had been the subject of racist comments on a regular basis.
The employer in its defence stated that it had taken “reasonable steps” by providing relevant training to the perpetrator.
Both the Tribunal and the EAT held that the training that had been given a year before the harassment occurred had become stale, which was demonstrated by the racist comments and the managers failing to report them when they became aware of them.
In this particular case, it was held that all reasonable steps would have included a refresher on the training.
We always advise that training should be kept up to date in respect of bullying and harassment and certainly your policies should be reviewed annually and redistributed to staff.
Covert recordings continue to plague employers.
In North Bay Pelagic Limited v Anderson an employee director of the Company set up a web-enabled camera in his office with exclusive access as, he believed, someone had been entering his room and accessing his computer. The director was dismissed, and the Employment Tribunal concluded that the employer was wrong to have dismissed the employee director for gross misconduct.
The EAT stated that the decision taken by the Company fell outside the band of reasonable responses test for unfair dismissal. The EAT explained that there should have been a balancing exercise between the right to privacy and the Claimant’s wish to protect his confidential information. In this case it held there was a negligible risk that persons other than those entering the room, would be captured on camera.
Generally, in terms of covert recordings, employers should be aware that Tribunals will carry out a balancing act however, in more cases than not, they will allow covert recordings to be entered as evidence unless, it is covert recording of when deliberations are being undertaken by a disciplinary panel etc.
Uber v Aslam
The Supreme Court has finally upheld the claims of Uber drivers as being workers for the purpose of rights under the Employment Rights Act, the Working Time Regulations 1998 and the National Minimum Wage Act 1998.
The Supreme Court held that the purpose of the legislation is to give protection to vulnerable individuals who are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work.
The Court concentrated on five main points in coming to its decision where were:
- Uber dictates the rate of pay;
- Uber dictates the contract terms;
- Uber constrains driver’s freedom to choose when to work once logged into the App;
- Uber controls the way in which the service is delivered; and
- Uber restricts driver’s ability to communicate with passengers.
As a result, Uber drivers are entitled to claim minimum wage. They can also claim 5.6 weeks’ pay for annual leave each year and will also have whistleblowing and similar rights.
Whilst the judgement does not give them employee rights, such as the right to redundancy payment or to claim unfair dismissal, it certainly improves their position.
When recruiting it is always critical that an assessment is carried out as to the status of the worker in terms of the reality of the relationship and that appropriate terms and conditions are issued to confirm whether the individual is a ‘worker’, an ‘employee’, or self-employed. It is also possible that an individual starts out as being in one of these categories but over time their status changes to a different category. This arises lot in industries that rely on zero hour contracts and casual workers.
Changes to Off-Payroll Rules (IR35) from 6th April 2021
From the 6th April 2021, IR35 Rules will also become effective in the private sector. As a result, certain organisations will be responsible for determining if any of their contractors are employed or self-employed for tax purposes.
The rules will not apply to small private sector organisations which satisfy two of the following criteria:
- Annual turnover less than £10.2m;
- A Balance Sheet of less than £5.1m; or
- Fewer than 50 employees.
Therefore, within the small private sector, the onus of determining employment status remains with the individual contractor.
HMRC has introduced a tool to help organisations with their decision making process.
If the rules apply, then organisations will be responsible for deducting income tax and National Insurance Contributions at source, as well as paying any employer’s National Insurance Contributions that are due.
As ever, it is important for organisations that engage contractors who work through their own Limited Company (Personal Service Company) or other intermediaries to ensure the status of those individuals are correctly categorised and, where appropriate deductions are made.
In order to establish whether an individual is “employed” for tax purposes there are a number of legal tests which the Courts and Tribunals will look at as well as what is written in the Contracts between parties. However, they will most likely look at how the relationship operates in reality. The main factors that are taken into account are:
- Mutuality of obligation – Is the individual expected/required to provide the service in return for any payment?
- Control – To what extent does the end client (employer) exercise a significant level of control over the way in which the individual performs those services.
- Personal Service – Does the individual have to provide the service personally or can they send a substitute individual to carry out the work instead.
Employers should therefore:
- Review existing Consultancy/Service / Contractor Agreements;
- Review Agreements with Agencies/Employment Businesses who provide off-payroll workers or supply services through an intermediary;
- Review Business to Business Agreements where services include those provided by off-payroll workers. Ascertain who is the end client;
- Make enquiries of all the above to ascertain status; and-
- Pro-actively communicate with the impacted workforce/individuals or the relevant intermediary.
It remains to be seen how businesses will deal with the additional costs and whether these will be offset by reducing the daily rate of contractors. We anticipate that there will be a significant reduction in the use of Personal Service Companies going forward.
The employment team at Davis Blank Furniss can help you review your current situation including reviewing contractors, advising you on contracts that should be in place or amendments required to existing contracts as well as assisting you to determine the status of individuals.
To discuss any of the above, please contact me via Shiva.Shadi@dbf-law.co.uk or call 0161 832 3304.