In this month’s legal update we’ll cover:
- Impact of Coronavirus
- Budget announcements
Impact of Coronavirus
Brexit has been pushed to the back burner in some respects due to the ongoing Coronavirus pandemic and the leaders of Europe trying to get a handle on that. At the beginning of this month there was an enquiry launched looking at all aspects of the negotiations and future relationship between the UK and EU.
A committee will be particularly concerned with the following questions:
- What are the priorities for the UK, and for the EU, in the negotiations on the future relationship?
- How should the interests of different sectors of the economy and parts of the UK be balanced?
- How will the implementation of the Withdrawal Agreement interact with the negotiations on the future relationship?
- What is the role of the Joint Committee, and what other mechanisms will be available for the UK and EU to resolve disagreements?
- How prepared is the UK Government to negotiate and implement the future relationship with the EU, including in the event a free trade agreement not being secured?
- Which aspects of the future relationship could be negotiated after the transition period?
- How effectively is the Government consulting with businesses, stakeholders, and the devolved institutions, to inform the UK negotiating position?
Only time will tell when meaningful negotiations can continue and what the results of those negotiations will be, but we will keep you updated.
Coronavirus: employment implications
Much of this update will of course be focussed around COVID-19 and the implications in employment and business. There is further guidance on some of the frequently asked COVID-19 employment questions on our website which we are keeping up-to-date as new announcements are made.
Statutory Sick Pay (SSP), contractual sick pay and sickness absence
SSP or contractual sick pay will now be payable from day 1 and not day 4 if employees have been advised by a health professional to self-isolate because they have symptoms of coronavirus.
Workers who are not on sick leave can be instructed to take statutory annual leave by their employer, provided that they are given the required level of notice.
In order to report sickness absence, employees are allowed to self-certify for the first 7 days but after that time most company sickness policies will say that a fit note from a GP is required. If sickness is linked to COVID-19 or somebody an employee lives with having COVID-19, they should now obtain an isolation note as evidence of sickness, from the NHS website.
Employers must consider their policies, particularly in terms of those who suffer from certain health conditions which amount to disabilities, such as some cancers, asthma, diabetes or COPD, as those individuals are at higher risk of serious illness or death if they contract COVID-19.
If an employer requires employees to continue travelling to and attending work, or to not pay or to dismiss them due to their absence in this scenario, this could be a policy which indirectly discriminates against those individuals. Unless this is a proportionate means of achieving a legitimate aim, the employer should consider homeworking or another reasonable adjustment so that individuals with these disabilities are not substantially disadvantaged and employers do not face disability discrimination claims.
Your business may not already have a homeworking policy but may now wish for employees to work from home. If you are able to set employees up for work at home, it is advisable to ensure that there is a homeworking policy in place. This is so that employers and employees know where they stand on issues relating to homeworking. If you do not already have a homeworking policy in place or would like help with updating this, please contact our specialist employment solicitors.
Coronavirus: assistance to businesses
Coronavirus Job Retention Scheme: This scheme means that a business of any size in the private or charitable sector can apply to HMRC for up to 80% of a worker’s wages to be paid by the government (up to a maximum of £2500 per month).
VAT and Income Tax payments delay: The government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months until the end of June 2020. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
Statutory Sick Pay relief package for SMEs: Chancellor Rishi Sunak announced as part of the budget that, for businesses with less than 250 employees, the cost of providing SSP to an employee due to coronavirus-related absences for up to 14 days will be refunded in full by the government. These new measures taken by the government are intended to support SMEs who may be experiencing increased financial disruption at this time. It is likely that the Treasury will set up a refund mechanism for employers to reclaim SSP in due course.
12-month business rates holiday for all retail, hospitality and leisure businesses: These industries who are likely to be hit hardest by the coronavirus pandemic are to be given a business rate holiday, which will be automatically applied to council tax bills in April 2020.
Small business grant funding of £10,000: For all business in receipt of small business rate relief or rural rate relief.
The Retail and Hospitality Grant Scheme: Thisprovides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. If businesses have a rateable value of under £15,000, they will receive a grant of £10,000 and businesses with a rateable value of between £15,001 and £51,000 will receive a grant of £25,000.
Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank: A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
Covid-19 Corporate Financing Facility: Larger companies can apply for support if there is a short-term funding problem, as the Bank of England will buy short term debt from larger companies, which will support corporate finance markets overall and make credit more readily available to all businesses.
HMRC Time To Pay Scheme: All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. If you have missed a tax payment or you might miss your next payment due to COVID-19 you should contact HMRC to see if you can qualify under this scheme.
The following will take effect according to the other announcements made in the budget:
- The Entrepreneurs Relief lifetime limit has been reduced from £10million to £1million.
- From April 2020 there is a new rate of Structure and Buildings Allowance, some aspects of which apply from 11 March.
- The National Insurance Contributions thresholds are to increase to £9,500 per year saving both the average employee and self-employed person money in 2020-2021. The maximum employment allowance will also be increased to £4000 from April 2020 so eligible businesses and charities will be able to claim a greater reduction on their Secondary Class 1 National Insurance contributions liability, but eligibility is also changing.
- Legislation implementing the recommendation from the independent review of the Loan Charge, will also apply retrospectively from 5 April 2019. The changes will benefit those that have made, or are due to make, certain voluntary payments to HMRC under a final settlement agreement.
- There is an increase on two income thresholds used in calculating the tapered annual allowance and decreases the minimum tapered annual allowance in respect of pension taxes from 6 April 2020.
- From 6 April 2020 the pensions lifetime allowance will be increased to £1,073,100 and collective money purchase pension schemes (or collective defined contribution pension schemes) introduced by the Pension Schemes Bill 2019-20, can operate as registered pension schemes.
- Where employer’s hire former members of the UK armed forces, they will benefit from a National Insurance holiday for any NICs liability on veterans’ salary up to the Upper Earnings Limit in their first year of civilian employment.
- All new cars provided to employees and available for private use that are first registered from 6 April 2020 will be taxed according to the CO2 emissions figure, measured under the Worldwide Harmonised Light Vehicle Test Procedure system.
- The maximum flat rate tax deduction where employees incur additional household costs when home working will increase, from £4 to £6 per week from April 2020.
- From 1 January 2021, postponed accounting for VAT will apply to all imports of goods, including from the EU, meaning VAT won’t have to be paid at the border but through their periodic VAT return.
- The Digital Services Tax will impose a tax on the revenue received from providing social media services, search engines and online marketplaces to UK users, from 1 April 2020.
- A zero rate of VAT will be applied to e-publications including e-books, e-newspapers, e-magazines and academic e-journals from 1 December 2020.
- Large businesses will be required to notify HMRC where they have adopted an uncertain tax treatment involving more than £1million.
Are sleep-in workers in care homes entitled to the national minimum wage while asleep?
Social care employers had hoped the issue had been resolved when the Court of Appeal held that the national minimum wage legislation requires sleep-in workers to receive the minimum wage only when they are awake and “available” to work.
But if the Supreme Court appeal by the Trade union, Unison, is successful, it will have wide implications for employers that have staff who sleep at work until called upon.
They will face ongoing increased staffing costs as well as claims for back pay for the previous six years. It’s been estimated that the total bill could be around £400 million.
Vicarious liability in respect of data protection breaches
The Supreme Court is expected to deliver its decision shortly on whether an employer is vicariously liable for the data protection breaches of an employee, even though the employer itself was not at fault in the processing and protection of personal data.
The Court of Appeal held in the case of WM Morrison Supermarkets plc that the supermarket was vicariously liable for the actions of an employee. The employee published personal data, including bank and payroll information, of nearly 100,000 of his co-employees online.
Even though this was done from the employee’s own personal computer, at home, out of working hours, the employer was found liable as the claimant’s cause of action had arisen the moment the data was downloaded at work, and not when it was published later at home.
Does TUPE apply to workers as well as employees?
The controversial decision in Dewhurst v Ecourier that TUPE applies to workers as well as employees is expected to be overturned and the traditional position that this only applies to employees, restored.
However, if the decision is upheld, it would mean that employers have more obligations in terms of workers, and would have to include workers in employee liability information, informing and consulting with them on a TUPE transfer.
Employment status and the gig economy
The Supreme Court is due to hear the appeal in Uber BV and others in July this year to determine once and for all whether Uber drivers are workers or self-employed. So far Uber drivers have been found by the Tribunal to be workers entitling them to receive basic employment rights such as paid annual leave.
Parental Bereavement Leave and pay
From 6 April 2020 the new Parental Leave and Pay Regulations will come into force. This will enhance the current right for bereaved parents to take ‘reasonable’ unpaid time off to deal with an emergency. This means that parents and adults with parental responsibility who have suffered the loss of a child under the age of 18 and have been employed for at least 26 weeks, will be eligible for paid parental bereavement leave.
All employees have a ‘day one’ right to unpaid bereavement leave in a two-week block or two one-week blocks within 56 weeks of the date of the child’s death.
If leave is taken within 56 days of the child’s death, the employee must provide notice to the employer before starting work on their first day of absence or as soon as reasonably practicable. If leave is taken between 56 days and 56 weeks following the child’s death, the employee must provide a week’s notice to the employer.
Provided affected employees receive pay above the lower earnings limit (currently £118 per week) for the eight weeks before their child’s death, they are entitled to at least two weeks’ statutory paid leave. This is set at the current statutory rate of £148.68 per week and after 6 April £151.20, or 90% of average weekly earnings, if this is lower. Small employers will be able to recover all, and large organisations will be able to recover most statutory parental bereavement payments.
It is advisable to add a parental bereavement leave and pay policy to your staff handbook or draft a new policy in this regard. If you would like for us to do this on your behalf, please do not hesitate to contact our specialist employment solicitors.
IR35 in the private sector
Understandably under the current circumstances, the government has announced that the extension of IR35 to medium and large companies in the private sector is being postponed and will now be introduced a year later than planned on 6 April 2021.
These rules, once introduced, will mean that an end user client will have to make a decision as to whether a contractor who provides their services through an intermediary is truly self-employed or not.
If it is considered by the end user client that if the intermediary were not used then the contractor would be an employee, that end user will need to ensure that statutory deductions are made to that individual’s pay.
*Please note that this update does not constitute
formal legal advice and should not be relied upon as such. Always ask a
solicitor if you are unsure of how the law relates to your business.