Do we need to pay employees if they are absent from work?
If an employee is prevented from working because they are genuinely unwell or sick, then the company's normal sickness policy should apply.
If you have asked your workforce not to come to work but to work from home, they should also be paid as normal.
Where an individual is not unwell but is prevented from working because they are, for example, in self-isolation, quarantine, or stranded abroad, or they have otherwise been advised to stay at home as a result of medical or UK government advice and are unable to work remotely, there is no legal right to be paid for the time off. However ACAS and the Secretary of State for Health have advised such absence to be treated as sick leave under the company’s sick pay policy.
Statutory sick pay (SSP) will be payable to eligible workers, although the UK government has announced a series of measures to relax the ordinary rules in light of the COVID-19 outbreak. New legislation has been passed allowing SSP to be paid from the first day of absence (instead of day four) in certain circumstances. For this to be the case, an employee must be unable to work either because they have Coronavirus or because they are self-isolating and:
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they must be eligible for SSP
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their first day of sickness absence must be on/after 13 March 2020
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they must be off work for more than 4 consecutive days
Small employers (those with under 250 employees) can recover SSP from the UK government for up to 14 days per person under the Coronavirus Statutory Sick Pay Rebate Scheme.
As of 26 August 2020, the SSP rules have been amended to cover those self-isolating in advance of an operation. Workers who have been notified by a registered medical practitioner that they are to undergo a surgical or other hospital procedure, and have been advised to self-isolate in advance, are eligible for SSP for the period of self-isolation up to 14 days. Workers who are able to work from home while self-isolating in these circumstances are not entitled to SSP, but should be paid their normal wages.
The UK government also announced that Employment Support Allowance (ESA) will be available to the self-employed, and to workers whose earnings are too low to be eligible for SSP, if they are affected by Covid-19 or self-isolating due to UK government advice. ESA rules have also been relaxed so that payment is from day one of absence (instead of day eight), and to remove the need to attend a jobcentre to claim.
You may want to consider a temporary enhancement to company sickness policy in order to incentivise people to remain off work, as insufficient sick pay provision risks individuals reporting for work. Any such changes should be kept under review and adapted as circumstances change.
What is the Coronavirus Statutory Sick Pay Rebate Scheme?
The Coronavirus Statutory Sick Pay Rebate Scheme enables employers to reclaim SSP which they pay to current or former employees for periods of sickness starting on/after 13 March 2020. Employers are eligible for this scheme if they:
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are claiming for an employee who’s eligible for sick pay due to coronavirus
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had a PAYE payroll scheme that was created and started on or before 28 February 2020
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had fewer than 250 employees on 28 February 2020
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.
Where an employer pays more than the statutory rates of SSP (‘enhances’ or ‘contractual’ sick pay) they can only claim for the current rate amount.
Repayments under this scheme will cover up to two weeks of sickness, starting from the first day of sickness, provided that the employee was unable to work because:
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they have Coronavirus;
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they are shielding at home;
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they are isolating at home because they live with someone who is self-isolating due to having symptoms;
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they self-isolate because they are in a 'bubble' with someone in a linked or extended household that has Coronavirus symptoms; or
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they are isolating at home because they have been told by the NHS Test and Trace that they have been in contact with someone who has Coronavirus
Employees do not have to provide a doctor’s fit note for employers to make a claim.
Please note that where an employee is self-isolating because of being in a 'bubble' with someone who has Coronavirus symptoms, SSP will cease to be payable if the person with symptoms tests negative for Coronavirus.
The online service through which to reclaim SSP is now available on the government website.
Employers should make sure to keep records of SSP payments for three years.
Can I make staff redundant?
It may not always be appropriate to make staff redundant completely.
You may wish to adopt flexible measures instead, for example short-time (a reduction in hours) and lay-off working, or furloughing your employees or relying on the Job Retention Scheme. If you do need to make redundancies ensure to follow the correct procedure. For further information and to make redundancy letters read Redundancies . Alternatively, Ask a lawyer for workforce reduction advice.
What does lay-off mean?
Lay-off is when an employer takes an employee off work and off pay for at least one working day. It is used as a response to lack of work, and as an alternative to making redundancies. For more information, read Lay-offs and short time working.
Check your employment contracts to see whether you are allowed to implement short-time and lay-off working. If they are currently not in the employment contract, you can get the employee's express consent to vary or change the contract to allow for lay-offs. You can use a Change to employment terms letter for this purpose. For further information read Changing employment terms.
There is a statutory scheme for lay-offs, but usually a lay-off clause in the employment contract is required in order to implement this or with the consent of the employee.
How long can an employee be laid off for?
There’s no limit for how long an employee can be laid off or put on short-time. An employee could apply for voluntary redundancy and claim redundancy pay if it’s been:
- 4 weeks in a row
- 6 weeks in a 13-week period
What is the lay-off pay entitlement and short-time working payments?
Employees should get full pay unless the contract allows unpaid or reduced pay lay-offs.
If the lay-off is unpaid, employees are usually entitled to guarantee pay.
What is short-time working?
Short-time working is similar to lay-off, but rather than providing no work, the employer provides some, reduced, work. Less than half a normal week's work and pay will trigger the statutory short-time working protections for employees, subject to eligibility requirements.
A statutory 'guarantee payment' is payable to employees, subject to certain requirements. The maximum payment is £29 per day for up to five 'workless' days in any three-month period, so a total maximum of £145. Part-time payments are calculated pro rata.
An employer could choose to pay more.
For further information read Lay-offs and short time working.
Can I make employees take annual leave?
You are entitled to give notice to staff to take annual leave, provided there is no agreement to the contrary (eg in the employment contract). Notice must be at least twice as long as the period of leave you require them to take, eg if you require an employee to take 1 week's annual leave, you must give them at least 2 weeks' advance notice.
Can I ask employees to volunteer for unpaid leave or redundancy?
If you wish for employees to take periods of unpaid leave, their consent is required unless their employment contract contains a clause allowing you to place them on unpaid leave.
While it is not always appropriate to make staff redundant completely, you may wish to seek out staff who are willing to take redundancy voluntarily.
You cannot just offer voluntary redundancy to age groups eligible for an early retirement package - this could constitute discrimination. However, an early retirement package (for certain age groups) could be one element of a voluntary redundancy offer open to all staff. For more information read Redundancy.
Can I reduce my employee's pay?
Employers will need to consult with staff to obtain their express agreement to these measures where the employment contract does not contain any relevant contractual flexibility clauses or short-time working clauses.
You can consider using a Furlough agreement letter to employees for this purpose. For further information read Furlough, workforce reduction and managing employees. Alternatively, you can consider using a Change to employment terms letter.
You should note that the Government will support employees by providing an emergency wage package rescue plan called the Coronavirus Job Retention Scheme until the end of October 2020. From 1 November 2020, the Government is offering additional support for employees under the Job Retention Scheme.
What is the Coronavirus Job Retention Scheme?
This scheme is to help employers pay employee wages. Employers will be able to contact HMRC to cover 80% of retained (or ‘furloughed’) workers salary up to a maximum of £2,500 a month in addition to the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can choose to fund the difference between this payment and employee salaries, but do not have to. To be furloughed, employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Apprentices can also be furloughed.
For further information read Furlough, workforce reduction and managing employees.
The scheme will cover the costs of wages backdated to 1 March 2020 and will continue until the end of October 2020.
The cut-off date for employers to place their employees on furlough for the first time is 10 June. This is because the Scheme will close to new entrants on 30 June. Only employees that have been furloughed for 3 consecutive weeks before the date of closure will be eligible to benefit from the Scheme. Employers will have until 31 July to claim for funds under the Scheme in respect of those furloughed before 30 June. For days in July, claims can only be made from 1 July onwards.
An exception to the 10 June cut-off date is any parent returning to work following their paternity or maternity leave. These individuals remain eligible for the Scheme after 10 June, ie can be furloughed for the first time after the cut-off date.
From July onwards, employers will be able to recall their furloughed employees part-time under the scheme (also called ‘flexible furloughing’). Employers will have to pay their employees for the hours they’ve worked while the scheme will cover their normal hours not worked (ie their furloughed days).
In order to maintain the same level of furlough pay for employees, participating employers will be asked to share its cost by making contributions from August onwards.
| Month |
Employers’ contribution |
Government’s contribution to wages |
| August |
National Insurance and pension contributions |
80% up to £2,500 |
| September |
National Insurance and pension contributions and 10% of the furlough pay |
70% up to £2,187.50 |
| October |
National Insurance and pension contributions and 20% of the furlough pay |
60% up to £1,875 |
How to claim for 80% of wages?
To be able to claim 80% of wages you have to be eligible for the Coronavirus Job Retention Scheme. To be eligible you must have:
You'll need to make a claim via HMRC's online portal, from 20 April 2020. Once you're able to make a claim:
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use the amounts in your payroll
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if appropriate, reduce employees' wages to 80% of their salary before they are paid
Please note that workers need to be furloughed for a minimum of 3 weeks for you to be able to claim under the Coronavirus Job Retention Scheme.
Can furloughed apprentices continue to undertake training?
Where apprentices are furloughed, they can continue to train for their apprenticeships, as long as it does not provide services to or generate revenue for their employer.
Where training is undertaken by furloughed employees, at the request of the employer, they are entitled to be paid at least their appropriate National Minimum Wage for this time.
How can I recall a furloughed worker?
You should use a Recall an employee from furlough letter to inform a furloughed employee that they are to return to work. This letter informs a furloughed employee when their furlough period will come to an end and when they are expected to resume working.
You should provide a furloughed employee with ‘reasonable notice’ to return to work, to allow employees to make any necessary arrangements (eg child care arrangements).
Can employees on furlough take holiday?
Staff members can take annual leave while furloughed. Statutory annual leave continues to accrue as normal during a period of lay-off or furlough. This is because the contract of employment will continue to be in existence during this period. Contractual annual leave above the statutory minimum (the 5.6 weeks of holiday required by the law) will also continue to accrue, unless the contract specifically provides otherwise. For example, if an employee’s contract says that they are entitled to 7 weeks’ holiday, the employer and employee can agree to (temporarily) reduce that to 5.6 weeks.
Furloughed members of staff can request and take their holiday in the usual way, if their employer agrees. This includes bank holidays. Furloughed workers must get their usual pay in full, for any holiday they take, unless agreed otherwise (eg if the employer and employee have previously agreed to reduce the employee's pay while on furlough). Employers are able to claim 80% of salary paid on holiday days as taking holiday does not break the furlough period. This means that for holiday days taken by a furloughed worker, the employer must typically top up the 80% salary paid under the Coronavirus Job Retention Scheme so that the employee is paid 100% of their salary.
Are furloughed employees entitled to holiday on bank holidays?
If the bank holiday is a day's holiday under the employment contract, then the furloughed staff is entitled to the holiday. The furloughed staff should be paid 100% of their wage for that day.
Alternatively, employers may agree to grant a day of holiday in lieu (ie grant the employee an additional day of holiday in place of the bank holiday). If the employment contract states that bank holidays form part of the usual holiday entitlement, employers will need the employee’s consent to grant a day in lieu.
What should furloughed employees be paid if they are then made redundant?
Furloughed employees who are then made redundant must receive statutory redundancy pay based on their normal wages rather than their furlough pay. This also applies to notice pay, which is where employees must be given a notice period before their employment ends.
What is the Job Support Scheme?
The Job Support Scheme is designed to protect jobs in businesses that are facing lower demand over the winter due to Covid-19.
The employer will continue to pay its employees as normal for time worked, for hours not worked, the Government (through wage support) and the employee (through a wage reduction) will both also contribute to the wages.
The Government will pay one third of hours not worked up to a cap of £697.92 per month, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will be able to claim the Coronavirus Job Retention Bonus if they meet the eligibility criteria.
The Scheme is expected to open on 1 November 2020, and run until 30 April 2021. Employers are expected to bring a claim online, from December 2020, and will be paid on a monthly basis.
What is the eligibility for the Job Support Scheme?
Employer
All employers with a UK bank account and UK PAYE schemes can claim the grant.
The employer can rely on the Job Support Scheme where neither the employer nor employee previously used the Coronavirus Job Retention Scheme.
Large businesses will have to meet a financial assessment test, so the Scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. No such financial assessment test if currently needed for small and medium enterprises (SMEs).
Employees
To be eligible, employees must be on an employer’s PAYE payroll on or before 23 September 2020.
In order to be eligible under the Scheme, the employee must work at least 33% of their usual hours for the first 3 months of the Scheme. After 3 months, the Government will consider whether to increase this minimum hours threshold.
Employees will be able to cycle on and off the Scheme and do not have to be working the same pattern each month. However, each short-time working arrangement must cover a minimum period of seven days.
What do reduced hours mean under the Job Support Scheme?
To be working reduced hours under Job Support Scheme:
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the employee must be working at least 33% of their usual hours
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for the time worked, employees must be paid their normal contracted wage
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for time not worked, the employee will be paid up to two-thirds of their usual wage
Employees also cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming under the Scheme for that particular employee.
How much does the Job Support Scheme cover?
For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government’s contribution will be capped at £697.92 per month.
Payments under the Scheme will be made in arrears, reimbursing the employer for the Government’s contribution. Please note that the grant will not cover Class 1 employer NICs or pension contributions. These contributions will remain payable by the employer.
Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked.
Calculations for an employee’s ‘usual wages’ are expected to follow the method used under the Coronavirus Job Retention Scheme. More details are expected shortly.
Employees who were previously furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
How do I put an employee on the Job Support Scheme?
Employers will need to agree to the new short-time working arrangements with their staff. They will need to make any changes to the employment contract by agreement, and notify the employee in writing. Employers can consider using a Change to employment terms letter to agree to these changes.
This agreement must be made available to HMRC on request.
What is the Job Retention Bonus?
The Government has announced a ‘job retention bonus’ programme encouraging companies to bring back workers as the furlough scheme comes to an end in October.
Employers who bring back someone who was furloughed and continuously employ them through to January 2021, will be paid a £1,000 bonus per employee.
To be eligible for this bonus, the employee also needs to be earning a minimum average of £520 per month (between the start of November 2020 and the end of January 2021). An average of £520 per month is the equivalent of the lower earning limit for National Insurance.
Will workers on zero hour contracts be paid if they are asked to self-isolate?
If a zero-hours worker earns over a certain average per week then they will be entitled to receive statutory sick pay (SSP) when told to self-isolate. Those zero-hours workers who currently do not meet the minimum earning requirements for SSP, will not be eligible for SSP unless further legislation is introduced, unless the employer pays them voluntarily.
For further information on calculating SSP, read How to calculate statutory sick pay for zero hours workers.
When will employees be paid statutory sick pay (SSP)?
Historically, SSP was not paid for the first three days of illness. The UK Government has passed new legislation allowing for SSP payment from day one of absence, for those unable to work as a result of being advised to self-isolate or because they have coronavirus. Additionally, in order for SSP to be payable from the first day of absence, employees:
- must be eligible for SSP
- their first day of sickness absence must have been on/after the 13 March 2020
- must be off work for more than 4 consecutive days
Are self-employed individuals entitled to sick pay?
Generally, employees are entitled to sick pay while self-employed individuals are not. This is because sick pay is paid by an employer. However, the Government intends to make it easier for self-employed individuals affected by Covid-19, to access benefits.
Those individuals on Employment and Support Allowance (ESA) who are suffering from Covid-19 or are required to self-isolate, will be able to claim the allowance from day one, instead of having to wait for seven days.
Further, the minimum income floor has been temporarily removed from Universal Credit for self-employed individuals who have to self-isolate as a result of coronavirus. The minimum income floor is an assumed level of income, which takes into account how much an individual would normally be expected to earn in a month, when calculating their entitlement to Universal Credit. Not having this minimum income floor in place, means that self-employed individuals will be able to claim for time they spend off work due to sickness.
Self-employed individuals in need of financial assistance will be able to apply for Universal Credit over the phone, without the need of attending a jobcentre.
Self-employed individuals who do not have enough money to live on while they wait for their first Universal Credit payment, can ask for an advance payment. This can be done online or through their Jobcentre Plus work coach. To apply, individuals will need to:
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explain why they need an advance
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verify their identity (either when they apply online or during their first phone appointment with the work coach)
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provide bank account details for the advance
For more guidance visit the Government website.
Is financial support available for self-employed individuals struggling because of Covid-19?
The Government has announced assistance for self-employed individuals affected by Covid-19, through the Self-Employment Income Support Scheme.
This scheme allows self-employed individuals to claim a grant for 80% of their profits (paid in one lump sum) for the next three months, capped at £7,500. You can apply for this scheme if you are self-employed or a member of a partnership and you:
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have submitted your Income Tax Self Assessment for the tax year 2018 - 2019
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traded in the tax year 2019 - 2020
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are trading when you apply (or would be, if not for COVID-19)
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intend to continue trading in the tax year 2020- 2021
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have lost trading/partnership trading profit due to COVID-19
In addition, more than half of your income must be through self-employment and your profits from this self-employment must be less than £50,000 per year.
The amount of relief you will be entitled to, will be 80% of the average profits from the previous three tax years (where applicable). This amount will then be capped at £2,500 per month and will be paid directly into your bank account in one lump sum.
Where you have not yet returned your Self Assessment tax return for the tax year 2018 - 2019, you have until April 23 2020 to do so.
You can now apply to the scheme using the Government’s portal. If you are eligible for the scheme, HMRC will contact you once applications open. If you’re eligible and want to make a claim for the first grant, then you have to make your claim on or before 13 July 2020.
The scheme has now been extended.
The eligibility requirements remain the same. If you’re eligible and your business has been adversely affected on or after 14 July 2020, you can make a claim in August 2020.
The second grant will be a lump-sum payment to cover 70% of your average monthly profit (up to £6,570) to cover 3 months’ worth of income.
You can apply online for this grant even if you didn’t claim the first grant.
As of 24 September, the scheme has again been extended. Those eligible will be able to make a claim for a further grant in November 2020.
The eligibility requirements for the second grant are the same as outlined above. However, this grant allows self-employed individuals to claim 20% of their profits (paid in one lump sum) for another three months, capped at £1,875 per month. You cannot currently apply for this grant. More information is expected shortly.
For more information read the Government’s guidance, Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme.
I’m struggling to meet my Self-Assessment payments on account. Is help available?
If you’re due to pay a self-assessment payment on account by 31 July 2020 but won't be able to make the payment by that date due to Covid-19, then you may defer payment until January 2021. As of 24 September, this period has been extended by the Government. Those due to pay up to £30,000 in tax by 31 January 2021 will be able to use HMRC's 'Time to Pay' service to pay over an additional 12 months, meaning they won't need to pay in full until January 2022.
To defer these payments, you don't need to make an application.
During the deferral period, you can set up a budget payment plan to help you pay the deferred payment on account when it comes due. You can set up a payment plan by either setting one up online (via the GOV.UK website) or calling the Payment Support Service:
Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm
What is the traineeship bonus?
The Government has announced that it will provide 30,000 new traineeships to get young people in England into work.
Traineeships provide classroom-based lessons (eg. maths, English and CV writing) in addition to up to 90 hours of unpaid work experience. Traineeships are aimed at 16 to 24-year-olds based in England and can last from 6 weeks to 6 months during which the trainees complete a maximum of 240 hours of work experience. Providers of such traineeships are encouraged to offer trainees an interview for apprenticeship or job, if available at the end of the scheme.
The traineeship bonus will provide businesses in England with a £1,000 for each new work experience place they offer.
The expanded traineeship scheme is expected to come into effect in England from September 2020.
What support is available for business taking on apprentices?
The Government has announced that businesses will be given £2,000 for each new apprentice they hire under the age of 25.
This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.
This bonus scheme is available for employers who apply between August 2020 and January 2021.
