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:
they must be eligible for SSP
their first day of sickness absence must be on/after the 13 March 2020
they must be off work for more than 4 consecutive days
Small employers (those with under 250 employees) will be able to recover SSP from the UK government for up to 14 days per person under the Coronavirus Statutory Sick Pay Rebate Scheme.
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 will enable employers to reclaim SSP which they pay to current or former employees for periods of sickness starting on/after the 13 March 2020. Employers will be eligible for this scheme if they:
are claiming for an employee who’s eligible for sick pay due to coronavirus
had a PAYE payroll scheme that was created and started on or before 28 February 2020
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:
Employees do not have to provide a doctor’s fit note for employers to make a claim.
The online service through which to reclaim SSP is not yet available.
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. 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.
You should note that the government will support employees by providing an emergency wage package rescue plan called the Coronavirus Job Retention Scheme.
Can I ask employees to temporarily leave their employment?
To minimise the need for redundancies, you could ask your employees to 'furlough' their employment (i.e. take a leave of absence) and reduce their pay (by no more than 20%). You can consider using a Furlough agreement letter to employees for this purpose.
This means that you won't be providing such employees with work, but can continue to pay them through the Coronavirus Job Retention Scheme. This ensures employees are kept on the payroll and not laid-off.
Under the Coronavirus Job Retention Scheme, once your employees have agreed to being furloughed, you would need to provide a written confirmation of their employment status. Make a Furlough leave confirmation letter to do this.
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 the 1 March 2020 and will continue until the end of October 2020.
The Scheme will close to new entrants on the 30 June. From the 30 June, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to the 30 June. This means that the final date by which an employer can furlough an employee for the first time will be the 10 June. Employers will have until the 31 July to claim for funds under the Scheme in respect of those furloughed before the 30 June.
From July onwards, employers will be able to recall their furloughed employees part-time under the scheme (alo 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).
New measures have also been introduced to ensure that the scheme remains sustainable by sharing its costs with participating employers. While furloughed employees will continue to receive 80% of their current salary (up to a maximum of £2,500), in August, employers will be asked to cover the National Insurance and pension contributions. From September the Government will pay 70% of wages (up to a maximum of £2,187.50). Employers will be expected to cover the National Insurance and pension contributions and make a 10% contribution to the furlough pay. From October the Government will pay 60% of wages (up to a maximum of £1,875). Employers will be expected to cover the National Insurance and pension contributions and make a 20% contribution to the furlough pay.
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 the 20 April 2020. Once you're able to make a claim:
use the amounts in your payroll
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.
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.
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:
explain why they need an advance
verify their identity (either when they apply online or during their first phone appointment with the work coach)
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:
have submitted your Income Tax Self Assessment for the tax year 2018 - 2019
traded in the tax year 2019 - 2020
are trading when you apply (or would be, if not for COVID-19)
intend to continue trading in the tax year 2020- 2021
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 are eligible and want to make a claim for the first grant, then you have to make your claim on or before the 13 July 2020.
The scheme was extended on 29 May and applications for the second grant will open in August. This 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 cannot currently apply for the second 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. 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