DONOTPUBLISH - employment FAQs


Page updates: this article has been updated following the latest government guidance released in relation to the Coronavirus Job Retention Scheme on 20 April 2020.

We consider the three new schemes announced by the government to support workers in the context of the coronavirus crisis and addresses some of the many questions you have put to us since the crisis began:

  • the Coronavirus Job Retention Scheme (CJRS) and associated guidance published on 4 April 2020;
  • the Self-employment Income Support Scheme (SEISS) for self-employed workers also announced on 26 March 2020; and
  • the provisions of the new Coronavirus Act 2020 which introduces rights for workers to take Emergency Volunteering Leave (EVL).

The situation continues to evolve with great speed, with new guidance issued by the government on 26 March 2020 both on the CJRS and on relief for the self-employed. Further guidance on the CJRS was issued on 4 April 2020. The Coronavirus Act 2020 became law on 26 March 2020 (amending Statutory Sick Pay and introducing the concept of EVL) and the government has relaxed the Working Time Regulations to permit employees to carry over holiday which they cannot take this year.

These questions and answers are intended as high-level guidance only and legal advice should be sought concerning your specific circumstances - please speak to your usual Macfarlanes contact to discuss your particular requirements.

You can keep up-to-date with all government guidance and the Acas guidance on these links.

Quick links

The Coronavirus Job Retention Scheme 

The online portal opened for employers to submit claims under the Coronavirus Job Retention Scheme on Monday 20 April.

The government (on 15 and 17 April) has also comprehensively updated its information on the CJRS, publishing:

  • a Treasury Direction containing the rules governing the administration of the CJRS by HMRC;
  • updated guidance for employees on their eligibility for CJRS support;
  • updated guidance for employers on how to apply for CJRS support;
  • updated information on claiming back statutory sick pay (SSP); and
  • a step-by-step guide for employers on how to calculate and submit their claims.

In light of these updates, this note now incorporates detail on the following points:

  • the cutoff date for eligibility has been extended from 28 February to 19 March;
  • the scheme will now run at least until the end of June;
  • employers should obtain agreement in writing from employees they want to furlough in order to be eligible for grants;
  • the "exceptional purpose" of the CJRS has been defined in the rules;
  • annual leave entitlement continues to accrue during furlough, and it is possible to take annual leave during furlough;
  • the formula for calculating reference pay has been published, and the government has created an online calculator for working out 80% of reference pay;
  • the government has published the information employers are required to provide to submit claims;
  • the interaction between CJRS and TUPE is now included; and
  • the government has set out HMRC’s powers in relation to abusive or improper claims.

Do employees have to agree to being furloughed?

The rules under the Treasury Direction state that an employee is only considered eligible for CJRS payments if the employer and employee have agreed in writing (which can be in electronic form such as email) that the employee will cease all work in relation to their employment for the furlough period. By contrast, the updated employer guidance states that employers must confirm in writing to their employee(s) that they have been furloughed, and that consent is valid if it is obtained in a manner that is "consistent with employment law". The guidance states that the employee is not required in this scenario to provide a written response, but that there needs to be a written record.

These positions appear to be somewhat contradictory, and it is our view that whilst implied consent may be sufficient, the most prudent course of action would be for employers to obtain express written consent from employees to being furloughed in order to claim under CJRS.

Is the CJRS limited to employees who are otherwise at risk of redundancy?

The new rules state that the purpose of the scheme is to provide payments to be made to employers to cover the costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from Covid-19. This is broader than the original purpose of the scheme which was considered to be a last resort for furloughing employees where the only alternative would have been to make them redundant. The new definition arguably allows employers some discretion to claim in respect of any employee who has been (and has agreed to be) furloughed in consequence of the health, social and economic effects of Covid-19.

The CJRS covers any UK organisation with employees including businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities. The employer must have a UK bank account and a PAYE payroll scheme in place as of 19 March 2020.

HMRC has express powers to audit applicants, and no claim may be made in respect of an employee if it is "abusive or otherwise contrary to the exceptional purpose" of the CJRS. HMRC can require information from employers to establish entitlement to grants under CJRS.   

Further, employers accept when making a claim that any payment made to them under the CJRS is only to be used for the purpose of paying furloughed employees, and any such payment must be returned to HMRC immediately upon the employer becoming unwilling or unable to use the payment for its proper purpose.

The updated guidance states that if an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer(s) should not re-employ and furlough them.

How do employers calculate reference pay for employees under CJRS?

Employers should refer to the government calculator when working out what to claim in respect of their employees.

For salaried employees, employers should use their actual salary before tax as at 19 March 2020, although if employers have already calculated reference pay (based on previous guidance) using salaries as of 28 February 2020 then the previous calculation can be used for the first claim.

If an employee has variable pay then employers should calculate their reference pay as the higher of:

  • the same month’s earnings from the previous year; or
  • average monthly earnings from the 2019-2020 tax year.

If an employee with variable pay has been employed for less than the full 2019-2020 tax year then the reference pay should be an average of monthly earnings since their employment commenced, up to the date that furlough commenced. For employees with less than a month of service, the reference pay should be a pro-rated amount.

How are salary sacrifice amounts and Benefits in Kind treated?

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in reference pay. Therefore post-salary sacrifice wages should be used in calculating reference pay.

The full amount of any payments made through CJRS must be passed on to employees, and employers cannot net off any of the amount against Benefits in Kind or salary sacrifice schemes.

The guidance has confirmed that the Covid-19 pandemic is considered by HMRC to be a "life event" that can warrant changes to salary sacrifice arrangements, if employees wish to make such changes. Any such changes should be reflected in amended employment contracts.

What about parental pay entitlements?

Employers cannot claim through the CJRS for Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Shared Parental, or Statutory Parental Bereavement Pay.

The guidance does not directly confirm whether employees on family leave can be furloughed, but it suggests that they can, as it states that employers can claim through the CJRS for enhanced contractual pay for employees on family leave, i.e. contractual parental pay in excess of statutory parental pay.

The employee guidance states that being furloughed prior to going on maternity leave may affect Statutory Maternity Pay if earnings are reduced as a result of furlough, and that the same rules apply to Statutory Adoption Pay, Statutory Paternity Pay, and Statutory Shared Parental Pay.

Our view is that furloughing an employee who is on family leave does not curtail or end their leave, so a mother on maternity leave who is furloughed should return to maternity leave after the end of the furlough period, if her remaining maternity leave extends beyond the end of the furlough period.

What about sick pay?

Employers cannot claim under CJRS for amounts payable to employees by way of Statutory Sick Pay (SSP), but the government is putting a separate scheme in place for employers to claim amounts paid to employees by way of SSP owing to the effects of Covid-19.

This additional scheme is called the Coronavirus Statutory Sick Pay Rebate Scheme, and employees do not need to provide a doctor’s fit note in order for their employers to claim. The portal for making claims under this scheme has not yet gone live.

Employers who pay SSP will be able to reclaim the current rate of SSP they pay to current or former employees for periods up to two weeks starting from the first day of sickness, starting on or after 13 March 2020. This will apply in respect of employees who are unable to work because they:

  • have Covid-19;
  • cannot work because they are self-isolating; or
  • are shielding in line with public health guidance.

Employers with PAYE payroll schemes that were in place on or before 28 February, and had fewer than 250 employees at that date may apply for SSP payments.

Can sick employees be furloughed?

There is inconsistency between the rules set out in the Treasury Direction and the employer guidance.

The Treasury Direction states that an employee who is receiving (or entitled to) SSP can only be furloughed once their period of SSP has ended.

The guidance states that employees who are currently off sick on either a short or long-term basis may be furloughed for business reasons, although the CJRS is not intended to be used for short-term absences from work due to sickness. It states that employers may also furlough staff who are being shielded, or are off on long-term sick leave.

In our view, the Treasury Direction should be followed. Sick employees must be paid SSP at a minimum, and it will be up to employers to decide whether to move such employees onto furlough pay instead. Employers may claim under both CJRS and the SSP rebate scheme in respect of the same employee, but not for the same time period.

How can employers claim under the CJRS?

Claims should be submitted through the online portal, which went live on Monday 20 April.

Employers need to submit the following information in order to claim:

  • employer PAYE reference number;
  • the number of employees being furloughed;
  • National Insurance numbers for the furloughed employees;
  • names of the furloughed employees;
  • Payroll/works Payroll/employee number for the furloughed employees (optional);
  • Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number;
  • the claim period (start and end date);
  • the amount claimed (per the minimum length of furloughing of 21 consecutive days);
  • bank account number and sort code; and
  • contact name and phone number.

Employers with fewer than 100 furloughed employees need to input their employees’ details individually into the online system. Those with 100 or more furloughed employees are asked to upload a file with the relevant details of the employees (in format: .xls .xlsx .csv or .ods).

What does it mean to "furlough" employees under the CJRS?

Furlough is not a concept recognised by existing employment laws. Government guidance simply refers to furloughed employees as on temporary leave. The guidance clarifies that furloughed employees can perform no work at all for their employer in order to qualify under the CJRS.

As explained in our previous notes, initial guidance on the CJRS made it clear that the scheme would apply to employees who would otherwise have been laid off due to the crisis. The latest guidance adopts a less stringent approach: although the scheme is designed for employers whose "operations have been severely affected", in fact any entity that employs people and pays through PAYE is eligible. There does not appear to be any need to show or evidence the impact of Covid-19 on a business.

The updated guidance has extended the cut-off date by which employers must have created and started a PAYE payroll scheme to on or before 19 March 2020. Employers can only claim for employees who were on the PAYE payroll before 19 March, and who were notified to HMRC on a real time information (RTI) submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.

Employers cannot apply for CJRS grants for employees who were employed after 19 March 2020 or whose employment terminated prior to then. However, the latest guidance expressly states that employees who were made redundant after 28 February can be re-engaged and then furloughed, even if they are not re-engaged until after 19 March. As long as such an employee was on payroll on or before 28 February and an RTI submission notifying payment in respect of that employee was submitted to HMRC on or before 28 February, that employee can be re-engaged and furloughed.

Can employers claim for employees who have transferred to them under TUPE?

Yes. The guidance states that a new employer is able to claim under the CJRS in respect of the employees of a previous business that transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Where the PAYE schemes of a group of companies have been consolidated into a new PAYE scheme after 19 March 2020, the employer can claim in respect of the employees on the new scheme.

What are the maximum and minimum periods of furlough?

The scheme was initially to be in place for three months beginning on 1 March 2020 and ending on 31 May 2020, however the Chancellor has now extended the scheme until 30 June, and it may be extended further.

The rules under the Treasury Direction only cover the initial three-month period to 31 May 2020, so the government may amend them in consequence of the extension.

The guidance confirms that employees must be furloughed for a minimum period of 21 consecutive days. Employees can be furloughed multiple times, but each separate instance must be for at least the minimum period. This suggests that furloughing by rotation is possible, in order to spread the workload across all staff.

Which of the following employees are potentially eligible for the CJRS?

Atypical workers who were on the payroll on 19 March 2020?

The latest guidance confirms that any employee on any type of contract can be furloughed (whether full-time, part-time, employees on agency contracts or employees on flexible or zero-hour contracts). The key distinction is that only employees paid via PAYE will qualify for grants under the CJRS.

Does that include LLP members, directors and workers?

Yes. Anyone paid through PAYE is eligible, although special care will be needed if LLP members are to be furloughed as the terms of their LLP agreement may need to be varied.  The guidance makes clear that directors and other officers can continue to undertake statutory duties while on furlough, provided they do so no more than is reasonably necessary and they do not do any work that will generate commercial revenue or provide services to or on behalf of their company.  Salaried individuals who are directors of their own personal service company are also eligible for the CJRS.

Employees who have already been made redundant?

The CJRS applies retrospectively from 1 March 2020 to any employee on the payroll on or before 19 March 2020. Therefore, an employer can re-engage any employee who was made redundant after 28 February and then furlough the employee in order to qualify under the scheme for the balance of the furlough period. This applies even if the employee was not re-engaged until after 19 March. Employees who were made redundant before 28 February cannot be re-engaged and claimed for under CJRS.

There is no requirement for an employer to re-engage redundant employees, and employers may be reluctant to do this particularly if redundancy and notice payments have already been paid and cannot be recovered.

Employees who have already been put on reduced hours or pay?

These employees are not eligible under CJRS because they are still working and are still entitled to payment under their employment contracts.

Employees who are on unpaid leave?

The latest guidance confirms that employers can only claim for employees that started unpaid leave after 28 February 2020. These employees can be furloughed. Any employees who went on unpaid leave on or before 28 February can only be furloughed from the date on which it was agreed they would return from unpaid leave.

Domestic staff (for example, nannies)?

The situation of domestic staff or those employed by individuals has been clarified in the most recent guidance. Individual employers can access the scheme provided they pay their staff via PAYE.

Employees who are “shielding” in line with public health guidance (i.e. vulnerable people, people over 70 and pregnant woman)?


What can employers claim?

Employers can apply for grants for 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance Contributions (NICs) and minimum automatic enrolment employer pension contributions on paying that salary.

If, based on the previous guidance, employers have calculated claims based on employees’ salaries as at 28 February 2020 (and this differs from their salary in the last pay period prior to 19 March) then the previous calculation can be used for the first claim to be submitted by an employer in respect of those employees.

However, the guidance is clear that, should the employer decide to top-up employees’ salaries, the employer NICs and automatic enrollment contributions on the top-up will not be funded by the CJRS.

Employers will need to deduct tax from employees’ pay as normal (i.e. income tax and employee NICs). This means that employees may receive less in the hand than they may anticipate.

An employer must pay the furloughed employee all the grant it receives from the CJRS and no fees can be charged to employees from the grants received. The guidance has confirmed that CJRS will not reimburse employers for other non-cash benefits and we assume that an employer must continue to provide those benefits separately under the terms of employees’ contracts unless employees agree otherwise.

Please see further guidance on the pension aspects of the CJRS, here and here.  

Will annual leave accrue whilst an employee is furloughed?

The latest guidance states that the government is keeping the interaction between holiday pay and furlough under review, so this may well be subject to further change. The following information is correct as at 22 April 2020.

Whilst furloughed, employees continue to accrue annual leave entitlement as per their employment contracts. Employees may also take holiday whilst furloughed, although the guidance states that employers have discretion to restrict when leave should be taken if there is a business need.

Importantly, annual leave to which employees are entitled under the Working Time Regulations (WTR) must be paid at an employee’s normal rate of pay, or where pay varies, calculated on the basis of the average pay received in the previous 52 weeks.

Most employees are entitled to 5.6 weeks of annual leave (including bank holidays), so employers will have to top up the balance of an employee’s normal rate of pay above the amount received from HMRC by way of CJRS grant for any periods of WTR holiday taken during furlough.

If employees usually take bank holidays as leave then employers will either have to top up pay to 100% for such days, or grant employees a day of leave in lieu.

Employers may however contractually agree with employees to reduce the rate of pay for any annual leave in excess of the statutory WTR minimum under their contracts.

What if, based on employees’ usual hours, we are paying furloughed workers below the National Minimum Wage/National Living Wage by virtue of only paying 80% of their salary?

Furloughed workers are not working and are only entitled to the National Living Wage/National Minimum Wage for the hours they work. Apprentices must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage as appropriate for the duration of their apprenticeship. This means employers must cover any shortfall between the amount claimed through the CJRS, and the appropriate minimum wage for the apprentice.

What constitutes “earnings” under the CJRS, does it include tips and overtime payments regularly paid through payroll?

The guidance includes these clarifications on what can be taken into account.

  • "You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded."
  • "The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind."

The new rules set out the criteria for determining what "regular payments" are. They specifically exclude payments that vary according to the performance of a part of the employer’s business, the contribution made by an employee to the performance of it, or any amounts payable at the discretion of the employer, such as bonuses or gratuities, save where such variable pay amounts arise from "a legally-enforceable agreement, understanding, scheme, transaction or series of transactions".

It is not entirely clear what is meant by this but our view is that any payment that is purely discretionary such as a bonus is not "regular", whereas commission or overtime to which an employee is contractually entitled, and could make a contractual claim for if such amount was withheld by the employer, is likely to be captured.

Do employers need to top-up the remaining 20% of employees’ salaries?

Employers may choose to top up wages to 100% but do not have to. This choice however is not the same as a government guarantee that the employer has no legal obligation to honour payment obligations under employment contracts.

What this means therefore is that an employer can choose to furlough employees on full pay without forfeiting its right to grants for the government contribution of 80%, but furlough should be by agreement with the employee, both in terms of eligibility for grants under the scheme, and because of exposure to claims from an employee if an employer has furloughed them on the 80% capped government contribution without their consent.

If I have already sent my employees home on full pay, and they are not working, can I retrospectively claim under the CJRS?

Yes, although you must designate them as furloughed for that period and furlough must be agreed with the employees.

Can employers unilaterally impose furlough on their employees?

The rules under the Treasury Direction state that an agreement in writing between the employer and employee is required in order for an employee to be eligible for payments under the CJRS. This agreement can be in an electronic form such as an email. The guidance states that employers must confirm in writing to their employees confirming that they have been furloughed, and that a written response from employees is not required. This suggests that implied consent may be sufficient if it is obtained "in a way that is consistent with employment law", although the prudent approach would clearly be to obtain express written consent where possible. All written records relating to employees being furloughed should be retained for five years.

Given the current extreme circumstances of the crisis, employees may be willing to give their consent (as an alternative to being put at risk of redundancy), but it would be prudent for employers to consider what steps they would take if consent is not forthcoming as they will not be able to unilaterally impose furlough on employees.

If employees refuse to agree, then employers will need to take advice as to next steps, which may include redundancies or enforcing variations to employment contract. Both these routes are likely to require collective consultation with employees where 20 or more employees are affected. There is no suggestion in the guidance that employers are exempt from the requirement to consult collectively simply due to the special circumstances caused by Covid-19. If redundancies are a possible outcome of the current situation (and it is the risk of redundancy that is driving the need to furlough), the prudent course of action would be to commence the collective consultation process (and engage with unions or other employee representative bodies) at the outset of discussions over furlough to avoid any later claims being made when redundancies are ultimately implemented for compensation for failure to consult.

How would we go about agreeing furlough with employees?

Subject to consideration of selection issues which we have outlined below, employers would first "offer" (to use the term from the guidance) furlough to them. If they agree, employers should record this in a furlough agreement. There is no statutory template for a furlough agreement but as a minimum it would need to record the length of the furlough and the employee’s consent to any changes.

It is a requirement for grants under the scheme that employers should designate in writing employees as having been furloughed. That written notice must be kept for five years. Certainly a formal furlough agreement would satisfy that requirement but if the employer is not intending to agree formal agreements, at the very least it should send or email written confirmation to employees of the date their period of furlough commenced. The CJRS is retrospective to 1 March 2020 and so we assume that HMRC will also accept retrospective designation of employees as having been furloughed. However, to avoid any doubt about this, employers will want to designate employees as furloughed as soon as possible.

Can an employee request or elect to be furloughed?

No - employees cannot unilaterally elect to be furloughed and the decision should be entirely the employer’s having satisfied that they meet the requirements of the CJRS and have carried out any necessary selection process.

Should employers have a selection methodology prior to "furloughing" employees?

When deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

It may be reasonably clear which groups of employees are required to work and which are not. However, in some instances, an employer may need to select some employees for furlough from one category of employees while needing others in that category to carry on working. If furlough is financially disadvantageous to employees, they may challenge the employer’s selection decision citing unfairness or even discrimination. An employer should, in those circumstances, have fair and transparent reasons or selection methodology for asking some employees to agree to furlough but not others.

Can an employer furlough employees on rotation e.g. if we want to cut a department by 50%, can we put half on furlough with half working, and then rotate them every three weeks?

Subject to the requirement for employees’ consent referred to above, there is no reason in principle why an employer should not rotate furlough in this way provided the requirements of CJRS are met. The minimum period of furlough is 21 consecutive days. That being the case, employers could consider furlough rotations based on minimum 21-day terms.

Given that CJRS is retrospective, can employers retrospectively designate workers as furloughed for scheme purposes?

Logically you should be allowed to designate workers retrospectively as having been furloughed since the factual question ought be whether or not they were furloughed on the relevant dates.

While the government’s initial guidance said that employees must otherwise have been laid off to be able to claim under the CJRS, the latest guidance has not made this a prominent issue (provided the employer meets the other conditions).

What about when the CJRS ends and there is not enough work for certain employees to do?

If an employee is unable to return to their duties, employers will need to consider making them redundant by following the usual process (outlined in our previous note).


Self-employment Income Support Scheme (SEISS)

What government support is available to self-employed workers?

Self-employed workers or partners who have suffered a loss in income will be eligible for a taxable grant worth 80% of average monthly income, up to a cap of £2,500 per month. Monthly income will be calculated by taking an average over the previous three years.

For how long is the support available?

Initially, the SEISS will be available for three months, payable in one lump-sum payment. Payments will commence from the beginning of June.

Who is eligible for support under the SEISS?

The SEISS is open to those who were trading in the last financial year, are still trading now, and are planning to continue trading this year. It is not open to those who do not have at least one full year of accounts.

The scheme is only open to those with trading profits of up to £50,000 in 2018-19, or average trading profits of less than £50,000 from 2016-17, 2017-18 and 2018-19. Only those whose main source of income (more than half) is self-employed work may apply; those who are otherwise employed but have a self-employed "side-job" are not eligible.

Do those who claim grants have to cease working?

Applicants under the scheme can claim grants and continue to do business, unlike the CJRS, under which furloughed employees must cease work.

How do self-employed workers apply under the SEISS?

HMRC will send application forms directly to eligible individuals, using information it already holds. Grants will be paid directly into bank accounts nominated on the application forms by such individuals. The scheme is only open to those who have submitted a tax return for 2019. Those who did not submit their tax returns by the due date of 31 January 2020, and have not yet submitted one, may submit a tax return by 23 April 2020 in order to be eligible.

The Coronavirus Act 2020: Emergency Volunteering Leave (EVL)

What is EVL? 

EVL is legislation permitting anyone (employees or workers) to take statutory unpaid leave to carry out both coronavirus-related, and non-coronavirus related essential services. EVL has been introduced in the Coronavirus Act 2020, which received Royal Assent on 26 March 2020. Although technically in force, a statutory instrument must now be passed in order to implement EVL.

How long could EVL last?

In order to ease the impact on business, EVL will be limited to being taken in blocks of two, three or four consecutive weeks in any 16-week period per volunteer.

How does a worker apply for EVL?

A worker is entitled to be absent from work on EVL for the period specified in an emergency volunteering certificate (EVC) provided, not later than three working days before the first day of the period specified in the EVC, the worker:

  1. notifies their employer in writing of their intention to be absent from work on leave for the period specified in the EVC; and
  2. provides their employer with a copy of the EVC.

How does a worker obtain an EVC?

An EVC may be issued by an appropriate authority (NHS bodies, local councils, London borough councils etc), and must certify that the worker:

  1. has been approved by the authority as an emergency volunteer in health or social care (no other functions have been identified in the legislation); and
  2. will be acting as an emergency volunteer in health or social care from the date and for the period specified in the certificate.

The government intends to publish guidance on how individuals can apply, and how public authorities assess applications and grant EVCs.

Will I have to pay the worker during EVL?

No - the employee will be compensated by the Secretary of State for Health and Social Care for loss of income and expenses. The appropriate rate of compensation has not yet been determined by the government.

Do other terms and conditions of employment continue during EVL?

During their period of leave, an employee who takes EVL is:

  • entitled to the benefit of all of the terms and conditions of employment (not including wages or salary, but employers must continue to meet pension contributions and other benefits) which would have applied if the employee had not been absent (i.e. they will continue to accrue annual leave); and
  • bound by any obligations arising under those terms and conditions (except in so far as they are inconsistent with the taking of EVL).

Employees on EVL are protected against detrimental treatment and dismissal as a result of taking, or requesting to take, EVL. In fact, any such dismissal will be deemed to be automatically unfair and the compensation for such a claim is uncapped. Importantly, employees do not need to have two years’ employment in order to bring a claim for unfair dismissal in these circumstances. However, the employer may be able to significantly reduce the compensation award where it can show it would have made the employee redundant as a result of Covid-19.

Is the worker entitled to return to work at the end of EVL?

Workers on EVL have the right to return to the job in which they were employed before the absence:

  • with the same seniority, pension and similar rights as they would have had if they had not been absent; and
  • on terms and conditions no less favourable than those which would have applied if the employee had not been absent.

Can I refuse to agree to EVL or request deferral?

The legislation provides exemptions for "micro businesses" (businesses with less than 10 employees), civil servants, the military, police and parliamentary and commission staff. There is a power for the Secretary of State to add to the list of exemptions. There is no process in the legislation entitling the employer to defer unilaterally a period of EVL to a more convenient time.

How does the EVL scheme work for employees who are furloughed?

How compensation under the EVL scheme will interact with the CJRS has not yet been determined – e.g. whether employees will be able to claim compensation under the EVL scheme if they choose to participate in the EVL scheme while also furloughed under the CJRS.

Other general Covid-19 FAQs

The Coronavirus Act 2020: Sick pay

When is statutory sick pay (SSP) payable and for how long?

SSP is normally payable from the fourth day of sickness absence, provided the individual meets the following conditions: (i) they must be an employee, not a worker or self-employed (agency workers are entitled to SSP); (ii) they must earn an average of at least £118 per week; and (iii) they must meet the illness and notification requirements.

SSP is currently £94.25 per week (rising to £95.85 in April) and is paid for up to 28 weeks.

The government has made four changes to the SSP regime for sickness absence due to Covid-19.

  • Payable from day one: SSP is now payable from the first day of absence for someone who is self-isolating due to Covid-19;
  • 14 days reclaimable from the government: employers may be able to reclaim the cost of 14 days’ SSP from the government per eligible employee who is either ill or been told to self-isolate because of coronavirus.
  • Entitlement: Employees will only be eligible for SSP for an absence due to Covid-19 if:
    • they have any symptoms of COVID-19;
    • a member of their household is self-isolating; or
    • they are already self-isolating and then develop any symptoms of COVID-19. 

      Therefore employees who are "shielding" or self-isolating as they are vulnerable individuals will not be entitled to SSP if they are, or a member of their household is, asymptomatic. 
  • NHS 111 isolation note: those who have coronavirus or are advised to self-isolate are now able to obtain an “isolation note” by visiting NHS 111 online and completing an online form, rather than visiting a doctor. This replaces the usual need to provide a “fit note” after seven days of sickness absence.

Which categories of people are entitled to SSP?

An individual employee must themselves be unwell and unable to work in order to qualify for SSP or be isolating in accordance with government guidance in order to claim SSP. We set out more detail on this above.

This would not include "extremely vulnerable persons" who have been advised by the government to "shield" for 12 weeks unless they are showing symptoms or are living with someone who is showing symptoms.

If an employee is entitled to SSP, must they also be paid enhanced or contractual sick pay?

Enhanced sick pay over and above the amount of SSP is only due where the individual has an existing contractual entitlement to this. Whether any enhanced sick pay extends to cover self-isolation without symptoms will be governed by the terms of the contract and/or policy in place from time to time. You should seek advice if the terms of your contract or policy are unclear.

Carrying over holiday

On 27 March 2020 the government announced that it is amending regulation 13 of the Working Time Regulations to allow workers who have not taken all of their EU holiday entitlement (four weeks’ leave) due to Covid-19 to carry it over into the next two leave years. The new regulations say that holiday can be carried over when it is “not reasonably practicable” for employees to take holidays due to Covid-19, though what “not reasonably practicable” entails remains to be seen.

The balance of 1.6 weeks' statutory annual leave will not be affected (although it can be carried over for up to a year by agreement under existing law).

Working from home

Do we have to allow employees to work from home?

Government guidance is that employees should work from home unless going to the workplace is absolutely necessary and work cannot be done from home. At the least, all key workers are expected to continue to work; regulated entities, insurers and banks will need to assess whether they are providing a public service and if so, whether the work can be performed at home or must be performed at work.

There is an underlying risk, that employees might argue constructive unfair dismissal if an employer forces employees to attend work in the face of a serious health and safety risk. When assessing this risk, it is likely that great weight would be given to the government guidance as it stands when the decision to require employees to come to work was made. Employers should keep government guidance under constant review to ensure compliance.

What can we do if we suspect that employees are not properly/diligently working from home?

You can treat this as you would any other disciplinary issue. You would investigate the allegation, put it to the employee with the supporting evidence, hold a disciplinary hearing and then issue the appropriate disciplinary sanction.

If you haven’t already, we suggest putting in place a “working from home policy” so that employees are aware of the consequences should they not be working properly during working hours.

Should we encourage staff not to use public transport?

It depends on the nature of each business, its location, and the make-up of its workforce. You should be proactive and encourage employees to walk or cycle to work, or you might otherwise be minded to subsidise taxis or parking. Again, encouraging people to follow government guidance is likely to be the best starting point.

Can we require those categories of "extremely vulnerable persons"  to come to work if they are unable to work from home?

Current guidance classifies some employees as at greater risk than others and recommends that they should be shielded at home for 12 weeks. Employers should take steps to identify their high-risk employees so that appropriate discussions with those individuals can take place to determine how best to deal with working during the crisis.

As things currently stand, those categorised as extremely vulnerable and shielding for 12 weeks are not necessarily "off sick" for the purposes of the employer’s sick pay schemes (although they may be due SSP).  Government guidance also suggests that those who are treated as off sick are not eligible for furlough. Employers should therefore be cautious before treating these groups of employees as sick if it intends to claim under CJRS in respect of them.

What are our obligations if an employee lives with a high-risk or vulnerable person?

Strictly, the health and safety duties placed on employers only relate to their employees, and not to relatives or friends of their employees. Clearly, employers may need to be sympathetic to requests to work from home or to work flexibly, where this is driven by anxiety about a vulnerable relative.

Can we require people to inform us about their health and ask them not to come to work?

Employers have a general duty to protect the health and safety of their staff. This is likely to encompass requesting and obtaining medical information where that is reasonably necessary to protect your other workers. It is reasonable for employers to ask their employees to inform them if they become ill. Medical information is special category personal data, so a data protection impact assessment should be carried out and documented before the information is collected.

Categorising time

Can we designate time as sick leave?

It is not possible to designate any particular period of employment as sick leave – in normal circumstances employees are either sick or not. In the current crisis, lawyers and the government are having to grapple with trickier questions: if a key employee is well, but is advised to stay at home because a family member has symptoms that might be coronavirus, are they sick or not? Those issues will hopefully be addressed in the emergency legislation due to be presented to Parliament in the coming days.

Can we make employees take paid holiday even if they can’t use it to travel at the moment?

Yes - by contrast with sick pay, it is possible to require employees to take statutory holiday (5.6 weeks’ leave including public holidays). The Working Time Regulations permit this provided advance notice of twice the proposed holiday is given (for example, four weeks’ notice if the requirement is to take two weeks’ holiday). Employers should check their contracts for the arrangements for any contractual holiday above the level of statutory holiday.


What do we have to pay an employee if they are off sick and are diagnosed with coronavirus? 

Employees are entitled to any sick leave/pay that they currently enjoy under their contract or in your leave policies and procedures. You should check whether your leave policies are expressed to be non-contractual – if so, you may be able to amend these to change the terms and/or entitlement. If in doubt, please seek advice.

If you do not enhance sick pay as a matter of contract or policy, then the individual will be entitled solely to SSP. The government has announced a temporary removal of the three day waiting period before SSP is normally payable so that employees will be eligible for SSP from day one of their illness.

What about somebody who is off sick and has symptoms but has no diagnosis?

If these individuals have symptoms which mean they are unable to work, they should be treated in the same way as those who have a formal diagnosis up to the seventh day of absence (up to that point individuals can self-certify their sickness).

After this point, while most employers normally require evidence of incapacity for continued contractual or SSP, a more flexible approach may be advisable given that individuals who are self-isolating will be unable to obtain a fit note. The government has announced that an alternative fit note will be put in place by the NHS shortly.

What about somebody who is self-isolating based on government guidance but has no symptoms and refuses to work from home or cannot come into work?

The government has, on an extraordinary basis, extended SSP to anyone who is self-isolating to stop the spread of the virus in accordance with Public Health England (or equivalent bodies in Scotland and Wales) and who "by reason of that isolation" cannot work. Current guidance recommends 14 days of isolation in a number of circumstances, including those in the same household as somebody with coronavirus symptoms, although as the situation is changing rapidly we recommend monitoring this guidance.

While the default position is that these changes to SSP rules do not affect contractual sick pay entitlements over and above SSP, employers may, depending on the wording of their employment contracts, extend the new SSP rules to contractual enhanced sick pay. Indeed, it may be prudent to do so even if not required to avoid quarantined employees from nevertheless attempting to work.

In light of government guidance, can we require employees to come into work if they are well? What is our exposure if they fall ill?

Government guidance is constantly developing. At the time of writing, the government has asked everyone to work from home unless it is absolutely necessary to go into work. If a role can be performed from home the employer should take all reasonable steps to facilitate this for the employee.

The government is therefore asking workers to carry on working unless they can work from home. If they refuse in these circumstances, an employer would be entitled not to pay the employee. This is a harsh stance to take given the lockdown, but legally permissible since any employee who cannot attend for work but is not ill, and cannot work from home, is not usually entitled to be paid.

There is an awkward tension with this guidance and employers’ being rightly concerned about managing their duty to provide a healthy and safe workplace. Health and safety law generally revolves around taking “reasonably practicable measures”. Great confusion has inevitably been caused by the question of whether businesses are able to safely continue running. Specific advice should be obtained on this point, however there’s a causation issue given it will be nearly impossible to demonstrate how someone contracts the virus.

If you do ask an employee to come into work, you have a duty under existing health and safety rules to carry out a sufficient and suitable assessment of the work related risk faced by employees and to take steps to protect employees insofar as reasonably practicable. These steps may include ensuring that employees can practice social distancing (being at least two metres away from one another at all times) and implementing all precautionary checks and measures to ensure the risk of transmission is as low as possible, including deeps cleans, taking employees temperature prior to having them start work, providing protective equipment and extra hand sanitiser. Some employers have concluded that the risk profile is so high that even these protective steps would not be sufficient to protect their employees (and clients) and so have either closed premises or temporarily ceased operations.

Employers should contact their insurers to discuss the extent of cover should an employee who is required to attend for work fall ill, either at work or on their commute.

What about employees who travelled against guidance and caught the virus and/or are stuck abroad?

An employee who travels against guidance has no different entitlement to sick pay and it is unlikely that such action is sufficient to justify minor disciplinary action. However, if the employee was specifically warned that they would not be paid during any quarantine before they travelled to an at-risk location, then an employer may attempt to withhold pay (although should still pay SSP). However, doing so is not without risk and it may be more sensible to issue a less serious sanction such as a written warning.

Employees who are stuck abroad are not entitled to sick pay if they are fit for work. If they can work remotely and do so, then they will be entitled to their normal pay. If they cannot work remotely then they are not normally entitled to pay subject to the terms of the contract. In these circumstances, you may wish to agree with the employee that their time abroad is taken from their paid holiday entitlement or as unpaid leave.

What are our rights to close the workplace if employees cannot work from home? If we do, do we have to pay staff?

Normally, even where a workplace is closed temporarily, employees who are able and willing to work but prevented from doing so by the employer must still be paid. Ideally employees will work from home in these circumstances. The exception to the normal rule is where an employer has a contractual right to “lay off” employees where there is no work for them to perform.

  • An employee has been "laid off" for the purposes of the statutory scheme if they are not entitled to remuneration during the lay-off (although during the first five days of a lay-off, employees are entitled to "guarantee payments" up to £29 per day from the employer).
  • Once a statutory lay-off has lasted for four consecutive weeks, an employee becomes entitled to claim for a statutory redundancy payment. To do so they must serve notice on the employer of their intention to claim (which, importantly, does not need, at this stage, to include a resignation from the employment). The employer can reject this claim if they have a reasonable expectation of bringing the employee back to work within four weeks for 13 weeks’ uninterrupted work. If this is contested, then the dispute proceeds to an employment tribunal.
  • If the employer does not contest the statutory redundancy payment, the employee must confirm their resignation before payment can be made. 
    The existence of a contractual right is more common in primary and manufacturing industries. Without such a right in the contracts, employers must secure the express consent of employees if it is to withhold work and pay from them. An employer who unilaterally imposes lay-off without a right to do so in the employment contract (or presents employees with a choice between that and permanent termination of employment) risks claims from employees of constructive dismissal, breach of contract and unlawful deductions from wages. Please also note our comments below in relation to collective redundancies where 20 or more employees are involved.

The majority of employers will not have the benefit of "lay-off" clauses in their employment contracts. In these circumstances, employers can consider a range of options for mitigating employment costs. The employer could require employees to use up some of their paid holiday leave; it could also start the procedures for making employees redundant. Alternatively, the employer can seek the agreement of its employees to other cost cutting measures: taking unpaid leave (in effect, lay-off by agreement); or a reduction in hours or pay.

The government has also announced the introduction of the Coronavirus Job Retention Scheme (CJRS) to provide support to employers and to dissuade them from implementing redundancies. The Scheme envisages that any employer that agrees to “furlough” employees to avoid redundancy claim back 80% of their pay from HMRC (see our guidance on the CJRS here). Grants under the scheme are only available if employees are (i) not working whilst they are furloughed; and (ii) would have otherwise been made redundant/laid-off due to the crisis.

Health and Safety

What steps do we have to take to meet health and safety duties in the workplace?

Employers have a duty to protect the health and safety of their staff. This is mirrored by a duty on employees to look after their own health, and that of their colleagues. This requires co-operation between employer and employee. Employers should regularly make available to employees government guidance on all aspects of health and safety such as hand-washing, limiting social contact and self-isolation. Obvious steps such as ensuring bathrooms are properly stocked and hand sanitisers are available are also recommended.

How do we notify colleagues if an employee has tested positive for coronavirus?

The recommended approach from the Information Commissioner’s Office is that organisations should keep staff informed about cases of coronavirus in their workplace. That notification should be anonymous and should not identify sick colleagues.

Employers are not able to require employees to be tested for Covid-19 without their agreement and it is unlikely that employment contracts and policies would deal with this situation.

Changing hours/roles and layoff

Can we change an employee’s duties/hours to require them to provide cover for other sick employees?

The employment contract might give the employer power to amend duties/hours. If it does, it must still be exercised in a reasonable way that maintains the underlying trust and confidence between employer and employee. It is likely to be very difficult to use even an express power to vary the employee’s duties substantially. If no variation right exists then any significant changes to role or hours will be in breach of the employment contract and could risk constructive dismissal claims.
For that reason, the agreement of employees should be sought where possible. As this situation is unprecedented, employees may be more receptive than normal to changes, particularly where these are crucial to keep the business and/or workplace operating at all.

Can we lay-off employees or put them on short-time working?

Lay-off, where it is permitted, allows an employer to maintain the employment while sending employees home with no work or pay. An employer can only lay-off employees if there is a right to do so in employment contracts or they agree to be laid off.

Underpinning this is the statutory lay-off scheme which requires lay-off to occur in blocks of one week where a contractual right exists. An employee has been "laid- off" if they are not entitled to remuneration during the lay-off (although during the first five days they must be given guarantee payments of up to £29 per day). Once a lay-off has lasted for four consecutive weeks (or six weeks in any 13 week period), an employee becomes entitled to claim for a statutory redundancy payment. To do so they must serve notice on the employer of an intention to claim. The employer can reject this claim if the employer has a reasonable expectation of requiring the employee within four weeks to return for 13 weeks’ uninterrupted work. If the employer contests the request for a statutory redundancy payment, the dispute proceeds to an employment tribunal. If the request for a redundancy payment is not contested, the employee must resign in order to receive payment. The statutory lay-off scheme is little used outside manufacturing and similar industries. Employers served with such a notice requesting a redundancy payment should seek advice.

Short-time working is where an employee is temporarily switched to reduced working hours (and pay). If an employee has a right to a particular working pattern in the employment contract, any material departure from this without consent would be a breach of contract and may also give rise to claims for damages, unlawful deduction of wages or constructive dismissal.

Can we require employees to take unpaid leave?

While an employer is entitled (see above) to oblige an employee to take paid holiday at certain times, employers are not allowed to place an employee on periods of unpaid leave or holiday without the consent of the employee.

If such action is required to maintain the solvency of a business, it should be done with the agreement of the employees (or their representatives).

What action can we take in relation to zero hours or self-employed staff?

Where a contract is a "zero hours" contract, employers can simply follow the processes set out in that contract to either bring it to a formal end or simply cease to provide work. It is now clear that the CJRS will apply to zero hour workers if their pay has been operated through the payroll.

Where an individual is self-employed, the express terms governing their relationship will be found in their contract for services. This is likely to provide simply for a certain period of notice before termination, during which the individual (or their personal services company) should continue to be paid if they provide the services under the contract. Care should be taken to ensure that such a relationship is indeed one of self-employment as the individual may be motivated to argue that the self-employment is a sham and that they are in fact employed (and so entitled to redundancy pay). The government has now announced greater relief for self-employed workers (the SEISS outlined above).

In light of the crisis, the government has postponed the extension of the IR35 tax regime to the private sector until April 2021.

Caring responsibilities

Do we have to allow an employee to take time off work to care for a dependant who is sick? Would that time off be paid or unpaid? Do the same rules apply once school closures take effect?

The first thing to check is whether the employment contract or handbook deals with this situation. Some employers offer paid leave for employees who have to deal with family emergencies. If there is no contractual entitlement to time off, it is up to the employer to determine what leave to grant in these circumstances.

A statutory right does exist to unpaid time off for emergencies. This would include school/nursery closures. The right is to "reasonable" time off to deal with the emergency situation; it is not a general right to unpaid leave. What amounts to reasonable time off during the current crisis is open to debate although typically this form of leave is used for short term emergency situations only.

A separate right to unpaid time off is also available to parents in the form of parental leave. Usually this is limited to four weeks per year, to a maximum of 18 weeks in total.


We have an updated guide to redundancy and to collective redundancies which will be released shortly. The key points to have in mind are:

  • the statutory definition of redundancy includes a decrease in demand for work of a particular kind and the closure of a place of work;
  • where 20 or more redundancies are being considered, collective consultation with those affected may be required; and
  • employees with at least two years’ service are entitled in most circumstances to a statutory redundancy payment.

The final part of this note looks at some particularly difficult questions in relation to redundancy that may arise in the current crisis, and which are not dealt with in the general guide.

When is an employer required to consult employees collectively?

The collective redundancy consultation law applies whenever an employer proposes to dismiss 20 or more employees as redundant at one establishment in a 90 day period.

"Redundancy" for these purposes includes the situation where an employer serves notice to terminate employment contracts with a view to offering employees new terms. It is therefore very likely, if employees decline to agree to a package of furlough terms, that collective consultation will be required if the employer then moves either to implement redundancies or to force contract changes, in either case in relation to 20 or more employees. In those circumstances, the employer would need to consult with elected representatives of the affected employees for 30 or 45 days before issuing notice under employees’ contracts.

Will the exception to collective consultation which is permitted for "special circumstances" apply to Covid-19?

The exception for special circumstances has always been narrowly construed by the courts. As things stand, the indications are that government will expect employers to comply with employment law requirements in the current situation and that approach may well be followed by the courts too in hearing claims for compensation from employers who fail to comply with collective consultation laws.

How can we elect representatives for collective redundancy consultation if everyone is working from home?

If collective redundancy consultation is triggered, the employer must consult with elected employee representatives of the employees (unless there is an elected suitable body, forum or works council already in place), or a trade union if the employer recognises unions. In the absence of a recognised trade union, the employer must facilitate an election by secret ballot of appropriate representatives. The legislation requires employers to arrange the election so that it is fair – this encompasses secrecy of voting, ensuring all those eligible to vote can do so, and fair counting. It is a broad power and so any sensible methodology that addresses those core aspects ought to be relatively risk-free. If voting is to be carried out by email or by an internet portal, thought will need to be given to ensure that voting is kept secret and votes are fairly counted.

Can we dismiss certain categories of worker now?

Some organisations may be facing very acute drops in demand, or immediate cash-flow pressures such that it may be necessary to look at ways of immediately reducing cost or headcount. Agency staff, those on zero-hours contracts, and freelance independent contractors are likely to be the most obvious categories to consider.

Agency workers or “temps”: context is key - are your temps or agency workers employed by you directly or are they retained via an agency or on self-employed contracts? If these workers do not have rights as employees in relation to you, termination is likely to be a matter of simply complying with the termination provisions in the contract with the worker or agency (including any minimum notice requirements). The government has recently confirmed that agency workers can be furloughed, though this would usually be undertaken at agency level.

Zero-hour workers: similarly to above, rights will depend on whether or not the worker is truly "zero-hour" (i.e. where the worker is engaged on an ad hoc basis with no guarantee of work and whether they have employment rights). If the arrangement is truly "zero-hour", organisations can opt not to offer work in the same way that they would do in any circumstances of reduced demand. It is possible to furlough zero hours workers under the CJRS if they are paid as employees through the payroll.

Freelance independent contractors: provided the individual is genuinely a self-employed independent contractor and has not acquired employment rights, termination can occur in accordance with the relevant contract terms.

Short-service employees: the right to a redundancy payment and to claim unfair dismissal compensation only accrues after two years’ service. It is therefore usually possible for employers to terminate short service employees (absent any discrimination) by just paying their notice pay. However, all employees, regardless of service, count for the purposes of determining whether the threshold for collective redundancy consultation has been triggered (i.e. 20 or more redundancies in any 90 day period).