Flexible furlough

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Flexible furlough is available form 1 July, enabling furloughed workers to return to work on a flexible part time basis. 

Up until the JRS (job retention scheme) closes on 31 October, these employees will be entitled to receive:

·   Their full contractual pay in relation to any part-time hours worked; and

·   80 percent of their reference salary (capped at £2,500 per month pro rata) in respect of their non-working time/on furlough leave.

  • from 1 August 2020 employers will no longer be able to claim the JRS grant in respect of any employer’s NIC and pension contributions. The Company will be liable to pay these.
  • Employers must still pay employees at least 80 percent of their reference pay subject to a cap of £2,500 per month pro rata in respect of non-working hours on furlough leave:
  • From 1 September the JRS grant will fall to 70 percent of reference salary (subject to a monthly cap of £2,187.50, which will reduce in proportion to any part-time hours worked/paid); and
  • From 1 October the JRS grant will further reduce to 60 percent of reference salary (subject to a monthly cap of £1,875, which will again reduce in proportion to any part-time hours worked/paid).

Employers will therefore bear an increasing portion of pay for their furloughed workers’ non-working hours.

Where the employer agreed to make any discretionary ‘top up’ payments (above 80%)  to furloughed workers, the cost of these payments – and the associated employer’s NIC and pension contributions – will be borne by the employer as at present.

What are the practical implications?

The flexibility in the new JRS, creates further complexity.

Employee eligibility and flexible furlough

Employees must have been furloughed for at least three weeks prior to 1 July in order to participate in the new scheme, if an employer intends a worker who has not previously been on furlough to be eligible for the JRS after 30 June, that employee must be furloughed for the first time by 10 June at the latest.

This will require careful planning and quick adjustments, and will mean that important decisions which affect individuals’ ongoing eligibility for the scheme must be made beforeHMRC’s guidance is published on 12 June.

Employers must also enter into new written furlough agreements with employees who are to work on a part time basis whilst furloughed.  Please let me know if you need a template for this.  This must be done in accordance with existing employment law. 

In developing flexible furlough plans, employers should ensure their criteria for selecting which furloughed workers will return to work part time – and what hours they work – are fair, reasonable and objective and neither directly, nor indirectly, discriminatory.

Be aware,  returning to work part time might potentially leave some employees at a financial disadvantage. This could be the case where, for example, historical overtime forms a significant part of the reference pay on which furlough payments are based, but similar levels of overtime are not currently available. Cases like this will require careful handling and sensitive employee communications.

Calculating and submitting claims

Claims under the new JRS can be submitted from 1 July, and the last claims under the existing scheme must be submitted by 31 July.

When submitting claims in respect of an employee on flexible furlough, the employer will be required to include information on actual hours worked, as well as the usual hours that the employee would have been expected to work under their contract in the relevant claim period. This information will feed into the calculation of the maximum JRS grant. We expect that the 12 June guidance will deal with the calculation of those hours which, for those with irregular hours, may be quite complex.

A minimum claim period of one week will apply under the new JRS, though claims can still be submitted in respect of longer periods. However, claim periods will no longer be able to overlap calendar months.

Importantly, from 1 July the number of employees included in a claim cannot exceed the highest number of employees included in a claim submitted under the current scheme.

When will the details be available?

As noted above, HMRC is expected to publish further guidance on 12 June which addresses flexible furlough

Updates to HMRC’s guidance
HMRC also published several updates to their JRS guidance on 14 May 2020.

These include:

  • Clarification that claims cannot be submitted more than 14 days before the end of the relevant claim period;
  • Confirmation that participating employers must retain their relevant records for six years for possible HMRC review; and
  • Guidance on what overtime payments and other ‘non-discretionary payments’ can be included in JRS reference pay.

This last point is an important clarification, as previously it was uncertain what constituted ‘non-discretionary overtime’, which should be included when calculating furloughed workers’ minimum salary payments and the associated JRS grants. HMRC’s guidance now confirms that, overtime payments can be included where the employer was contractually obliged to pay the employee at a set and defined rate for the overtime worked (rather than where the employer was contractually obliged to offer the overtime on a voluntary basis).

The updated guidance also confirms that other contractually enforceable variable payments (e.g. shift allowances) should be included in reference pay.

The treatment of overtime, allowances and similar payments requires careful consideration, and employers should assess the basis on which they calculate their JRS claims in light of this updated guidance.  Employers should also consider whether any amendments to past claims might be required once HMRC have introduced this functionality into their JRS portal.

What should employers do?
Extension of the JRS is clearly welcome, and employers will urgently need to consider how the support available affects decisions in relation to managing its workforce. 

In particular, if it is indeed the case that employees can only be furloughed over August to October if they were on furlough at the end of July, employers will need to assess the extent to which they might require support from the JRS over the coming five to six months, and plan which employees to furlough – and when – accordingly. This work will need to be undertaken in the coming weeks in order to put plans into action in when the new scheme rules come into force.

Other practical steps that employers who do or might participate in the JRS can take now include:

  • Reviewing existing agreements with employees – do existing agreements with employees need to be revised to allow the possibility of furlough continuing into July and beyond? The template sent through previously if the current terms have not changed.
  • Getting people back to work – what staffing requirements are forecast from now until the end of October, and is it appropriate to bring furloughed workers back into the business on a full or part time basis?
  • Thinking about workforce requirements – does the extension of the JRS affect any planned headcount reductions? Consider implications if the ongoing costs cannot be covered by the company; Do you need to consider restructuring, reducing headcount,  commencing redundancy consultations.
  • Modelling different levels of employer contributions – what level of subsidy can the business afford? If discretionary payments are currently made over and above furloughed workers’ minimum entitlements, could this continue or should the position be renegotiated to 80%.
  • Checking claims – for many employers, calculating their current JRS claims is not straightforward, with common difficulties including:
    • Establishing the correct components of furloughed workers’ reference pay (in particular, employers should review past claims in light of HMRC’s recently updated guidance);
    • Identifying ‘fixed’ or ‘variable’ rate employees in order to calculate the grant correctly (‘fixed’ rate employees are defined in a similar way to ‘salaried’ workers for National Minimum Wage purposes, which is not always easy to apply in practice); and
    • Making deductions from payments to employees (furloughed workers must receive their entire minimum furlough payment in cash, and any deductions made by the employer must be carefully considered to ensure this condition is met).
  • Reviewing JRS compliance – are processes and controls robust enough to withstand HMRC review, and can they cope with the additional complexities the prospective changes will introduce?

Please let me know how I can help support you through this challenging time.

Forthcoming changes

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This table shows forthcoming changes. 

1 April 2020 Increase to national living/minimum wage rates
5 April 2020 Increase to statutory maternity pay, paternity pay, adoption pay and shared parental pay
6 April 2020 Increase to statutory sick pay (SSP) rate
6 April 2020 Changes to taxation of termination payments
6 April 2020 New law prohibiting use of Swedish derogation agency contracts takes effect
6 April 2020 New law lowering the threshold required for information and consultation requests takes effect
6 April 2020 New day-one right to a written statement of main terms and conditions for workers and employees comes into force
6 April 2020 Amendments to mandatory information required within a statement of main terms and conditions comes into force
6 April 2020 New law extending the holiday pay reference period to 52 weeks takes effect
6 April 2020 New law requiring employment businesses to provide all agency workers with a Key Information Document takes effect
6 April 2020 IR35 update: large and medium sized organisations in the private sector who engage contractors through intermediary companies will be responsible for assessing the employment status of those contractors.
6 April 2020 Parental Bereavement Leave is to be introduced
30 April 2020 Deadline for agency workers on Swedish derogation agency contracts to be provided with an explanatory statement

For further information please contact us. 

Rolled Up Holiday Pay

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When employers (or agencies) refer to ‘rolled up’ holiday pay, they normally mean paying an additional sum of money on top of a worker’s hourly rate when they are working, to cover the equivalent of their annual holiday pay.

The courts have ruled that rolled up holiday pay is unlawful, as it is a disincentive for workers to take their holidays. This is because the worker is not paid when they are actually on holiday but receives a higher rate of pay when they are working. The statutory minimum holiday entitlement (currently 5.6 weeks in the UK) is there for health and safety reasons, as workers need time away from work to rest.

The ruling stated that Rolled up holiday pay as being unlawful, as the holiday pay should be paid when a worker is actually taking their holiday. Having said that, where rolled up holiday payments are made and are clearly identified on a worker’s pay slip as holiday pay, those payments would be offset against any holiday pay claim.

Employers have an obligation to ensure that workers are taking at least the minimum statutory holiday and, if this is not happening, the Health and Safety Executive can take action.

National Sickness Day

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‘National Sickness Day’ on 4th February is a  reminder to employers on how best to tackle employee absence.

Absence in the workplace can be expensive for  organisation; according to government research, illness costs the UK around £60 billion per annum. Not only does it impact financially but it can also have a negative effect on organisational culture, leading to staff disengagement and poor morale.  A more recent study revealed that 27% of employees regularly ‘hide’ in the toilets at work to pass the time, collectively earning over £1.3 billion on average per year as they do!!

However some absences are unavoidable due to illness or injury, it is important to identify hidden causes at the outset.

Recurrent poor attendance can often be a symptom of a unknown, underlying problem. Examples include, workplace bullying , stress or family relationships. If you have concerns about an employee’s health or the duration of their sickness, it may also be appropriate to refer the employee to an occupational health therapist.

By identifying underlying issues early, you are more likely to be able to work with your employee to tackle the problem and be identify the most appropriate action.  Demonstrating a caring, flexible but firm approach is likely to result in a more engaged, motivated and loyal workforce – so hopefully you won’t be one of those employers who are paying people to hide in the toilets!

Strategies on improving attendance at work:

  • A clear well communicated  Sickness Absence policy, to set out expectations, which is implemented consistently. With  appropriate procedures for employees to follow if they are late or absent.
  • Train managers in handling difficult conversations, and provide them with a clear support structure, and who to get advice from to help  deal with absenteeism appropriately. Managers should be approachable, so that employees feel comfortable talking to them about concerns. It is important not to make any judgements on whether the absence is ‘genuine’ or not until all the facts identified.
  • Identify trends and reasons for absence. Collecting data on the patterns of employee absence is essential to determining whether absenteeism is a problem in your workplace.
  • Conduct return-to-work interviews every time. Research indicates that they are regarded as one of the most effective tools for managing and reducing short-term absenteeism.
  • Carefully consider for  medical grounds or to improve  work life balance, offering flexible options;  such as working from home, and/or flexible working.  Allowing employees more control over their schedules can drastically reduce absenteeism.
  • Consider implementing ‘Duvet Days’. These allow staff to take a maximum number of days each year at short notice and can help reduce absenteeism and improve morale.
  1. Ensure all employees know what support is available to them and how to access it.

With the right measures and controls, absenteeism can be successfully reduced and managed appropriatley

HR GDPR

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HR GDPR

We have updated our contracts of employment and template Employee Handbook to reflect the introduction of the General Data Protection Regulation. Please let us know if need to update your documents.

November Budget

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Philip Hammond delivered the first November Budget for 21 years on the 22 November 2017. Although expected to be a duller affair than normal, there were a number of employment initiatives outlined that organisations need to be aware of.

The Chancellor confirmed the minimum wage increases that will take effect from April 2018.

National living wage, the rate for workers aged 25 and over, will increase by 4.4 per cent from £7.50 to £7.83 an hour.

Over a year, this increase will give a full time worker a £600 pay increase.

The government has also accepted the Low Pay Commission’s recommendations for national minimum wage (NMW) increases. From April 2018, the following increases will apply:

Workers aged 21-24 – NMW will increase from £7.05 to £7.38 an hour
Workers aged 18-20 – NMW will increase from £5.60 to £5.90 an hour
Workers aged 16-17 – NMW will increase from £4.05 to £4.20 an hour
Apprentice rate – will increase from £3.50 to £3.70 per hour
The Budget was used to repeat the government’s commitment to deliver three million apprenticeship starts by 2020 through the operation of the apprenticeship levy. The levy, introduced in April 2017, requires organisations with an annual turnover of more than £3 million to pay 0.5 per cent of their pay bill in to a digital levy account. This money is then available to spend on apprenticeship training for 24 months before expiring.

The Chancellor announced the government will review the flexibility levy payers have to spend their money. Although no further details were announced, this may look at extending the time organisations have to spend the money in their levy account or improve the way group structures can share their levy payments.

A new National Retraining Scheme will be introduced. The government will work in partnership with the Trade Union Congress and the Confederation of British Industry to develop a scheme that supports workers with retraining during their working lives. It will provide the opportunity to gain skills that are necessary for future workplaces. At first, the scheme will focus on certain sectors and will initially look to provide retraining on construction and digital skills.

In the Budget document, it was further announced that the government will publish a discussion paper in response to Matthew Taylors review on ‘Modern working practices’. This paper will explore the options available to clarify employment status tests for both employment rights and tax.

Mindfulness in the workplace – taking a grassroots approach

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One of the workplace wellbeing success stories of recent years has been the rise to prominence of mindfulness. A form of meditation that has moved well beyond its Buddhist origins, mindfulness is widely practised all over the world. Much more than a celebrity lifestyle fad, it has been embraced by bastions of the UK establishment. Oxford and Bangor Universities have been researching the impact of mindfulness since 2008 – adding to a substantial evidence base confirming its effectiveness.

In political circles, a Mindfulness All Party Parliamentary Group has explored how mindfulness can contribute to society more broadly, resulting in it being introduced into schools and prisons. For good measure the MPs created a policy institute; The Mindfulness Initiative.

This has produced an influential business case for mindfulness in UK workplaces, to encourage and support companies interested in making it available to employees.  A great many have done so.

Google, IKEA, General Motors and the insurance giant Aetna are some of the major corporations that have embraced mindfulness. It has gained traction in the financial sector too, with Lloyds, Goldman Sachs, RBS, Bank of England, Credit Suisse, Deutsche Bank, and HSBC among the banks that have offered it to their staff.

With so many large corporations on board, it’s fair to say that mindfulness has gone mainstream.

But there is no right way to bring mindfulness into the workplace.

What is important is that it is introduced in a way that aligns with the culture and values of the organisation. Some businesses offer it to all employees on a voluntary basis.

In others the focus is on senior leaders through the introduction of a “Mindful Leadership” programme. Mindfulness can also be rolled out through apps that are offered for free or as part of an employee benefits package.

An employee-led approach is much less common.

This typically involves the business supporting mindfulness initiatives that develop naturally from the enthusiasm of employee-led groups.

These spread gradually through the organisation as awareness and commitment widens. In some cases the extent of company support amounts to little more than providing room space for practice but it can extend to more sophisticated approaches.

One particularly innovative example of this has taken place at HSBC. There are useful lessons for other businesses in how they have gone about it, so I’m going to look at it in some detail.

From small beginnings

Mindfulness at HSBC was initiated through the efforts of Mari Lewis – a senior IT Architect for the bank in Sheffield, who practised mindfulness regularly.

She enjoyed the benefits herself and wanted to establish whether there was appetite among her colleagues to form a regular group. In 2012, she solicited interest in her workplace, through an onsite lunchtime stall, signing up 15-20 staff. Mari, an experienced mindfulness practitioner, led the sessions and the interest grew.

Five years on, 350 employees have been through her Sheffield programme.

In 2014 Mari, along with a colleague Jane Daniels, oversaw the development of an employee-led mindfulness network, and the creation of a mindfulness intranet site. A launch event for the network was held at the bank’s Canary Wharf HQ, introduced by one of the bank’s global heads, with a special interest in mental health.

With 500 employees participating, many dialling in from HSBC sites round the world- at the time, this may have been one of the largest ever-corporate mindfulness events,

Soon mindfulness sessions were being set up at other HSBC sites across the UK where experienced volunteers were available. Support for the developing network was gained from the UK bank’s Head of HR. Since then there have been many mindfulness events, often involving external speakers. The network membership has now grown to over 1000 employees.

But more was needed if mindfulness was going to succeed long-term. An internal leadership project group raised the profile of mindfulness further, gaining support and funding from the UK Head of Benefits and Reward, who holds responsibility for the HSBC UK’s new wellbeing strategy.

This financed a multi-stranded mindfulness programme that will be rolled out across the bank through the remainder of 2017. This includes access to a mindfulness app and the training of 25 mindfulness champions. The use of a ‘train the trainer’ approach will ensure the supply of future champions is sustainable.

The programme also includes, at HSBC’s request, research into its impact.

To embed it further, mindfulness has also been introduced, as an option, into the Banks’s “mental health pathways”, which is the process by which mental health cases are managed at HSBC.

This also includes occupational health and the private health insurance provider.

Following an impressive re-launch event in July 2017, the process of recruiting the champions is underway, to take mindfulness at the bank to the next level.  In September 2017 HSBC received a Parliamentary award in recognition of the achievements of the mindfulness network

Mindfulness from the bottom up 

What impresses me most about this approach is that it has evolved organically through the commitment of dedicated enthusiasts, fired by a wish to communicate the benefits of mindfulness to others.

Spread in this way, the introduction will only succeed if it elicits enough interest from colleagues.

And because it is initiated by employees, it is hard to argue that mindfulness is being introduced for faddish reasons, or that it is being hijacked to suit corporate ends – a frequent criticism of corporate programmes.

Finally, whilst large organisations, might baulk at commissioning mindfulness training for a workforce of many thousands, employee-led rollouts are easily scalable and relatively inexpensive, once a cohort of internal trainers is in place.

Mindfulness in UK businesses is on an upward curve.

There are many different ways it can be offered in the workplace. What HSBC has done seems both innovative and cost effective and demonstrates that sometimes wellbeing programmes succeed best when they originate with the staff themselves.

Read more about how mindfulness has taken off among UK businesses and the different approaches they are taking to make it available to employees, in Bank Workers Charity’s whitepaper Mindfulness at Work: On an Upward Curve.

 Paul Barret

Statutory rates

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Statutory maternity pay (SMP):

First six weeks – 90 per cent of employee’s average weekly earnings.

From 3 April 2016: Remaining weeks – £139.58 or 90 per cent of employee’s weekly earnings if this is lower
From 2 April 2017: Remaining weeks – £140.98 or 90 per cent of employee’s weekly earnings if this is lower

Statutory adoption pay (SAP):

First six weeks – 90 per cent of employee’s average weekly earnings.

From 3 April 2016: Remaining weeks – £139.58 or 90 per cent of employee’s weekly earnings if this is lower
From 2 April 2017: Remaining weeks – £140.98 or 90 per cent of employee’s weekly earnings if this is lower

Statutory paternity pay (SPP):

From 3 April 2016: Two weeks – £139.58 or 90 per cent of employee’s weekly earnings if this is lower.
From 2 April 2017: Two weeks – £140.98 or 90 per cent of employee’s weekly earnings if this is lower.

Statutory shared parental leave pay:

From 3 April 2016: £139.58 or 90 per cent of employee’s weekly earnings if this is lower
From 2 April 2017: £140.98 or 90 per cent of employee’s weekly earnings if this is lower.

National Living Wage

From 1 April 2016, a new National Living Wage for workers aged 25 and over was introduced. In November 2016, the government announced new rates for all five categories of worker, to take effect from April 2017. For more information see our Recent and forthcoming legislation page.

From 1 October 2016:
Workers aged 25 and over: £7.20 an hour
Workers aged 21 and over: £6.95 an hour
Development rate for workers aged 18-20: £5.55 an hour
Young workers rate for workers aged 16-17: £4.00 an hour
Apprentice rate: £3.40 an hour

From 1 April 2017:
Workers aged 25 and over: £7.50 an hour
Workers aged 21 and over: £7.05 an hour
Development rate for workers aged 18-20: £5.60 an hour
Young workers rate for workers aged 16-17: £4.05 an hour
Apprentice rate: £3.50 an hour

Statutory sick pay

From 6 April 2016: £88.45
From 6 April 2017: £89.35

Redundancy pay

For details of statutory redundancy payments and guaranteed pay see the Compensation limits listed above.

The GOV.UK website has an interactive tool to help calculate redundancy pay.

National Minimum Wage and National Living Wage

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1 Apr 2017 – National Minimum Wage and National Living Wage

The following NLW and NMW hourly rates apply from 1 April 2017:

  • Workers aged over 25 years (NLW): £7.50.
  • Workers aged 21 to 24 years: £7.05.
  • Workers aged 18 to 20 years: £5.60.
  • Workers aged 16 to 17 years: £4.05.
  • Apprentices (under 19 years, or in the first year): £3.50.

From 2017, changes to both the NLW and NMW rates will take place in April.