The Enterprise Investment Scheme: What tax reliefs are available?
In his latest article, experienced Corporate & Commercial Solicitor Paul Longland answers your questions on EIS tax relief.
Following a lot of queries from clients, even more announcements from the Government and an excellent online conference hosted by leading employment law barrister Daniel Barnett yesterday Chris Dobbs has put together the following summary of advice for employers during the coronavirus outbreak.
Sick pay and medical suspension during coronavirus outbreak
If someone chooses to isolate at home because they are in a ‘vulnerable group’
but neither they nor someone in their household actually have symptoms, then they are not entitled to SSP. This is because current Public Health England guidance on those in a vulnerable group (with the exception of the 1.5 million especially vulnerable) is to social distance, not self isolate. This may change of course.
SSP
is payable from day one and not day four if the reason a person is off sick is due to Coronavirus, including having to self-isolate if someone in their household has symptoms.
Up to 14 days SSP
is reclaimable from the Government for businesses under 250 employees, again if due to the Coronavirus.
Company sick pay
is likely to be treated differently, as it is normally only payable if someone is actually sick. The general view amongst employment lawyers is that someone will not be entitled to company sick pay if they are just self-isolating and not actually sick themselves. Even if this is not correct, the consequences are not big, an employer simply has to pay the full pay that they would have paid anyway.
Pregnant women and coronavirus medical suspension
Some people have talked about medical suspension over the last few weeks, but the legislation is clear that Coronavirus does not come within one of the three legislated provisions, so someone cannot claim full pay for being medically suspended. The exception is for pregnant women - if a risk assessment (which must be carried out) shows reasonable adjustments are required to reduce risk and they cannot be provided with the person still in work, then they have to be medically suspended on full pay. If they are absent within the last six weeks before the baby is due (not four weeks as for other sickness) then the maternity leave automatically starts.
Termination during coronavirus outbreak
Termination during self-isolation
If an employee says they are self-isolating for a very long-time due to Government guidance, it is likely employment tribunals will say any dismissal is outside the band of reasonable responses and therefore unfair.
Automatic unfair dismissal
There is a bigger risk if someone who is self-isolating is dismissed. An employee is likely to be able to use the health and safety part of the Employment Rights Act to say the dismissal is automatically unfair, as Coronavirus is likely to be classed as a ‘serious and imminent’ danger to health and case law demonstrates a virus can be included. This would be an automatic unfair dismissal, which means an employee will not require two years’ service to make a claim and any compensation awarded will be uncapped.
Collective consultation
The view is that this is not required if asking employees to agree to furlough leave as not proposing to dismiss at that stage. If 20 or more refuse then any dismissal/re-engagement or redundancy procedure after it will require collective consultation.
There is a special circumstances defence that means the full consultation period of 30 days may not be required, but any consultation should still be reasonable, say at least 14 days, in order to reduce the risk of a successful claim.
Furlough leave
Who can be furloughed?
Only employees on PAYE who are completely stopping to work can be furloughed, it does not include reducing hours.
Written agreement for furlough
Obtain agreement from employees to furlough on 80%/cap of £2,500pm. It would be wise to obtain agreement in writing.
What is included in the furlough cap?
Recent guidance published on 26th March suggests the Government subsidy will pay national insurance and basic auto enrolment pension contributions in addition to the cap. At the moment we understand the cap works so that someone on a salary up to £3,125 per month will get full 80%, amounting to the £2,500 per month, but not certain yet. Tax and national insurance will have to be deducted as normal.
When will the HMRC furlough portal be open?
Rather worryingly, it seems likely that it could take HMRC 6-8 weeks to get the portal up and running and it will probably be full of bugs! However, the legislation for it will probably come through in the next 1-2 weeks.
Dismissal during furlough period
It will probably be unreasonable and therefore unfair to dismiss for redundancy while the scheme continues to run, unless the business really does become insolvent.
Rotating staff in furlough
Many people are asking if they can rotate employees through furlough leave. The latest 26th March guidance says they can, as long as employees are put on furlough for at least 3 weeks at a time.
Can people work while furloughed?
Another question I am being asked a lot – can a person being furloughed get another paid job during that time? The answer is almost certainly no. They can get another job that is outside of their working hours, but not during the working time they are furloughed.
Objection to working while other staff are furloughed
It is not easy to deal with people who object to having to work full-time while their colleagues get 80% for doing no work, it may be incentives will have to be offered, for example a bonus once this has all passed and financial times are better.
Holiday accrual while furloughed
Holiday accrues normally through the furlough period and employers can make people take holiday if we wish to do so, as long as they are given the required notice of twice the amount of time they are being asked to take. They should be paid 100% during the holiday period.
Employees may ask to cancel holiday and employers should consider such requests as sympathetically as possible.
Maternity leave and furlough
Employees on maternity leave can ask to cut their maternity leave short to return early and take advantage of furlough leave.
Emergency Volunteering Leave
Workers can ask to take unpaid leave to volunteer for NHS/social care work. They have to give 3 days’ notice by providing an emergency volunteering certificate to their employer. Leave can be 2-4 weeks, which can be taken once in any 16 week period. They will get all their benefits, including pension, throughout the leave, the only thing they do not get is salary. The Government has said there will be some form of compensation payment to such people, the details of which are yet to be given.
Employment law updates during the coronavirus outbreak
We will post any announcements, along with advice for employers and HR professionals as soon as we are able. These will be shared on our website and on social media.
Our Employment and HR newsletter will continue to be sent out monthly, though as important information is announced by the government, we may send this to you more frequently.
Our quarterly employment seminars are postponed until further notice, though we are looking into ways of delivering these online.
We have a dedicated coronavirus page, where we will post links to all articles, fact sheets and downloads concerning the outbreak and implications for businesses.
