Employment Update - November 2020

Furlough scheme extended

The Government has announced that the Coronavirus Job Retention Scheme (CJRS) is being extended until 31 March 2021. The CJRS, which was due to close on 31 October 2020, had already been extended to cover the four-week national lockdown and will now continue until 31 March 2021. The scheme has also been made more generous than it was in October 2020.

The CJRS provides a Government-funded wage subsidy for employers who place staff on full or partial furlough (paid leave). Under the CJRS, employees on furlough must receive at least 80% of their regular wages for hours not worked up to a full-time maximum of £2,500 per month.

Following the Government's announcements on the extension:

• The CJRS will now run until 31 March 2021.
  
  
• All employers of all sizes with a UK bank account and PAYE scheme will now be able to use the CJRS, whether or not they have previously put staff on furlough.
  
  
• All employees will be eligible for furlough, provided they are on the payroll as at 30 October 2020 (i.e. they have been notified to HMRC on an RTI submission on or before 30 October 2020). There is no requirement for the employee to have been on furlough previously at any point. 
  
  
• Employees who have been made redundant after 23 September 2020 can be rehired and placed on furlough, provided they were on the employer's payroll as at 23 September 2020 (i.e. they were notified to HMRC on an RTI submission on or before 23 September 2020). 
  
  
• Employers will be able to put staff on full furlough (i.e. no work) or partial furlough (i.e. reduced hours) and so will have the flexibility to determine the hours required. Employers will need to report and claim for minimum periods of seven consecutive calendar days at a time.
  
  
• The Government will pay 80% of wages up to a cap of £2,500 for employees on furlough for any hours not worked until at least 31 January 2021. The Employer will not have to contribute to this subsidy but will be responsible for employer NICs and pension contributions on the full amount paid to employees. For partial furlough, employers will also have to pay full pay for any hours worked.
  
  
• The amount of the Government subsidy will be reviewed in January 2021 to determine whether employers should be asked to contribute more to the wage subsidy from February 2021 onwards.
  
  
• Employers will use the same calculations for usual wages and hours for employees who have previously been on furlough. For employees not previously eligible for furlough, usual wages and hours will be calculated as at 30 October 2020 or, for those with variable wages or hours, the average of tax year 2020/21 up to the start of furlough.
  
  
• Employers can choose to top up employees' wages above the Government subsidy if they wish but are not required to do so.
  
  
• Employers will be able to submit claims for the CJRS subsidy from 8am on 11 November and will be required to submit claims within 14 days of the end of the month to which the claim relates.

Under the CJRS, employers can claim the Government wage subsidy before or after employees have been paid but the subsidy must be paid in full to employees.

In the light of the CJRS extension, both the previously announced Job Support Scheme and the Job Retention Bonus will be shelved. The Chancellor has said that an alternative job retention incentive will be considered at an appropriate time.

For more detail on the CJRS extension see our full Q&A briefing here.

Post-Brexit immigration system opening early

The Government's new points-based immigration system was widely expected to take effect from 1 January 2021, following the end of the Brexit transition period. However, the Government has now announced that the new system will open for applications on 1 December 2020.

Under the new regime, the key new work visas are the Skilled Worker and the Intra-Company Transfer (ICT) routes. These will apply to both EEA and non-EEA nationals and will replace the existing employer-sponsored visas for non-EEA nationals from 9am on 1 December 2020. This means:

• For non-EEA nationals, existing Tier 2 visas will remain valid but extension applications submitted from 1 December 2020 onwards will be considered under the new regime; and
  
  
• EEA and Swiss nationals will be able to apply under the new regime from 1 December 2020 but will only be granted visas under the new regime with effect from 1 January 2020 (as they will continue to be able to rely on free movement rights until 31 December 2020).

EEA and Swiss nationals who arrive in the UK by 31 December 2020 are covered by the EU settlement scheme which is already open. Applicants can apply now for settled or pre-settled status and must do so by 30 June 2021.

Employers who do not already hold an immigration sponsor licence should apply now, as this will be required to sponsor both EEA and non-EEA nationals under the new regime. Those with a sponsor licence should undertake a review to ensure the licence is fully up-to-date and also covers all linked entities across Europe, which will be necessary to facilitate transfers from those linked entities in future.

How will employer-sponsored visas change?

The new points-based immigration system will cover both non-EEA and EEA nationals going forward with new routes replacing the existing Tier 2 (General) and Tier 2 (ICT) visa routes from 1 December 2020.

The existing Tier 2 (General) visa category will be replaced by a new Skilled Worker visa category, which will cover individuals coming to the UK with a job offer from an approved sponsor employer. Employers will need to be paying a minimum salary of at least £26,500 or the "going rate" for the particular role set by the Home Office. Employers familiar with the Tier 2 (General) route will note the following helpful changes:

• the resident labour market test requirement to advertise for a minimum of 28 days will be removed;
  
  
• the 20,700 annual cap on numbers will also be removed;
  
  
• the 12-month 'cooling off period' requiring applicants to wait 12 months outside the UK before reapplying under Tier 2 will no longer apply;
  
  
• the maximum six-year cap on the time spent in the UK under the Tier 2 (General) visa will be lifted and there will be no limit on the time an employee can spend on a Skilled Worker visa; and
  
  
• employees in the UK on an ICT visa will be able to switch to a Skilled Worker visa without having to leave the UK.

The ICT route allows companies to transfer staff from linked overseas offices to work in the UK temporarily. This route will remain under the new regime but with some key changes:

• the 12-month cooling off requirement will be removed and replaced with a new cap of up to five years in any rolling six-year period or up to nine years in any 10-year rolling period for high earners;
  
  
• the high earner threshold under the ICT route will change to £73,900, a reduction from the current rate of £120,00; and
  
  
• individuals may be able to switch to the new ICT route within the UK if they hold a Tier 5 or Tier 2 (General) visa – this is currently not permitted.

Please see our briefing Post-Brexit immigration – the new points-based system for more details of the new regime. 

Disciplinary invites - consequences of getting it wrong

This case highlights the potential danger of getting the invitation to a disciplinary meeting wrong. The employee was a teacher with a long, unblemished record. Following a tip off, police raided his home and found a computer with indecent images of children on it. He told the school about this but denied any responsibility for the images. He was charged but ultimately not prosecuted. The employer invited him to a disciplinary hearing for misconduct related to the images on his computer. It was unable to obtain any information from the police about the nature or seriousness of the images or where they had come from. The disciplinary chair concluded there was insufficient evidence to say the employee was responsible for downloading the images but decided to dismiss the employee because of the reputational risk to the school. The employee claimed unfair dismissal.

The employee's claim was initially rejected but, on appeal, the Employment Appeal Tribunal (EAT) ruled that the dismissal was unfair. The EAT said that the letter inviting the employee to the disciplinary hearing only mentioned misconduct and said nothing about reputational risk as a potential issue – the employee therefore had no opportunity to respond to this in any material way. The EAT said that the employee could not have been fairly dismissed on the basis of misconduct in circumstances where the employer had found insufficient evidence that misconduct had occurred. The EAT also doubted whether there was enough of a reputational risk here to justify dismissal, given there had been a decision not to prosecute the employee, and therefore no chance of a conviction, and there was no information available about the nature or seriousness of the images.

Religious beliefs - how far does the protection go?

The employee in this case was a Christian and worked at a school. Someone outside the school complained about a post on the employee's personal Facebook page, which encouraged others to sign a petition against teaching in schools about same-sex marriage and gender fluidity. A further post by the employee was uncovered which referred to gender fluidity as a "perverted vision". The employee was dismissed for gross misconduct, which included breaching the school's policy on inappropriate use of social media. She claimed she had been discriminated against and harassed because of her religious beliefs.

The school argued that the employee's beliefs – that gender cannot be fluid and that people cannot change their biological sex – were not protected beliefs because they were incompatible with human dignity and conflicted with the fundamental rights of trans people. The Employment Tribunal rejected this argument and ruled that the employee's beliefs were protected beliefs. However, the employee had not been discriminated against or harassed because of those beliefs. Rather, she had been dismissed because her posts might reasonably lead others to conclude that she was homophobic and transphobic, which had the potential to negatively impact on pupils, parents, staff and the wider community.

Cap on public sector exit payments

The Government has introduced a cap on public sector exit payments which took effect from 4 November 2020. Under the cap, payments by a public sector body in respect of an employee's termination of employment must not exceed £95,000 in total for that employee. In terms of what is covered by the cap:

• payments for accrued but untaken holiday are excluded
  
  
• a payment in lieu of notice equivalent to up to a quarter of the employee's salary is exempt from the cap but any part of the payment in lieu above this would be caught
  
  
• redundancy payments are caught, whether statutory or enhanced
  
  
• payments resulting from the employee's accrued right to a pension are excluded but employer-funded early access to pension payments are within the scope of the cap.

Ministers have the power to relax the cap in certain situations and must do so in relation to payments made as a result of TUPE, as well as payments made to settle or avoid whistleblowing or discrimination claims. There are other situations where Ministers may relax the cap on a discretionary basis. 

Senior managers and certification regime

In March 2016, the Senior Managers and Certification Regime (SMCR) replaced the approved persons regime for employees in banks, building societies and other financial services organisations jointly regulated by the FCA and PCA. An equivalent regime was brought in for large insurers. The SMCR was extended to all insurers in December 2018 and to all FCA regulated firms on 9 December 2019.

There are transitional rules for employees who were approved under the approved persons regime and will become certified individuals under the SMCR. Firms originally had until 9 December 2020 to certify these employees as fit and proper under the SMCR, but this deadline is being extended to 31 March 2021 in light of the pandemic. The date on which the FCA conduct rules come into force for staff who are not senior managers, certification staff or board directors is also being extended from 9 December 2020 to 31 March 2021, as it the date by which relevant employees must have received training on the conduct rules. Despite the delay, the FCA encourages firms to meet the original deadline of 9 December 2020 wherever possible.

Off payroll rules

Changes to the tax rules for those who engage consultants and contractors are due to come into force in April 2021, a year later than expected due to the COVID-19 pandemic. The legislation introducing the changes has now been made, with a view to the rules coming into force on 6 April 2021. The so-called "off payroll rules" were introduced in the public sector in April 2017 and are being extended to the private sector from April 2021.

These rules are designed to ensure that workers who provide their services like employees are taxed like employees, even if they provide their services through a personal service company. From 6 April 2021, large and medium-sized businesses in the private sector will be caught by the rules. Such businesses will have to decide whether without the personal service company the worker would be regarded as an employee for tax purposes. If so, if the business (or the body responsible for paying the personal service company) must account for tax and national insurance contributions on payments to the personal services company.

Businesses in scope will need to write to all workers who supply services via a personal service company to explain whether the business believes the new rules apply or not, and the reasons for this determination. Businesses will also need to respond to challenges on such "status determination statements" within 45 days.

Those in scope should therefore review their arrangements for engaging consultants, contractors and other workers, and implement systems and processes to ensure compliance with the new rules ahead of 6 April 2021. We have been working with a number of employers on implementation projects and have produced a 'toolkit' of template documents to assist with this. Please speak to your usual Employment team contact for more information.

Since the last Employment Update, our work has included:

• advising on a complex disciplinary and grievance issue involving protracted sickness absence
  
  
• advising on the duty to consult collectively with employee representatives in relation to making business changes to terms and conditions of employment
  
  
• advising in respect of an equal pay claim brought against a client for like work and work of equal value
  
  
• advice around the application of the 'positive action' rules under the Equality Act
  
  
• investigating alleged misconduct by a departing employee, including a forensic analysis of their emails
  
  
• advising on the implications of employees working from home abroad
  
  
• advising on protective award claims brought against a business which did not carry out legally compliant redundancy consultation
  
  
• conducting an investigation into whistleblowing allegations raised by an ex-employee
  
  
• obtaining written undertakings from an ex-employee on behalf of a client so as to protect confidential information.