Coronavirus: Information for employers
The coronavirus (COVID-19) outbreak is having far-reaching financial impacts on individuals and businesses across the UK, and indeed across the world.
This page answers questions that small employers are likely to have about sick pay, changing working hours, leave, laying people off and working from home.
Paying Statutory Sick Pay (SSP)
The government are asking people to stay at home if they have a high temperature or a new and continuous cough, or if anyone in their household has one of those 2 symptoms.
If you have any staff (who you pay under the PAYE system, who earn at or more than £118 per week), who cannot work because they are ill or self isolating in accordance with government guidance (even if they are not sick themselves), then you may have to pay them SSP.
Under emergency legislation, they will be able to get SSP from the first day they are off work, rather than the fourth. This will apply from 13 March. Although most payroll software has a 'three day waiting period' built in, you should be able to override this.
If an employee is entitled to SSP, the payment will be due at the same time as their normal wages (for example, weekly/monthly) and SSP payments will be treated as earnings for Pay As You Earn (PAYE) tax and NIC purposes. The employer guide on paying SSP is on GOV.UK.
If an employee is not entitled to SSP, for example, because they have exhausted their 28 weeks SSP maximum entitlement, then they won’t be entitled to any more, even under the coronavirus provision, and should be served the SSP1 form and advised to claim welfare benefits.
‘For further information about paying Statutory Sick Pay during the coronavirus and links to technical guidance to help you understand the rules in complex or unusual situations, see our press release: Tax experts try to clear up Statutory Sick Pay misinformation.
Can I claim any reimbursement of SSP I pay out?
The burden of SSP generally falls on employers. However, further to the announcements extending SSP for those individuals affected by coronavirus, the government will support small and medium-sized businesses and employers to cope with the extra costs of paying coronavirus related SSP.
In particular, eligible businesses will be able to obtain a refund of eligible SSP costs. The eligibility criteria for the scheme are as follows:
- this refund will be limited to two weeks per employee;
- employers with fewer than 250 employees (as of 28 February 2020) will be eligible;
- employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19;
- employers should maintain records of staff absences, but should not require employees to provide a GP fit note;
- the eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force.
The current system does not allow for employer refunds for SSP, so there will be urgent work to set up a refund mechanism for employers as soon as possible.
What if my staff are not entitled to SSP?
SSP is the statutory minimum. If your staff do not qualify for SSP, then it is important to realise that it is perfectly possible for you to make an alternative arrangement with your employee, whereby you continue to pay them anyway perhaps, or you pay them over and above the statutory minimum.
The costs would obviously not be reclaimable from the government (although you may benefit from some of the other business support announced), but they would form a deductible expense for your business, just like any other staff salary costs.
Of course, this may not be possible due to your financial circumstances. In which case, your staff should consider whether they can claim contributory or ‘new style’ ESA or UC.
What should I pay my employees if I ask them to work from home?
Unless you change your employees' hours and/or pay, you should continue to pay them as normal.
As well as providing equipment etc. to an employee who works from home (which you can do on a tax-free basis), you may want to cover the cost of additional household expenses such as additional costs of heating and lighting.
If you cover any costs to the weekly limit (£4, or £18 a month for employees paid monthly) then you do not need to ask for evidence or report or pay anything to HMRC.
This amount goes up from £4 per week to £6 per week from 6 April 2020.
If (and only if) your employee does not already pay for a broadband internet connection at home, and needs one in order to work from home, you may also be able to reimburse this tax free.
Further guidance is available on GOV.UK.
Can I force my employee to take annual leave?
If you do not have a contractual agreement with your employee on this, then the rules basically say yes - provided you give the appropriate notice.
Such notice should specify the day or days on which leave is required to be taken and the notice must be given twice as many days in advance of the earliest day specified in the notice as the number of days to which the notice relates. For example, if the employer requires the worker to take one week's annual leave at a particular time, it must give the worker at least two weeks' advance notice.
This will depend on what is in the existing contract you have with your employee.
If you need to change your employee's contract, you can find some relevant information on GOV.UK. This advises that usually, the employer and employee both need to agree to any contract changes.
If you are after more detail on this, or if you cannot agree any changes with your employee, we can point you in the direction of this ACAS guidance which covers the possibility of serving notice to terminate the existing contract and offering to re-engage the employee on new terms.
What if I need to lay people off?
Sometimes, when circumstances change, you may no longer need an employee. As an employer, you can force an employee to take unpaid leave if there’s not enough work available for them—commonly known as laying an employee off – this must be pre-established with a contractual provision in place. You can find out more about lay-offs on GOV.UK.
If your needs have changed significantly because of the coronavirus, and your employee's job simply no longer exists, there may be a redundancy situation.
If you believe you need to make some staff redundant you should seek advice from an expert – we tell you how to do this below.
Employees with two years' or more continuous service are entitled to statutory redundancy pay.
Statutory redundancy pay is not taxable/NICable and should not be included on a worker’s P45. As such, if your payroll software cannot deal with it, you can pay it outside of your normal payroll processes, although you should give the worker a cover letter explaining what it is, in case they need a record of the income for other reasons – e.g. for benefits purposes. Keep a copy of the letter for your own records.
Of course, you can pay more than the statutory minimum redundancy pay, if you wish.
For guidance on how to deal with other elements that you may pay when an employee is made redundant (e.g. pay in lieu of notice or accrued holiday pay), see CWG2 – Further Guide to PAYE and NICs.
Where can I get further help and advice with employment law?
We are not employment law experts but to be helpful we have given you some basic information here, about matters that we think employers may have urgent questions about.
It is important to understand that employment law is a complicated area. If you are unsure at all about your obligations, you should ensure you take proper advice based on your circumstances rather than acting or refraining to act based on any of the content here. This may be from ACAS or from a local lawyer.
As an employer you are likely to need employer's insurance. Some insurance companies offer access to employment law specialists as part of their employer policies.
You should also be aware that the coronavirus situation is constantly changing, and it is important as an employer to keep up to date. The best way to do this is to keep checking back to the coronavirus pages of GOV.UK.
The Department for Business, Energy and Industrial Strategy (BEIS) has issued a bulletin addressing the issue of coronavirus in relation to the National Minimum Wage (NMW) and the National Living Wage (NLW).
The bulletin confirms that, despite current circumstances, employers still have a responsibility to pay at least the minimum wage to workers, and that workers cannot forfeit their entitlement to the minimum wage.
The bulletin sets out that the government has received questions relating to situations where workers are temporarily not working or having to work reduced hours, but where the employer wishes to continue paying them. The advice is that, if this is related to coronavirus, businesses should investigate whether the Coronavirus Job Retention Scheme is applicable.
We are checking with BEIS as to whether there are any intentions to delay the forthcoming minimum wage increases.
Loans/advances to employees
Guidance is also provided in the BEIS minimum wage guide (see above) to employers who are considering pay advances or employer loans for their workers.
For payroll purposes, if an employer and employee make an agreement under which the employer lends the employee money and the employee agrees to repay it at a future date or dates, then the amount is not reportable on the Real Time Information (RTI) submission. (You may however be providing the benefit in kind of an interest-free or cheap loan.)
Where there is a payment on account of earnings, when the employer agrees to pay the employee money the employee has earned but which is not yet due for payment, this is strictly reportable at the time the payment is made, although there is an easement for 'ad hoc' payments outside the normal payroll run, which may apply.
Further HMRC guidance on this issue can be found here.
What if I'm late sending my RTI submission/paying my PAYE bill because I'm ill or can't get to my computer?
Under RTI most employers must submit information electronically to HMRC each time they make a payment to an employee.
If you do not send in your payroll information on time (or at all) the position regarding penalties is as follows:
Penalties potentially apply to all employers for late filing of PAYE submissions. HMRC will usually informally allow a three-day grace period meaning that HMRC may not charge a late filing penalty for delays of up to three days after the statutory filing date.
In all cases, the first late submission of the tax year is ignored. However second and subsequent failures may attract a penalty – the details of how the penalty will be calculated are on GOV.UK, but broadly the penalty will be determined by the number of employees. The minimum penalty is £100 (applied per month, but charged quarterly). An additional tax-geared penalty may be applied if a return is outstanding for three months or more.
Brand new employers can send their first submission within 30 days of first paying an employee without incurring any penalties. This late filing is also ignored for the purposes of determining the first tax month in which a return is filed late.
Please note that where one of the concessions does not apply, late filing penalties will still not be charged if the taxpayer has a reasonable excuse.
A reasonable excuse is normally something unexpected or outside your control that stopped you meeting a tax obligation. We think that being ill with the coronavirus or having to self isolate away from your office or other place where you keep your computer/payroll software, should be considered a reasonable excuse.
HMRC have suggested that they will accept reasonable excuses from late filing or late paying taxpayers who are generally compliant without further investigation.
You are usually able to tell HMRC you have a reasonable excuse, using your payroll software. Here is the screen shot for HMRC’s Basic PAYE Tools payroll program:
You are not usually required to give details of what the reasonable excuse is at this stage but you should keep a note of your situation, how you have been affetced by the coronvirus and how this has in turn affected your ability to deal with your payroll on time, in case you are asked for more information at a later date.
If you forget to claim reasonable excuse at the time you make the RTI submission, or for whatever reason HMRC still send you a penalty even though you have selected ‘reasonable excuse’, then you are able to appeal online against a filing or payment penalty, using HMRC’s Online Service. Once you have logged in, select ‘Appeal a penalty’.
You can also send a late filing appeal in writing to:
National Insurance Contributions and Employers Office
HM Revenue and Customs
You should note that HMRC have a different penalty regime for late payment of PAYE tax and NIC, however the reasonable excuse safeguard still applies.
What if I can't afford to pay my PAYE bill at all?
If you pay your PAYE bill monthly, then the amount for the period 6 February to 5 March, was due on 19/22 March (depending on your payment method).
If you pay your PAYE quarterly, then the amount for the period 6 January to 5 April will be due on 19/22 April (depending on your payment method).
You may be having cash flow difficulties at this time and have missed a payment already or know that you will not be able to pay what you owe HMRC on time or at all.
In light of the situation, HMRC have set up a dedicated coronavirus helpline (0800 024 1222), and are urging anyone worried about payments to call them to discuss the options available, which will include considering a bespoke Time to Pay arrangement so that amounts can be paid off over a period of time, and possible suspension of any ongoing debt recovery action.
HMRC intend to make up to 2,000 experienced call handlers available on this line, however due to their own measures that have been put in place to stop the spread of the coronavirus they have not yet been able to scale up to this level. The line is currently staffed between 8am and 4pm Monday-Friday, although the intention is for the line to be open 8am-8pm Monday-Friday and 8am-4pm on Saturday as soon as possible. We understand that the line is very busy and so there can be a significant waiting time before calls are answered. HMRC are suggesting that if you are calling them about a future tax bill you call back nearer the time or check GOV.UK for guidance at this stage.
If you reach an agreement with HMRC to pay your PAYE bill over a period of time then you should not be charged any late filing penalties once the agreement is in place, however you will still be charged interest.