Coronavirus: Information for employers

Updated on 7 April 2022

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. If you are a small business, there is other guidance available if you have any questions regarding wider COVID-19 related issues. For information on the Job Retention Scheme, see our dedicated page.

Although the Job Retention Scheme closed on 30 September 2021, we have retained some information about the Scheme on this page as we recognise it could useful to people who may be checking claims they have previously made. For important information on what comes next for employers now that the Job Retention Scheme has ended, please see our news article.

Illustration of employees in an office

Paying Statutory Sick Pay (SSP)

If you have any staff who you pay under the PAYE system, who earn at or more than a certain amount (£120 a week from 2021/22 or £123 for 2022/23), who cannot work for the following reasons (provided they are off for at least 4 days in a row), then you may have to pay them SSP:

  • If they are ill with the coronavirus or have tested positive and are self-isolating in line with official guidance (even if not actually ill)
  • They are self-isolating in accordance with government guidance because someone they live with has coronavirus.
  • If they started self-isolating because they were notified by the NHS or public health authorities including the ‘test and trace system’ that they’ve come into contact with someone with coronavirus and they are required to self-isolate
  • If your employee has been notified by the NHS to self-isolate before surgery.

Under emergency legislation, the groups of employees listed above, are able to get SSP from the first day they are off work, rather than the fourth. However, from 24 March 2022, the normal Statutory Sick Pay (SSP) rules return, meaning employers will start paying SSP from the fourth qualifying day their employee is off work, regardless of the reason for their sickness absence

⚠️The NHS Test and Trace system in England ended on 24 February 2022. The rules across different parts of the UK may differ.

Test and Protect, Scotland

Test, Trace Protect, Wales

Contact tracing, NI

Your employee therefore can no longer get SSP for being contacted by Test and Trace in England because Test and Trace no longer exists – even though it is still alluded to on GOV.UK.

From 24 February 2022, in England, there is no longer a legal obligation to self-isolate. However if your employee has any of the main symptoms of COVID-19 or a positive test result, the public health advice is to stay at home and avoid contact with other people. So, those who decide to self-isolate in line with this guidance (even if they don’t have a legal obligation anymore to do it), can still get SSP (even if not actually ill). This will also come to an end on 24 March 2022, and then those in England will only be able to get SSP if they are actually ill with COVID-19.

The guidance on self-isolation may be different for those in Wales, Scotland and Northern Ireland.

People that were shielding are no longer eligible for either SSP or Employment and Support Allowance (ESA) solely on the basis of being instructed to shield (although they could potentially have been furloughed). Individuals may, however, be eligible for SSP or ESA if they are sick or unable to work, either due to coronavirus or wider health reasons, provided they meet the other eligibility criteria.

Note that people who have to quarantine upon entering or returning to the UK will not qualify for SSP unless they also meet one of the above criteria.

Detailed guidance has been published on GOV.UK to help employers work out an employee’s SSP.

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.

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 SSP during the coronavirus and links to technical guidance to help you understand the rules in complex or unusual situations, see our dedicated page on SSP for employees.

In Wales, additional funding allows employers to pay eligible workers at full pay if they cannot work due to COVID-19.

How did SSP and furlough interact?

The furlough scheme was not intended for short-term sickness absences. If, however, employers wanted to furlough employees for business reasons and they were already off sick, they were eligible to do so, as with other employees.

Furloughed employees who become ill, due to coronavirus or any other cause, must have been paid at least SSP. It was up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.

⚠️ The Job Retention Scheme closed on 30 September 2021.

Can I claim any reimbursement of SSP I pay out?

The burden of SSP generally falls on employers. Under the original Statutory Sick Pay Rebate Scheme, the government supported small and medium-sized businesses and employers to cope with the extra costs of paying coronavirus related SSP. In particular, eligible businesses were able to obtain a refund of up to two weeks’ of eligible SSP costs.

The original SSP Rebate Scheme closed on 30 September 2021 and employers had until 31 December 2021 to submit any final claims, or to amend claims they have already submitted.

In response to the latest coronavirus variant, the SSP Rebate Scheme restarted from 21 December 2021 to 17 March 2022. The Scheme is open to UK based employers with a PAYE payroll and less than 250 employees as of 30 November 2021. To claim the employee must have already been paid the coronavirus related SSP. Employers have until 24 March 2022 to submit any final claims or to amend claims already submitted. Claims can cover reimbursement of up to two weeks of SSP per employee.

(This two week limit has been reset, so an employer will be able to claim up to two weeks per employee regardless of whether they have claimed for them previously.)

For general information on the SSP Rebate Scheme see GOV.UK.

For more information on eligibility and how to make a final claim, go to GOV.UK

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 they 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 such costs to the weekly limit (in 2021/22 and 2022/23 this is £6 or £26 a month for employees paid monthly) then you do not need to ask for evidence or report or pay anything to HMRC.

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 and in this useful summary produced by our colleagues in the ATT.

If your employee has had to purchase office equipment, such as a desk and chair, then under relaxed rules, you can reimburse these on a tax and NIC free basis.

The announcement of the relaxation can be found here. On 3 March 2021, the Government confirmed that this temporary measure would be extended to 5 April 2022 as the outbreak was still ongoing.

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 also applies if you are making an employee redundant and want them to take leave during their notice period. Any excess holiday entitlement outstanding at the point of their departure, must be paid out to them.

See GOV.UK for more information on holiday pay. For information on whether you could claim a Job Retention Scheme grant to cover holiday pay, see the guidance on GOV.UK.

⚠️ The Job Retention Scheme closed on 30 September 2021.

Can I change my employee’s hours or pay?

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.

Do I have to give my employee time off?

Your employee may need to take time off unexpectedly to deal with something connected to the coronavirus situation. For example, they may have a child at school who needs to self-isolate and cannot attend school for some time.

You can find guidance on what your employee’s rights and protections are in these circumstances on the ACAS website. (Note that if the child went on to develop symptoms or test positive for coronavirus, your employee may be able to get SSP if they then needed to self-isolate as well.)

Such time off is typically unpaid, unless pay is provided for in their contract or other policies.

You may, of course, be able to find a way that your employee can keep working flexibly or agree for them to take some annual leave which means that they do not need to take time off in this way.

It was also possible to ‘furlough’ workers who had caring responsibilities resulting from the coronavirus, including employees that needed to look after children, for the purposes of claiming a Job Retention Scheme grant to help pay them.

⚠️ The Job Retention Scheme closed on 30 September 2021.

If your employee is simply worried about working (and isn’t ill or otherwise covered by the self-isolation provisions etc.), then the situation is different. You can find some guidance on what the considerations are on the ACAS website.

Redundancy pay

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.

If you are making an employee that you have furloughed, redundant, you may find this news article useful, as it looks at what the situation is with their notice pay and redundancy pay (in terms of how much they are entitled to).

It was initially the case that employers could claim for employees under the scheme while they were serving a notice period (although not redundancy payments). From 1 December 2020, this was stopped - you could not claim payments from the Job Retention Scheme during the notice period.

⚠️ The Job Retention Scheme closed on 30 September 2021.

There are some useful examples of how redundancy pay should be calculated for employees that have been on furlough on the ACAS website.

Coronavirus and minimum wage interactions

If you have furloughed workers that were on the minimum wage and have accessed a grant under the Job Retention Scheme, then you can find some information on how you should have calculated their furlough pay and grant amount here.

Due to the ‘look back’ period, it was possible that your employees’ furlough pay could have been based on two-year-old pay data and did not take into account either the April 2020 or April 2021 minimum wage rate rises.

⚠️ The Job Retention Scheme closed on 30 September 2021.

Help! I’ve missed an auto-enrolment deadline due to COVID-19 and now have a penalty

There are certain legal duties that employers must meet for auto enrolment purposes, which employers are usually advised on/reminded about, by letter. The COVID-19 situation has caused disruption to businesses and may have prevented people from meeting their obligations/accessing post from The Pensions Regulator etc.

The Pensions Regulator (TPR) can send a range of penalties to employers for failing to comply with obligations under auto enrolment, such as failing to put someone in a scheme and re-enrolment.

You can, however, appeal such penalties, as set out in their guidance.

As you will see, there is a penalty defence of ‘reasonable excuse’ in auto-enrolment, meaning that something unexpected has occurred outside your control that has stopped you meeting your duties. Some examples of what might be accepted as a reasonable excuse are set out on this page of TPR guidance. It is not an exhaustive list and you should not be put off if the circumstances do not fit neatly into one of these categories. In particular, it does not mention the COVID-19 situation, however, we would very much hope that the TPR would be try and be flexible in interpreting reasonable excuse so they can treat people fairly.

As stated above, HMRC have confirmed the impact of the COVID situation will be taken into account when considering if someone has a reasonable excuse. Although reasonable excuse for tax and auto-enrolment duties are separate and where a reasonable excuse might be accepted for tax purposes, it does not mean that it will be accepted for auto-enrolment purposes, it perhaps would be worth highlighting this in any appeal to show that other areas of government recognised the impact of COVID-19.

What expenses and benefits can I give to my employees on a tax and NIC free basis?

HMRC has published specific guidance on how to treat certain expenses and benefits provided to employees during coronavirus (COVID-19).

Tax guides

Share this page