Unprecedented Times – You and Your Staff

The Covid-19 pandemic is a situation that none of us are likely to have ever faced before in business and whilst we now know how robust our business continuity plans (BCPs) are, how much have you started to think about the months and years ahead, as things develop?

I don’t believe for one second that firms will ‘get back to normal’ as the world has now changed forever and it’s important for us to recognise this and decide if we are going to use this situation to evolve our business models, or die wondering ‘what if’?

Successful, sustainable and flexible businesses are the backbone of our economy and specifically, our industry in:

  • Providing Financial Services to clients,
  • Employment and prosperity to their staff and owners and
  • Taxation to our government and as such there are various Government Schemes in place to assist us all.

Working from home

By now, I would think that we have all begun to adapt to the challenges that come with working from home and communicating electronically/via video calling. Therefore, I won’t go into how we have come to deal with this in too much detail other than to suggest that if you’re looking for any help or suggestions on how to manage your days, keep your team motivated and enthused and how to look after your teams, please take a look at The Verve Group (@groupverve) Twitter account for some handy tips.

In view of the current situation, the FCA has clarified that it expects firms to implement staff working from home wherever possible. This applies to all FCA-regulated firms across the UK.

Each firm’s designated Senior Manager or equivalent should identify which of their employees are unable to perform their jobs from home. It is expected that the number of roles requiring attending the usual business premises will be far smaller than the number of attendees normally working from business premises.

Where possible, firms should facilitate employees working from home, including providing suitable IT and equipment to enable remote working. The FCA expects that the following staff should be able to work from home, with very few exceptions:

  • Financial advisers and their support staff, as they can offer their services online or by phone.
  • Staff who can safely and securely trade shares and financial instruments from home.
  • Business support staff – such as those in IT where they can triage issues from home, unless they are looking after specific equipment or technology.
  • Claims management companies and those selling non-essential goods and credit.

There are obviously other issues and risks associated with having to adapt your existing business practices. Things like obtaining AML documentation or verification, clients signing documents, the security risks associated with your firm’s IT equipment being in people’s homes, data security, email encryption, webinar/video calling.

What had you already done as part of writing your business continuity plans to allow for these issues or what have you done since?

The can of worms that is furlough

You will have no doubt heard by now that the Government promised to support businesses by paying 80% of employees’ salaries up to £2,500 per month. This wasn’t clearly explained at the time but further details are becoming available.

Details on this scheme feel quite scarce so I will summarise everything that we know so far…

This only applies where businesses are applying “Furlough” to their employees. This means that under normal circumstances, the employee in question’s role has become temporarily redundant but in these desperate times they remain in employment funded by the Government.

Our initial understanding is that employees take a 20% pay cut (subject to the £2,500 max which may mean higher cuts) then the 80% of their salary is fully paid by HMRC. We understand that employers could make a voluntary top-up (i.e. pay the 20%) but this is highly unlikely given the other Government measures such as 3-month mortgage holidays that would mean that employees with mortgages have reduced outgoings which preserves monthly disposable income. There is also now support for your employees in rented accommodation, click here to find out more.

  • E.g. if someone is on £30,000 pa salary then their salary is £2,500pm.
  • The employee is sent home and told they have no work for a minimum of 3 weeks at a time.
  • The employer must write to the employee explaining that they have been furloughed and get their agreement to this.
  • The employee then goes onto a temporary salary of £2,000 pm (£2500-20%).
  • The Employer pays the £2,000pm reduced salary.
  • HMRC reimburses the £2,000pm.

Please note, any employee on more than £37,500 (£3,125 pm) will only receive £2,500 max salary support from the Government.

  • This will be administered through an HMRC portal which has NOT BEEN CREATED YET.
  • This portal will be in the form of an online application process so it does not appear that it will be automatic.
  • HMRC does not currently have the payment processing facilities to manage these refunds.

This means that:

  • They are still employed with employment rights and all contractual benefits.
  • They do not have any work to do as their role has temporarily ceased.
  • The employer has classed them as “furloughed workers” and have discussed with and notified the employees of this stance.
  • The scheme can be backdated to 1st March 2020 for any employees you have already made redundant to keep them employed.
  • Anyone who has carried out their role since 1 March 2020 cannot be furloughed during that time as they have been working for you and will need to be paid by you for this work.
  • This will apply to all employees on 28th Feb 2020 and NOT new employees since that date to avoid fraud. Any new employees since this date (that you wish to furlough) should be encouraged to approach their previous employers to ask if they can and will furlough them.

Important steps to take now

  • For those employees affected by this, we would suggest you engage with those employees about your plans to furlough them.
  • Encourage those employees to contact their mortgage provider to request a 3-month mortgage holiday – this should be an online scheme in most cases.
  • This will allow the employees to preserve their disposable income in the event of being furloughed on a reduced salary.

Get HR advice on the following (Apricity do not provide this advice)

  • Understand your employment contracts and make changes (if required) to allow the furloughing of employees – you do not want to get this wrong and put your business at risk of an employment tribunal (even if it is in the Autumn/ Winter).
  • Get employees’ acceptances of the changes in terms in light of the Government support.
  • Communicate your overall strategy with employees – will you top up the 20%? (highly unlikely).
  • Get your standard documentation together and get it approved – your letter to your employees will need to be accepted by HMRC so you need to get it right.
Christian Markwick – Compliance Consultant