The hospitality industry has taken one of the hardest hits from the coronavirus outbreak and for a sector that was already dealing with the effects of Brexit, the pandemic has been a seismic blow.
Despite this, the country has seen some moments of magic from hospitality businesses over recent months. They’ve demonstrated true agility, camaraderie and many continue to fight with tenacity. Numerous restaurants, bars and suppliers have diversified their service to continue servicing customers and keep employees in work by offering home deliveries or gift vouchers in an effort to safeguard their organisations. Some hotels have thrown open their doors to front line staff in an act of generosity that has touched the hearts of the nation.
As well as developing a business continuity strategy, company owners are faced with the added responsibility of determining the most appropriate approach to employment during this time. Here are the key considerations –
Coronavirus Job Retention Scheme
This scheme is designed to help employers that can’t maintain their current workforce because operations have been severely affected by coronavirus. It allows companies to retain their current staff – and re-recruit staff whom they had previously laid off or made redundant or who have recently left the company – by enabling employers to put an employee on furlough and claim for 80% of their wages (subject to a cap of £2,500 per month) plus any employer National Insurance and pension contributions on that subsidised wage.
The scheme will initially run for four months from 1 March-30 June but may be extended. It can be used at any point during this period – provided the employee was employed (and on an RTI submission) by the company on or before 19 March – and the minimum furlough period is three consecutive weeks.
PAYE will continue to be recorded and paid through furlough but employers may request a deferment of tax payments due to COVID19. Many employers are ‘topping up’ the furlough payment by 20% to ensure employees continue to receive full pay, although this isn’t obligatory.
Employers cannot expect furloughed employees to undertake any work and there will be criminal sanctions for those that do, as well as an employee hotline to report employers breaching the rules of the scheme.
Sickness and Leave
Annual leave can be taken whilst on furlough and Working Time Regulations (WTR) require holiday pay to be paid at the normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay an employee received in the previous 52 working weeks. Government guidance also states that whilst furloughed, employees will continue to accrue leave as per their employment contract.
If someone usually works bank holidays, as is common within hospitality, then their employer can agree that this is included in the grant payment. The policy on holiday pay remains under review and it’s also important to remember that this is government guidance as opposed to a Court decision interpreting the Working Time Regulations. Moreover, the question of whether an employer can require an employee to use holiday still remains.
With regards to sickness, if an employee is on sick leave, self-isolating or shielding due to coronavirus, they’ll be able to get Statutory Sick Pay. Employers are eligible to furlough employees that are currently off sick and in these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee. They can claim back from both the CJRS and the SSP rebate scheme for the same employee but not for the same period of time.
Employers are also entitled to furlough employees who are being shielded or are off on long-term sick leave.
Furloughed employees who become ill must be paid at least SSP but it’s an employer’s discretion as to whether they move these employees onto SSP or keep them on furlough, at their furloughed rate. It hasn’t been confirmed whether a period of sickness would break the minimum period of furlough but by analogy with holiday pay, presumably not.
The reality is that we’re going to be living with the effect of Coronavirus for the next year – possibly beyond. Those at the helm of hospitality organisations are faced with what are likely – and hopefully – the biggest decisions of their professional lives. It’s an extremely stressful time and one that shouldn’t be navigated alone.
There is a wealth of free, accessible advice from professional bodies such as ACAS and experts in the legal and financial industries are poised and ready to offer valuable advice – now’s the time to take it.