Can you place employees who TUPE transfer to you on Flexible Furlough?
A new employer may claim under the scheme in respect of the employees of a previous business transferred after 10 June 2020 as long as:
- the TUPE or PAYE business succession rules apply to the change in ownership
- the employees being claimed have previously had a claim submitted for them by their prior employer in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June
In these circumstances, the maximum number of employees that the new employer can claim for will be the total of both:
- the maximum number of employees the new employer claimed for in any one claim ending on or before 30 June
- the number of employees that are being transferred to the new employer which have had a claim submitted for them in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June. This is subject the maximum cap the previous employer was subject to.
A new employer is also eligible to claim under scheme in respect of the employees associated with a transfer of a business after 10 June 2020 from the liquidator of a company in compulsory liquidation where:
- TUPE would have applied were it not for the company being in compulsory liquidation
- the employees being claimed for have been furloughed and a had a claim submitted for them by their prior employer in relation to a period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June
In these circumstances, the maximum number of employees that the new employer can claim for will be the total of both:
- the maximum number of employees the new employer claimed for in any one claim ending on or before 30 June and
- the number of employees that are being transferred to the new employer which have had a claim submitted for them by their prior employer in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June. This is subject to the maximum cap the previous employer was subject to.
Related FAQs
Many policies will only provide business interruption cover if it arises from property damage. The FCA has acknowledged that insurers are entitled to reject claims in relation to such policies, notwithstanding the success of the FCA’s test case in the Supreme Court, and which was generally favourable to policyholders [Insert a link here to our update on the test case]. In other cases the policy wording will be less clear and businesses may legitimately feel that their insurer is wrongly withholding payment.
One route of challenge to an insurer’s decision is via one of the well-publicised class actions. Another route of challenge is by a complaint to the Financial Ombudsman Service (FOS). This service is open to consumers and small and medium-sized businesses, ‘micro-enterprises’, charities and trusts. The service will be an attractive option for many businesses, as it is free and relatively quick (although it remains to be seen how the service keeps up with an increase in demand as a result of the pandemic). You will need to have complained to your insurer before bringing a complaint with the FOS.
Further details can be found here.
An obvious cost cutting measure is to reduce salaries, either temporarily or permanently. If you are to seek a reduction in salaries, this should be done fairly – either across the board or by selecting teams/individuals based on objective business reasons.
Note that this cannot be imposed without significant risk. Without agreement, this would need fair selection and consultation.
Every company has to file accounts at Companies House every year. If they are filed late, a fine is automatically levied. If there is a long delay in filing them, the directors are at risk of prosecution and the Registrar of Companies might start a process which could ultimately lead to the company being struck from the register.
However, Companies House has recognised that businesses might currently face exceptional problems in preparing and filing their accounts on time and so have posted a notice on their website which says that if immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to coronavirus, you can make an application to extend the period allowed for filing.
Most rent suspension clauses in commercial property leases are unlikely to come to the assistance of the tenant. These clauses normally apply only where the premises has suffered substantial physical damage and are, as a consequence, incapable of being occupied, used or accessed. The coronavirus pandemic does not involve any physical damage to a property, loss from the crisis will be purely financial. Such losses then will not be covered by the landlord’s buildings insurance policy in a way that will allow a tenant to claim rent suspension.
On 4 May 2020, the Government launched the Bounce Back Loan Scheme (BBLS), which is intended to cut red tape to enable smaller businesses to access finance quickly during the coronavirus outbreak.
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there are no any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
The length of the loan is 6 years, but it can be repaid early without penalty. No repayments will be due during the first 12 months.
Under the scheme, lenders are not permitted to take any form of personal guarantee or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
Businesses can apply for a BBLS loan if it:
- is based in the UK
- was established before 1 March 2020, and
- has been adversely impacted by the coronavirus.
Any business regarded as being a business in difficulty on 31 December 2019 will need to confirm that it is complying with additional state aid restrictions.
Businesses from any sector can apply, except the following:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies, and
- state-funded primary and secondary schools.
Businesses already claiming under the following schemes cannot apply although it is possible to convert an existing loan under such schemes into BBLS:
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- COVID-19 Corporate Financing Facility.
There are 11 lenders participating in the scheme including many of the main retail banks, which are listed on the British Business Bank’s website (www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/). Applicants are directed to approach a suitable lender via the lender’s website. If an applicant is declined by a lender, they can apply to other lenders in the scheme.
The lender will ask applicants to fill in a short online application form and self-declare that they are eligible. All lending decisions remain fully delegated to the accredited lenders.