What is the Bounce Back Loan Scheme (BBLS)?

In the event that the worst happens and contractor insolvency occurs, there are a number of steps which the employer should take immediately:

• Confirm that insolvency has actually occurred and the type of insolvency (for example liquidation or adjudication) – actions taken based on rumours can have adverse consequences
• Secure the site and carry out an audit of the plant, equipment and materials present – this may extend to changing the locks on site in order to prevent overzealous contractors and sub-contractors seeking to return and take what they see as their possessions. The building contract may contain a provision that these are the employer’s property, but they can be difficult to recover if they are not within the employer’s possession – possession is 9/10ths of the law!
• Ensure that there are adequate insurance and health and safety arrangements in place for the site – these would usually be dealt with by the contractor and therefore may no longer be in place, so alternative arrangements may be required
• Ensure that any further payments to the contractor are stopped pending a more detailed review
• Consider whether any off-site materials have already been paid for and can be secured. This can however be difficult in practice where the materials are not physically within the employer’s possession

In addition, there are also a number of further actions which the employer should consider in the slightly longer term:

• Investigate the options available and ascertain the cost of completing the works to assist in deciding how best to proceed
• Consider whether termination of the contractor’s employment under the building contract is required, and if so take the necessary steps in accordance with the building contract
• Consider whether there are any bonds or guarantees in place upon which the employer can rely, and if so assess their terms as to whether and how to make a claim
• Make arrangements to complete the works – as a general rule of thumb the cost of completing the works may increase by around 30% if it is necessary to get a replacement contractor
• Consider whether direct payment to subcontractors is possible or desirable
• Although we would say this(!) we would strongly recommend taking legal advice, as insolvency and its implications are complex and it is easy to inadvertently fall foul of the various different requirements

The formal Government position relating to construction sites is that construction work should continue on site if it can be conducted safely, and the Business Secretary, Alok Sharma, has written an open letter to the UK Construction Industry thanking it for all its help in the current crisis. The letter also confirms the Government’s current official policy of keeping construction sites open. The full text of the letter can be downloaded.

This also remains the formal position of the Construction Leadership Council (CLC) with the qualification that sites should operate in accordance with Public Health England instructions; without compromising health and safety; and in accordance with the Site Operating Procedures issued last week by the CLC.

In practice, many construction sites have been closed by national developers and house builders due to difficulties with staffing and supply chain, and practical issues with compliance with the social distancing and site operating procedures.

The Scottish Government has recently issued guidance that all non-essential construction sites, which includes housing, office, leisure, schools and retail sites, must close to reduce the risk of the spread of Covid-19.

Lay off is a temporary measure where an employee is required not to do any work by their employer in any given week and does not receive any salary for that period. This is sometimes used interchangeably to refer to redundancies; however, this is not correct and lay-off is different to redundancy.

Lay-off may be very useful to achieve short or medium-term cost savings in response to a temporary reduction in demand for products or services. Whether the employer has the right to implement lay-offs and how swiftly they can expect to be able to do so will depend on whether the relevant contracts of employment have specific provisions which deal with lay-off.

Short time working is where an employer temporarily reduces an employee’s working hours, with a corresponding reduction in their pay to less than 50% of their usual salary. This could be through reducing the number of working days, reducing the length of working days or a combination of both.

Short time working provides the employer with the ability to reduce staffing costs whilst providing flexibility in deciding the form of working pattern. As with lay-off, whether the employer has the right to unilaterally impose short-time working and how swiftly they can expect to practically implement this will depend on whether the relevant contracts of employment contain a short time working clause.

Where there is a contractual right to lay off or impose short time working: There is no strict process which has to be followed. We would advise transparent communication and confirmation in writing.

Where there is no contractual right: Imposing these options without a contractual right to do so will be a fundamental breach of the employee’s contract of employment. In these circumstances the employee’s options are: accept the situation and keep working; claim for lost pay; resign and claim constructive dismissal. The best approach for employers in these circumstances is to instead seek to agree lay-off or short-time working arrangements with employees.

Selecting employees for lay-off or short time working: There is no prescribed method for selecting which employees are to be laid-off or placed on short-time working, provided that the employee cannot argue that the method of selection is discriminatory in some way. We would advise selection based on objective business reasons.

Entitlement to pay during lay-off or short time working: Employees must be paid for the time they work. Additionally, while on lay off or short time working, an employee is entitled to receive statutory guarantee pay for the first 5 workless days in any 3-month period. The maximum statutory guarantee pay in any 3-month period is £150 (i.e. £30 for each workless day up to a maximum of 5).

Entitlement to statutory redundancy pay: Once employees have been on lay-off or on short-time working for 4 consecutive weeks or for a combined total of 6 weeks during any 13-week period, they may seek to claim a statutory redundancy payment (provided that they have two years’ service). There is a prescriptive process for this – please seek advice.

Schools should be considering both Youth MHFA training and Adults MHFA training so that there are people within every school who have the skills and knowledge to support the mental health needs of students and teaching staff.

The scheme is being administered by HMRC under a new online portal that has been set up. It applies to businesses, charities, recruitment agencies, individuals who employ a nanny, administrators (where there is a reasonable likelihood of re-hiring the workers) and public authorities.

All employers with a UK payroll can apply as long as you have:

• Created and started a PAYE payroll scheme on or before 28 February 2020
• Enrolled for PAYE online (which can take up to 10 days)
• A UK bank account.

To make a claim you will need:

• The number of employees being furloughed
• The start and end date of the claim
• The name and National Insurance Numbers for each furloughed employee
• Your employer PAYE reference number
• To be registered for PAYE online
• The Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference or Company Registration Number as appropriate for your entity
• Your UK bank account details and sort code
• Your name and contact number
• Your organisation’s registered name
• Your organisation’s billing address
• The full amounts you are claiming for including:
  • Employee wages
  • Employer national insurance contributions
  • Employer minimum pension contributions

For claims for those who are flexibly furloughed you will also need:

• the number of usual hours the employee would work during the claim period
• the hours the employee has worked or will work during this period
• you will also need to keep a record of the number of furloughed hours that the employee has or will be furloughed for.

You will need the above information ready before you access the system to make a claim. You will also need to have calculated the amounts claimed in advance as the application needs to be completed in one session. You can currently save one draft of the application and it must be completed within 7 days of starting it.

The Government has issued a step-by-step guide for employers who wish to make a claim under the scheme which can be found using the link below. It contains useful information about calculating the payments claimed. You will need to register for a Government Gateway ID and password if you do not yet have one in order to access the portal.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/880099/Coronavirus_Job_Retention_Scheme_step_by_step_guide_for_employers.pdf

If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. A file only agent can assist you in obtaining the information required to make a claim (listed above). If an agent makes a claim on your behalf you will need to tell them which bank account you would like the grant to be paid into.

For claims for fewer than 100 employees you will need to input the details separately for each employee. If claiming for more than 100 employees you can upload a file with the information instead. The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional). You will also need to include details of hours normally worked, actual hours worked and hours furloughed for those who are flexibly furloughed.

The need to demonstrate the impact of coronavirus on your business is not one of the criteria listed above about who can make a claim, so the government does not appear to intend to set a specific test to determine if a business is “severely impacted by coronavirus”. You are not required to explain the impact of Coronavirus on your business when submitting your claim.

HMRC will retain the right to audit any claim retrospectively. You must keep records for 6 years including:

• the amount claimed and claim period for each employee
• the claim reference number
• you calculations for each claim
• details of hours usually worked and hours actually worked for flexibly furloughed employees.

You must tell your employees that you have made a claim under the scheme, and you must continue to pay their wages during this time.