What type of agreements are we talking about?
To respond to the crisis businesses might need to exchange information to a greater extent than they would usually. They might need to discuss capacity and to coordinate supply chains (both upstream and downstream). They might need to purchase or sell jointly to ensure vital supplies are maintained. In general agreements or collaboration which:
- Avoid a shortage, or ensure security, of supply
- Ensure a fair distribution of scarce products
- Continue essential services
- Provide new services such as food delivery to vulnerable consumers
Related FAQs
The guidance from the Government concerning private sector organisations is very different from the guidance for public sector and organisations that receive public funding. The guidance states:
“The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs. Organisations who are receiving public funding specifically to provide services necessary to respond to Covid-19 are not expected to furlough staff.”
This guidance isn’t particularly clear but it appears that there is a recognition that there are different types of organisations which could be caught by this:
- Organisations who will be required to provide frontline services during the Covid-19 response. It is interpreted that NHS organisations such as NHS Trusts will fall firmly into this category. Employees of such organisations are expected not to be furloughed and to continue to work and be paid their normal salary in the usual way.
- Organisations who receive public funding to provide services to respond to the Covid-19 crisis. These organisations are not expected to furlough their staff. The type of organisation that would fit into this category are those that have been commissioned to developing breathing apparatus or testing kits to meet the needs of the healthcare sector during the peak of the pandemic.
- Organisations who receive public funds for staff costs to operate services. Employers are expected to continue to pay staff if the money to pay them is publicly funded. It is strongly inferred that this is irrespective of whether such staff have any work to perform. The type of organisation that is likely to fall into this category are GP practices, charities and private sector companies that have won contracts with the public sector.
To facilitate social distancing the Home Office has stated that as of 30 March 2020, the following are permitted:
- The RTW check can now take place over video call.
- Job applicants no longer have to send original documents but can send scanned copies or photos to the employer.
- Where the job applicant cannot provide these documents, employers can use the Employer Checking Service and if they have the right to work, then the employer will receive a Positive Verification Notice which will provide the employer with a statutory excuse for 6 months.
These adjustments remain in place until the Home Office confirms otherwise.
If changed circumstances mean that a business wants to exit from a contractual arrangement, then before trying to terminate it, a careful review should be carried out to see whether a right to terminate actually exists. For example:
- Not every contract for the sale of goods contains the right for the buyer to terminate in circumstances where the supplier hasn’t done anything wrong. If a business has entered into a contract on the supplier’s standard terms, it is unlikely to contain any such provision
- A contract for the provision of services is unlikely, if drafted by the customer, to contain a provision that allows the supplier to walk away from the arrangement at short notice, or perhaps at all
If a party tries to terminate a contract when it doesn’t have the right to do so, the other party will likely claim breach of contract and could sue for damages. In the case of a long term or high-value contract, this could amount to a very significant liability.
Even if the right to terminate the contract does exist, there might be particular rules about the following:
- How much notice has to be given
- How such notice has to be served (for example, it might have to be in writing to a particular address)
- When the notice can be served (perhaps on an anniversary of the start of the contract)
- How much a party has to pay if it cancels (for example, for raw materials, for work done to date, or even the whole contract price)
All of these factors must be taken into account, and any contractual processes for termination are followed.
Yes. The updated government guidance has confirmed that office holders (including company directors), salaried members of Limited Liability Partnerships (LLPs) individuals working under umbrella companies (including agency workers) and individuals who are classified as ‘workers’ rather than employees can be furloughed but only to the extent that they are paid via PAYE. Therefore director’s fees can be claimed (subject to the cap) but dividends are excluded, as are bonuses and commission payments.
Those who are paid annual are now eligible to make a claim, subject to meeting the remaining requirements. This includes being notified to HMRC on an RTI submission on or before 19 March 2020 which relates to a payment of earnings in the 19/20 tax year.
The decision to furlough a director or office holder should be adopted as a formal decision of the company or LLP which should be minuted and notified in writing.
Company directors can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company while furloughed and they cannot carry out work that would generate revenue or perform services to or on behalf of their company. This also applies to salaried individuals who are directors of their own personal service company (PSC).
Where an apprentice is made redundant the training provider should support the apprentice in seeking alternative employment within a 12 week period. ESFA will support this process. Where an apprentice is placed on unpaid leave or the nature of their employment no longer supports their apprenticeship, it should be considered whether a break in learning would be appropriate.
An employer who wishes to make an apprentice redundant should seek advice on the process to be followed for this.