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COVID-19 FAQs

Below you can find a number of Frequently Asked Questions on the impact of Coronavirus from Commercial & Legal issues and Employment issues.

Commercial FAQs

Should a site be open? Does my business have to remain on site?

The Government position (as of 24.03.20) is that construction (including FM/maintenance) can continue, subject to meeting essential conditions*.

*The current view of the Construction Leadership Council is that work should only continue if:

Those businesses which remain open do so subject to employers ensuring their employees, whether in offices or on site, are able to balance the need to fulfil contractual obligations against the requirements of health & safety law and Public Health England guidelines.

The Government position (as of 24.03.20) is that construction (including FM/maintenance) can continue, subject to meeting essential conditions*.

*The current view of the Construction Leadership Council is that work should only continue if:

A version 2 of the SOP was released for 3 hours on 2 April and subsequently withdrawn – contractors taking actions based on version2 during the intervening period should seek legal advice).

  • workers can travel safely and responsibly to sites.  

Those businesses which remain open do so subject to employers ensuring their employees, whether in offices or on site, are able to balance the need to fulfil contractual obligations against the requirements of health & safety law and Public Health England guidelines.

Can I still chase late/overdue payments?

Of course – although any monies you chase must actually be overdue and not simply coming up as due. You should always ensure your credit control systems are in place and working to ensure, now more than ever, that as soon as a payment is due to be made, if it is not, you have measures in place to leverage your position and ensure payment is received. Remember, on commercial construction contracts you usually have rights to: suspend performance, charge interest at 8% (or some other agreed rate) and adjudicate, to recover monies you are owed.

Can I rely on force majeure?

Yes – force majeure is only as good as the contract drafting on force majeure and often it only gives you a right to time and not necessarily money to read The answer depends on your contract clauses and drafting, but if you have a force majeure clause, COVID19 may well constitute ‘force majeure’, but be careful as force majeure clauses often only give you a right to time and not necessarily money. You should therefore check your contract to establish the best way forward in the circumstances.

Who is a key worker?

The list of key workers so far can be found here:
https://www.gov.uk/government/publications/coronavirus-covid-19-maintaining-educational-provision/guidance-for-schools-colleges-and-local-authorities-on-maintaining-educational-provision

The label ‘key worker’ pertains to those workers who are permitted to send their children to school so that they can continue to go to work due to the prioritisation of their roles during the COVID19 outbreak. It does not define who can go to work and the phrase is not interchangeable with ‘critical worker’ or ‘essential worker’ which have been used in the media and have no relevance to the construction sector in any regulatory way.

Will those who take out building insurance allow building owners to still be covered if their certificates of compliance are out of date?

This is principally a matter for the building owner and the insurer, not the contractor or the broker.

Insurance policies rarely if ever, refer to detailed areas of compliance, but instead favour a catch-all approach to ensure the ‘insured’ (building owner) must maintain the building in compliance with ‘…all applicable statutory obligations…’, this may extend to ‘…and relevant applicable UK and EU standards…’ but not necessarily.
Building insurance is not necessarily void if good or best industry practice is not followed during the COVID19 outbreak. It will usually be void if legislation or regulation is not followed during the COVID19 outbreak.

Individual insurance policies should be check by building owners, landlords etc., but this may also be a subject for your commercial conversations with clients in order to ensure continuity of work and subsequent cash-flow, subject to your ability to manage (with the client) ongoing health & safety requirements in line with site opening and Public Health England guidance.

What do we do if a contract is cancelled due to COVID19?

It will depend on whether the cancellation is under the contract or simply something they have chosen to do outside of the contractual relationship.

If your contract does not provide for their right/ability to terminate due to force majeure, they will be seeking to cancel the contract outside of the contractual framework and you will be entitled either to wasted expenditure costs or loss of profit – the choice is usually yours, but you will have to prove your claims/costs. Evidencing your claim is essential.

For the purposes of commercial longevity, you may wish to prefer an open commercial dialogue to reach a settlement which may well ease your cash-flow quicker than a disputed claim.

Do we have any rights if a customer is withholding payment because the person that ‘authorises’ payment is off self-isolating?

If you are under a B2B (business to business) relationship it is irrelevant who is off-sick (whether related to coronavirus or anything else). Your contractual rights with regards to payment will still stand, however we would advise that you have a collaborative dialogue concurrently with any dialogue about your contractual rights and remedies to ensure commercial longevity.

If HMRC have deferred VAT payments, do I still complete my VAT return?

Yes – you do the return as you normally would, but do not complete the payment until required.


Government have deferred VAT payments for 3 months - the deferral will apply from 20 March 2020 until 30 June 2020. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the Government as normal. You must cancel their direct debit to ensure the VAT payment isn’t taken by HMRC Repayments of VAT will be made by HMRC as normal.

Employment FAQs

Can self-employed workers be furloughed?

Whereas agency, ‘limb (b)’ and umbrella company workers paid through PAYE can qualify for furlough under the CJRS, those with a similar employment status, but previously taxed as self-employed, are excluded from the CJRS alongside other self-employed individuals. They might, however, be entitled to claim under the Government’s parallel Self Employment Income Support Scheme.

Individuals engaged via their own limited company may be eligible for furlough under the CJRS provisions governing company directors – albeit only in regard to that proportion of their income covered by PAYE.

How does annual leave operate whilst workers are on furlough?

Government claims guidance published on 17 April 2020 has now officially confirmed that furloughed workers may take holidays during furlough and, if they do, they should be paid in line with normal holiday pay principles for these days, rather than any reduced amount they receive during furlough.

Holiday pay for furlough workers must be based on normal remuneration. If the worker’s normal working hours vary from week to week or the employee has no normal working hours, they will be entitled to holiday pay based on an average of amounts paid to them over the 52 complete weeks prior to the commencement of annual leave, or the number of weeks the employee has worked for the employer, if less than 52. Non-working weeks (such as periods of furlough or SSP, etc.), should be disregarded.  This sum may of course exceed the amount you can then claim back from the HMRC under the CJRS. ECA Members can access guidance on calculating holiday pay from the members-only section of our website.

The 17 April guidance clarified that an employer’s usual entitlement to restrict when holidays can be taken on grounds of business need still applies during furlough leave.

Whilst an employer is legally entitled to require workers to take and/or cancel holiday on notice, this power should be exercised sparingly and sensitively.

Both in managing holidays over the shorter term and planning further ahead, employers should also take account of the Government’s relaxation of the usual limits on carrying over holiday, as set out in the Working Time (Coronavirus) (Amendment) Regulations 2020. These Regulations allow workers to carry over up to four weeks' annual leave into the next two holiday years, where it has not been reasonably practicable for them to take it as a result of the effects of Coronavirus. This will avoid the problem of large numbers of workers building up an excess of leave that has to be taken towards the end of the leave year.

I am a company Director, can I still run the business if I am furloughed?

Firstly, the construction industry and engineering services sector often uses the label ‘director’ to describe someone with managerial responsibilities, but who is not a director registered at Companies House with corresponding statutory duties (as an office holder under the Companies Acts). Such personnel are simply employees and normal furlough rules under the CJRS will apply.


Office holders, i.e. company directors can be furloughed and supported through the CJRS. Salaried company directors are within the scope of the CJRS. Guidance states that where the decision to furlough a director is taken by the board, it should be formally adopted, noted in the company records and communicated to the relevant director in writing.


The point is also made that a director who has been furloughed can carry out their statutory obligations under the Companies Act 2006, provided they do no more than is reasonably necessary for that purpose.
The director must not, however, do work of the kind they would normally carry out to generate commercial revenue or provide services for or on behalf of their company.


By contrast, those who pay tax on their trading profits through Income Tax Self-Assessment can only claim support under the Self-Employment Income Support Scheme.


Working for the employer during furlough - Both iterations of the guidance make it abundantly clear that an employee is not permitted to work for an employer by whom they have been furloughed. But what constitutes “work” for these purposes has been made no clearer by the updated guidance, which repeats the statement that work “includes providing services or generating revenue” (emphasis added).


Volunteer work - The updated guidance repeats previous advice that an employee can take part in volunteer work so long as they do not provide services to or generate revenue for or on behalf of the organisation.
Guidance goes on to say that the organisation can “agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is line with public health guidance”.


Training – The guidance confirms that employees are permitted to engage in training that does not involve providing services to or generating revenue for the employer. This adds that “furloughed employees should be encouraged to undertake training”.

I am a partner, can I still run the business if I am furloughed?

Salaried members of limited liability partnerships - The CJRS has been extended to members of LLPs who are designated as employees for tax purposes.

The point is also made that a partner who has been furloughed can carry out their statutory obligations, provided they do no more than is reasonably necessary for that purpose.


The updated guidance points out that the terms of the LLP agreement may require formal amendment if a member of an LLP is to be furloughed. The member’s reference salary for the purposes of the CJRS is stated to be the member’s profit allocation, excluding “any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP”.


By contrast, those who pay tax on their trading profits through Income Tax Self-Assessment can only claim support under the Self-Employment Income Support Scheme.


Working for the employer during furlough - Both iterations of the guidance make it abundantly clear that an employee is not permitted to work for an employer by whom they have been furloughed. But what constitutes “work” for these purposes has been made no clearer by the updated guidance, which repeats the statement that work “includes providing services or generating revenue” (emphasis added).


Volunteer work The updated guidance repeats previous advice that an employee can take part in volunteer work so long as they do not provide services to or generate revenue for or on behalf of the organisation.
Guidance goes on to say that the organisation can “agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is line with public health guidance”. Training – the guidance confirms that employees are permitted to engage in training that does not involve providing services to or generating revenue for the employer. adding that “Furloughed employees should be encouraged to undertake training”.

Ongoing work commitments mean that not all our workers can be furloughed. What options are open to us to maintain them in employment when there is not always sufficient work to keep them all busy?

The Government guidance offers little in the way of answer to this question other than to suggest that non-furloughed workers can be used to carry out critical business activities. The changes made to the guidance on 4 April have, however, added a further option of sharing the work around by rotating different workers or groups of workers between periods of furlough and work.


ECA recognises the difficulty businesses face at the present time in balancing financial sustainability concerns with a need or desire to maintain a minimum level of service where appropriate. Accordingly, in addition to the present furlough guide, ECA’s Employee Relations team has produced an Alternatives to Furlough guidance note, also available on the Employee Relations section of ECA’s dedicated Coronavirus webpage.

Options, or combinations of options, outlined in our Alternatives to Furlough guide, include:

  • Training
  • Alternative duties
  • Working reduced hours
  •  Annual leave
  • Leave on reduced pay, including unpaid leave
  • Redundancy
  • Temporary lay-off and short-time working.

What are our collective redundancy consultation obligations if it looks like the CJRS could terminate at the end of June?

Under the Trade Union and Labour Relations (Consolidation) Act 1992 an employer is under an obligation to consult trade union or workforce representatives whenever it is contemplating making 20 or more workers redundant within the next 90 days. The minimum consultation periods under the 1992 Act are 30 days for 20 to 99 workers and 45 days for 100 or more.

Given that the CJRS is currently scheduled to run only until the end of June 2020, employers contemplating the possibility of 100 or more redundancies in the event that furlough is removed as an option then, would need to issue an HR1 and begin the consultation process by the middle of May. Similarly, employers facing the prospect of between 20 and 99 redundancies would need to begin by the start of June.

What can be done to minimise any negative impact on our apprentices’ progress if we need to furlough them?

negative impact on an apprentice’s progress.

Both the Education and Skills Funding Agency (ESFA) in England and the Welsh Government have published special guidance for employers and training providers about managing the effects of the current emergency. ECA understands that similar guidance has also been issued by Northern Ireland’s Department of the Economy, but we have not yet managed to track this down.

 

Both the English and Welsh guidance encourage colleges and training providers to make more online resources available, so that even though in-person training has now ceased, apprentices can continue to make some progress with their learning, whether on furlough or still at work. In our own industry, for example, the largest apprentice training provider, JTL, has issued a statement confirming that it is putting in place a remote learning plan for all learners, including online resources updated weekly and (after Easter) online tutor support for all apprentices attached to a JTL training centre.

Under normal ESFA funding rules, any break in learning for an apprentice in England should be initiated by the apprentice. However, in the light of the present emergency, ESFA is temporarily allowing employers and training providers to initiate a break in learning. Formal breaks in learning lasting more than four weeks should be reported to the ESFA. In Wales, training providers are empowered, where there is no reasonable alternative, to place apprentices on authorised absence ‘for as long as required’.

What can we do if an individual refuses to agree to be furloughed?

Furlough must be agreed with the worker concerned and may not be imposed in any circumstances. If someone refuses, even after you have done your best to persuade them, the main options will be either keeping them at work, possibly as part of a core group continuing to undertake critical business activities, or – assuming no work is available – redundancy.

Even where redundancy might initially seem the only choice, employers are encouraged to consider all the other options carefully as in general and particularly during the current Coronavirus outbreak, redundancy should only be considered as a last resort. ECA’s guidance on Alternatives to Furlough is available on our dedicated Coronavirus webpage. ECA members also have access to the ECA Redundancy guide in the members-only section of our website and one-to-one expert advice via the ECA Employee Relations helpline.

What flexibilities do we have to rotate workers between furlough and work?

The confirmation on 4 April 2020 that workers may be furloughed, taken off furlough and re-furloughed multiple times (see Section 8 above) is the clearest official indication so far that the Government accepts some employers’ need and/or preference to share work more equally by rotating different sets of workers between work and furlough.


The key limitation on employers’ freedom of action is the continued insistence in the guidance that the minimum duration of any period of furlough must be three weeks. Accordingly, rotation patterns such as three weeks ‘off’ and three weeks ‘on’, three weeks ‘off’ and one/ two weeks ‘on’, and even three weeks ‘off’ and one/ two days ‘on’ appear to be acceptable. Any pattern where the period of furlough falls short of three weeks, however, is liable to be disallowed for the purposes of claiming a grant under the CJRS.


This does not mean, of course, that once an employee has completed a minimum three-week period of furlough, they cannot then return to work for another three weeks. Once the three-week threshold has been passed, then furlough can subsequently be terminated by the employer with immediate effect without compromising their entitlement to make a claim under the CJRS. Unfortunately, the same flexibility does not apply where a furloughed worker returns to work and then has to be furloughed again. In this latter instance, the furlough clock starts again from the beginning and three weeks will need to be completed for the employer to claim for this period under the CJRS.

What happens if a period of furlough is interrupted by a need to transfer individuals back onto work immediately?

We understand how this can happen as some clients and main contractors begin to reopen their sites in line with the Construction Leadership Council’s Site Operating Procedures and other safe-working guidelines.

For CJRS grant purposes, of course, an employer in this case will almost certainly forfeit its chance to claim for any part of the furlough period already completed. This ineligibility to make a claim to HMRC should not, however, affect the contractual position between the employer and its workers, as set out in the furlough agreement between them. Provided this agreement is properly drafted, the employer should be able to rely on it to justify paying affected workers in line with the furlough arrangements for those weeks and/or days during which they were still on furlough, before switching over to normal pay and conditions as each starts back at work.

What should we do if a worker refuses to work despite having no symptoms, nor recently having arrived from a Category 1 country or area, nor caring for those within the same household who display Coronavirus symptoms, and has not been told to self-isolate?

Workers who have no symptoms and self-isolate without medical advice or without the employer’s consent and are not caring for those within the same household who display COVID-19 symptoms and have not been told to self-isolate, are unlikely to be on sick leave and therefore, would not be entitled to SSP.

In these circumstances, it is important that workers are not paid any sick pay as they are not ill, nor have they been advised to self-isolate on medical grounds.

You should discuss any concerns a worker has about working – in order to assess whether there are reasonable grounds to refuse to work or attend work, such as not have enough space at home to work or any concerns about contracting Coronavirus. Consider the possibility of restricting the type or amount of work to be carried out by your workers and maybe for it to be done outside normal working hours if that would assist and/or reduce the risk of contracting coronavirus. Also make sure you provide your workers with the relevant information contained in Government and NHS guidance, and make them aware of any health-and-safety measures being taken at site and/or by you to reduce the risk of infection. You might want to explore the possibility of taking some additional measures to protect the health and safety of your workforce if appropriate. For further information consult separate ECA guidance on our Coronavirus webpage about the Construction Leadership Council’s current Site Operating Procedures, specific arrangements operating in different nations within the United Kingdom, and communications with clients and main contractors about the measures in place to support continued safe working on their sites.

Where working from home is not possible, as a general rule, an employer can require workers to attend work (unless they belong to a vulnerable group). Employers should be mindful of genuine and possibly, justified concerns the worker may have of contracting the virus and passing it on to a relative or friend who belongs to a vulnerable group .

 

If a worker still does not want to attend work, because they are concerned about contracting coronavirus, employers may wish to take a more flexible approach and consider the alternative of allowing them to take the time off as annual leave or maybe furlough them. If taking annual leave or furlough are not feasible, employers should inform workers  that they will not receive any pay for refusing to attend work on the basis that the worker is refusing to perform their part of the contract.

Where it is not possible for the worker to work from home and they are not in a vulnerable group, the fear of contracting the illness would not generally be sufficient reason for failing to attend work.  If a worker refuses to work or attend work, without a valid reason, you could inform them that disciplinary action may be taken against them as a result.  However, there is a high likelihood that any disciplinary action may be considered as unreasonable by an employment tribunal during the current Coronavirus outbreak. Disciplinary action should be the last resort. ECA members can find more information on www.eca.co.uk/coronavirus or call the Employee Relations helpline.

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