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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 and safety law and Public Health England guidelines 



Can a business insist on having access to data relating to its employees held on any 'contract tracing' apps which may be introduced?

These apps will contain “special category” data about the employee and, as such, access to and processing of this data must be in compliance with Article 9 GDPR (read together with Schedule 1 DPA). 
It may be possible for an employer to insist on its employees having and using such an app and having access to the data on the app (particularly if held on a device owned by the employer) so as to ensure that workers do not pose a risk to the rest of the workforce.  

However, a more proportionate approach may be to require employees to self-declare that the app is showing them as having not been in contagion proximity of an infected third party, before allowing entry to the workplace.  

The implementation of any “contact tracing” app in the UK is likely to trigger specific government and ICO guidance so employers should adhere to all relevant advice as and when it is published.

Can a business collect information from individuals relating to COVID-19?

Yes - if it is relevant and necessary to do so (that is, there is a lawful basis under data protection laws) but, as a data controller of its employees’ personal data, employers must take care to keep data protection requirements firmly in mind when considering whether and/or how to collect, process and retain such information.
Businesses may decide to collect and process information from workers and their dependants/household that would not typically be collected.  

This could include, identifying and sensitive information on workers, their household/dependants, their movements, results of Covid-19 testing and locations they have visited. This data is highly likely to constitute “personal data” and “special category” personal data, which must comply with the data protection measures set out in the General Data Protection Regulation  (“GDPR”) and the Data Protection Act 2018 (“DPA”).

Employers can collect information from individual employees relating to Covid-19 but must be transparent about the basis for obtaining such information and as to the way in which the data will be processed, stored and retained.  This may require an amendment or addition to your Privacy Notice relating to the processing of employee data.

Can employee health information be shared with government and health authorities?

Yes - where that is necessary for public health purposes.  Health information falls within the “special categories of personal data” and, as such, employers will need to rely on a condition for processing special category data under Article 9 GDPR, read together with Schedule 1, paragraph 3 of the DPA.

Can employees use personal devices such as laptops / phones in order to carry out their work?

Yes, but with appropriate technical and organisational measures to ensure that personal data is processed securely.

As a minimum, employers must require (via a well-publicised data protection and security management policy) all staff to encrypt all devices which they use for their work.  This will significantly reduce the risk and severity of any data breach incident.

On the whole, corporate cloud storage solutions are the most secure and enable employers to continue to monitor and control what data is accessed and how it is processed by their workers.  These solutions allow users to access data away from the office on any device, whilst preventing staff from downloading data onto their own personal storage and messaging services and so reduces the risk of data breaches.

Businesses should:
  • Implement easy measures to mitigate the risks caused by workers using their own devices;
  • Adopt and communicate clear policies, procedures and guidance for staff who are remote working and/or who use their own devices in the workplace;
  • Use the most up-to-date version of the remote access platform which has been adopted;
  • Remind all workers to use unique and complex passwords and to encrypt all devices on which they access and process the company’s data;
  • Implement multi-factor authentication for remote access, including for access to emails;
  • Ensure that all accounts have lockouts so that the account is disable after a fixed number of failed logins;
  • Review the National Cyber Security Centre’s Guidance on “Phishing Attacks:  Defend Your Organisation
  •  Review the Information Commissioner’s Office useful guidance “How do I work from home securely

Can I make a claim on my insurance if I have closed my business?

You will need to check your policy wording –in many instances even with business disruption insurance cover for pandemics is excluded. 

Standard Business Interruption is provided for consequential loss of income or the additional cost of working following (mainly) physical damage to buildings and contents. Some policies extend that cover, often in a very limited way, to provide for certain events which might impact use of the premises – this may or may not include loss arising from pandemics, epidemics, notifiable, infectious or human disease. These extensions are not common. 

Therefore even if cover extends to disruption arising from pandemics it may only cover closing the business following a Governmental order (bearing in mind construction and FM businesses in general were not ordered to close) and cover may only extend to closure of the commercial premises as opposed to activity on your clients’ sites. Rarely, coverage can be found in specific extensions to policy cover where these have been purchased at specific additional premiums.

It may well be worth contacting your broker to find out if you have Business Interruption cover in your commercial insurance policy.

Can I rely on force majeure?

Ultimately the answer is up to a court, but there is extremely high chance that you can – 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. You should therefore check your contract to establish the best way forward in the circumstances. 

As time moves on and working under COVID-19 becomes normal, force majeure may not work as it will become foreseeable. In new contracts, there is likely to be clauses which attempt to either carve-out of a force majeure clause pandemics, putting them at your risk, or, bespoke clauses that put any and all consequences of COVID-19, epidemics, pandemics, infectious disease or other natural or unforeseeable disaster at your risk, Clearly this is not a risk you can control or manage and therefore, regardless of how desperate you are for work, your should not agree to.

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 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 staff be informed that a colleague may have contracted COVID-19?

Yes, in limited and necessary circumstances. 

Workers should be informed about cases where there is any real possibility that they might have come into contact with the colleague who may have been infected.  This is because businesses as employers, have a duty of care to safeguard the health and safety of all of their employees. This should be limited to no more information than is necessary; for example, it is unlikely to be necessary to disclose the name of the infected colleague. 

Do I still have to pay rent on my commercial premises?

Treasury have announced that they have introduced emergency legislation through the Covid Bill in Parliament to ban evictions for commercial tenants for at least three months. 

No business should therefore forfeit their lease and be forced out of their premises if they miss a payment up until 30 June, this will be extended if required. 

This is not a payment holiday – the business will still have liability for the rent and have to pay it – although it may also be worth talking to the landlord to either; negotiate a settlement of outstanding arrears and/or renegotiate a reduce rent for the remainder of the lease (this will depend on relevant prevailing commercial factors).

Do I still neeed to comply with data protection during COVID-19?

Given that the lifting of lockdown restrictions is being managed according to criteria and stages, it is likely that large numbers of workers will continue to work remotely.

As a result, an organisation’s data is perhaps being accessed and processed in different ways to its ‘business as usual’ operations.  

The Information Commissioners Office has indicated a more pragmatic and flexible approach will be adopted in its statement on coronavirus. Nevertheless, employers are still bound by data protection legislation and will need to continue to act in accordance with their obligations, even if the ICO’s regulatory approach has been somewhat relaxed.

As some level of home working becomes a new normal for many who can work remotely, businesses should think about the same kinds of security measures for homeworking that would be used in the workplace, whilst acknowledging that additional risks exist outside the workplace (for example, storage of any hard copy documents in a home environment; tech devices used by other family members; more significant use of email and, accordingly, greater risk of phishing attacks; higher risk of breaches of security and confidentiality via the increased use of personal email accounts and devices and personal video conferencing platforms such as Zoom, Houseparty etc). 

The Information Commissioner’s Office has produced useful guidance “How do I work from home securely” which contains ten easy and practical steps to minimise the risk of data protection breaches from homeworking.

Do the normal rules relating to wrongful trading apply to the directors of the company?

On  28 March 2020, the Business Secretary, Alok Sharma, announced that changes would be made to insolvency legislation, including to temporarily suspend wrongful trading rules (retrospectively with effect from 1 March 2020, for three months).  This removes until June 2020 the threat of directors incurring personal liability.  However, as at 15 May 2020, no amending legislation has actually been introduced which would have this effect.

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 as it is the business not the person who has the liability to pay under the contract, however we would advise that you have a collaborative dialogue concurrently with any dialogue about your contractual rights and remedies to ensure commercial longevity.

How can the director of a company be f ixed with liability for failures to implement health & safety measure in the workplace?

The level of risk to a company caused by the pandemic may be such that the success of the company will rely on proper steps being taken by the directors to ensure the health and safety of the staff.

The UK corporate governance code requires a director in a listed company to maintain a sound system of internal controls to safeguard shareholders’ investments and company’s assets. The director must also conduct a review of the effectiveness of the company’s internal controls at least once a year.

The director must also report to shareholders on this review in the annual report.  One area which must be covered is health and safety (notably because of the effect that a fine can have on share values).  So, as a matter of corporate governance, the director must ensure that there are adequate controls in relation to significant health and safety issues. There must be proper policies and procedures which ensure compliance with health and safety legislation. This is normally delegated to the management of the company.

This aspect of corporate governance will reveal the need to ensure that those dealing with the day-to-day management of health and safety matters provide regular reports for the Board of Directors to review the internal controls that exist in relation to health and safety.

Good corporate governance will require a company director to ensure that the annual assessment covers any changes since the last assessment in the nature and extent of significant risks faced by the company and the company’s ability to respond to changes that have taken place. The review should also cover the scope and quality of the monitoring that is being undertaken by those managing the internal control systems. The review should also deal with the extent of the communication to the board of information gathered in the course of monitoring and the frequency with which it is communicated.

The review should identify any significant weaknesses in the internal controls that had occurred during the previous year and the extent to which they may materially have affected the company’s financial performance or condition. Finally, the review should deal with the effectiveness of the company’s public reporting processes in this respect.

In order to ensure the success of the company, a director of a listed company will therefore need to properly consider the reports that are made concerning health and safety. The director will have to form their own view on whether the procedures within the company are effective in managing health and safety risks.

If the board of directors becomes aware that there are deficiencies in the internal control systems, it must decide how to remedy the situation and reassess procedures that it has for the assessment of the controls.

How does a company director's overarching statutory duties interact with the COVID-19?

The director’s composite fiduciary duty to the company remains in operation during the Coronavirus outbreak.  These are put on a statutory footing by the Companies Act 2006 (CA 2006). 

The first of these is to act within the director’s powers. In terms of corporate governance, the powers of a company may not have been sufficiently strong before the outbreak to allow matters such as remote board meetings to taken place. The powers of the company (see sections 171 and 257 CA 2006) are contained in the company's articles, decisions in accordance with them, and other decisions taken by the members (or a class of them if they can be regarded as decisions of the company) and resolutions or agreements affecting the company's constitution.  

When considering whether a director has exercised an abuse of power, by doing acts which are within its scope but done for an improper reason, the test is subjective, and the motive of the director must be established.  Decisions which are taken against the backdrop of the onset of the pandemic and lockdown will be judged with this context in mind. However, the powers of the company must be exercised, in any event, to promote the success of the company.

Second, the duty is (in good faith) to promote the success of the company for the benefit of the members as a whole. This pre-existing equitable duty is contained in section 172 CA 2006 and includes the duty to have regard (inter alia) to: the likely long-term consequences of a decision; the interests of the employees; the need to foster the company's business relationships with suppliers, customers and others;  the impact of the company's operations on the community and the environment; the desirability of the company maintaining a reputation for high standards of business conduct; the need to act fairly as between the members of the company.

In this context, “success” means the long-term increase in value of the company.  Where there is evidence of actual consideration of success, breach will only be established if the director did not honestly believe that they acted in a way most likely to promote the company's success. Otherwise an objective test will be applied. 

If an employee breaches data protection laws when processing data in relation to which their employer is the data controller, is the employer liable?

Yes – business are usually vicariously responsible for the actions of their employees – however, not where the employee’s breach arises from conduct which is not closely connected to what the employee is authorised to do and could not be regarded as done by them while acting in the ordinary course of their employment.

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.

What claims might a director face for breach of their duties?

Where a director has breached statutory duties under the CA 2006, the Company may bring a claim against the director by the party suffering loss.  Derivative actions can also be brought on behalf of the company. 

In cases of marginal survival by companies, it may be that directors will face increasing numbers of these claims. 

However, a director is entitled to claim relief from liability where their decision-making has been ratified by the Board (section 239 CA 2006), or if the court grants relief under section 1157 CA 2006.  It will grant this relief if it concludes that the director acted honestly and reasonably and that, considering all the circumstances of the case, the director ought fairly to be excused.

In the light of the very difficult circumstances in which decisions have to be made at present by directors, it is likely that claims for relief will be heard sympathetically if the decision was made on the best available information that the director had.

What does the duty to exercise reasonable skills, care and diligence equate to?

Section 174 of the CoA 2006 provides that a director must exercise reasonable care, skill and diligence in carrying out their duties (having regard both to their own knowledge, skill and experience and that which may reasonably be expected of a person carrying out the functions carried out by the director).  This means that the director will need to have sufficient knowledge of significant health and safety issues and how they should be managed. 

The duty on a director to acquire and maintain sufficient knowledge and understanding of the Company's business to enable them to discharge their duties as director, is inescapable. Even an incoming, inexperienced director must acquire the necessary knowledge and understanding of the Company's operations, and ensure that it is compliant with issues as wide ranging as trading standards, health and safety and taxation, in order to avoid potential liability to the company for breach of his or her fiduciary duties.

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 (COVID19 or pandemic, 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 to optimising your position.

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.

What is wrongful trading?

Sections 214 and 246B of the Insolvency Act 1986 provide that if it appears, in the course of an insolvent winding up or insolvent administration of a company, that a current or former director of it knew (or ought to have known) at some point before the start of the liquidation/administration, that there was no reasonable prospect that the company would avoid going into insolvent liquidation/administration, but continued to allow the company to trade to its detriment, then whoever is liquidating or administering the company can apply to the court for a declaration that the director make a contribution to the company’s assets.

What is important is whether the person occupies the position of director (and it does not matter what they are called); so, this will include a de facto/shadow director.

Liability will only arise if it is shown that the company is worse off as a result of continuing to trade - this is not an inexpensive process so must be viable and be able to be evidenced.

By section 214 (3) and 246ZB (3) of the Insolvency Act 1986 no wrongful trading order will be made if the director took every step with a view to minimising potential loss to creditors as ought to have been taken by him at the time he or she knew that there was no reasonable prospect of the company avoiding the insolvent state (liquidation or administration).

When the detail on the announcement from Government is put into effect:

  • We will need to establish if they apply retrospectively so that Courts can take account of the entire pandemic period.
  • What then will a court judge that a director ought reasonably to have known about trading prospects?
  • If the announcement is not supported through legislation – how will the announcement be implemented in any meaningful way?
  • How wide ranging will the Government’s detailed solution be?

When are the interests of creditors going to cause difficulties?

All of the duties under section 172 CA 2006 are subject to the duty requiring directors, in certain circumstances, to consider or act in the interests of the creditors of the company (section 172(3)).  One such circumstance is the situation in which the company is near insolvency.  

There is a duty, embodied in section 172(3) of the CA 2006, to the creditors of a company, which arises when the directors know or should know that the company is or is likely to become insolvent. Under this duty "likely" means that there is a real, as opposed to a remote, risk of insolvency.

The payment of dividends, therefore, during the Covid-19 pandemic or a furlough period will, in many cases, be of doubtful legality if the company is at this sort of risk of insolvency.

The director must exercise independent judgement (section 173); avoid conflicts of interest (section 175) and must not accept benefits (meaning personal rather than corporate gain) from third parties (section 176). They must declare an interest in a proposed transaction or arrangement (section 177).

There is, also, a duty to exercise reasonable care skill and diligence as a director (section 174. This duty places a reasonably high burden on the director during the pandemic as regards ensuring that health and safety requirements are observed by the company. 

What happens to business rates and do I still have to pay them if I am a small business?

Responding to the coronavirus (Covid-19) pandemic, the government announced there would be support for small businesses. This small business coronavirus grant will take the form of the Small Business Grant Fund – a one-off grant of £10,000 for eligible businesses to help meet their ongoing business costs.

As grants are allocated per business property, a single business can receive multiple grants and may receive grants from separate local authorities.

Eligibility is based around rate relief. Those who qualify for Small Business Rate Relief (SBBR) or Rural Rate Relief will be able to get the funding.

Your local authority should have contacted you – if not you should contact them to ascertain why you are not eligible. Grant money has been available until from April – see here for details

You can find your local authority here.

The coronavirus grant only applies to small business in England. Business rates in Scotland, Wales and Northern Ireland are set by their devolved administrations.

Northern Ireland

The Small Business Rate Relief scheme will continue in 2020-21. There will be a three-month rates holiday for all business ratepayers (excluding public sector and utilities). This will be shown as a 25% discount on your bill which will be issued in June 2020.  LPS are deferring issuing bills from April until June.
You should be aware that these bills may be sent to your place of businesses, if you think you are eligible for this relief, and have not received a letter you should contact your local authority. 
This discount applies to the majority of properties which have been ordered to close as a result of the coronavirus outbreak. Full guidance on eligible properties can be found on the GOV.UK website.


The Welsh package is identical to the England system. It provides a £10,000 grant to all businesses eligible for Small Business Rates Relief with a rateable value of £12,000 or less.

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 and safety requirements in line with current site opening and Public Health England conditions.

Health & Safety FAQs

How do I keep staff safe? - risk assessments and method statements

An employer needs to apply its mind to the risks in its workplace and the way in which it operates. The Health and Safety Executive set out a guide here. Set out below are the questions that an employer will want to consider in a risk assessment.

An employer will need to cover the following when going through a risk assessment with respect to coronavirus:
  • How can the risk at work be avoided?
  • Working from home?
  • Can systems be changed and or equipment be provided to enable working from home?
  • What are the risks of people working together?
  • Infected people transmitting the virus;
  • Aerosol infection risk – breathing / coughing / sneezing / faecal flushing;
  • Hygiene infection risk – contact infection.
Once the risks have been considered and identified including any particular risks in a business then the risk assessment should go on and cover addressing the risk, adapting the workplace and work-processes, adapting work equipment, replacing the dangerous by the non-dangerous or the less dangerous and developing a coherent overall prevention policy.

What do I have to do in order to keep staff safe?

The employer has to do all that it reasonably can to set up a system of safe work and then to ensure that it is implemented. 

Firstly, an employer has to take reasonable care for the safety of those people its operations might reasonably effect and secondly, S.2(1) Health and Safety at Work Act 1974 which sets out that It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees.

What steps should employers be taking in the workplace?

If working from home is not possible, and the business has not been ordered to close then the employer will need to set up and implement systems falling under three headings to reduce the risk of virus contagion at work. It should address three particular strands: 

a)    Control of Infected People 
b)    Control of Aerosol/airborne Infection and 
c)    Control of Contact Infection. 


A1. When can businesses use the furlough scheme?

The UK Government guidance states that furlough under the Coronavirus Job Retention Scheme is available to assist businesses where they ‘cannot maintain [their] workforce because [their] operations have been affected by coronavirus (COVID-19)’.

A2. When does the furlough scheme end?

The Chancellor of the Exchequer has announced that the Coronavirus Job Retention Scheme will end on 31st October 2020.

A3. Does our company qualify to make a claim under the furlough scheme?

From 1st July 2020, only employers who have previously submitted a valid claim for a grant under the Coronavirus Job Retention Scheme will be permitted to continue using the Scheme.

See here for the full Government guidance on employer eligibility requirements.

A4. Are we free to decide whom to furlough, or do we need to agree it with our employees?

One limitation on your freedom of action will be the eligibility rules for individual workers – see further C1. below.

Assuming that workers are themselves eligible for furlough, then, you are free to select whom you want to furlough. You will, however, need to discuss this with each individual you wish to furlough/ flexibly furlough and obtain their agreement.

This agreement will need to cover the furloughing arrangement itself and any associated changes to the employment contract. It must also be confirmed in writing and kept on record for five years (to allow HMRC to inspect it if they choose to do so).

Further details about furloughing agreements can be found in the Government guidance here.

A5. What is the minimum length of time we can furlough someone for?

The minimum duration of any period of furlough which commenced up to and including 30th June 2020, was three weeks. For any period of furlough which commences from 1st July, there is no minimum furlough/ flexible furlough period, although the minimum claim period is seven days and, also from 1st July, can no longer overlap different calendar months.

See further E1. below for details about the rules relating to claim periods from 1st July onwards.

A6. We are a JIB member company. Does this place any additional restrictions on whether and how we can access the furlough scheme?

No. The JIB has stated that JIB employers can continue to operate furloughing arrangements by agreement with their employees, in line with the usual rules for the Coronavirus Job Retention Scheme.

This option remains available right up until the scheduled end-date of the Scheme, on 31st October 2020. A lower-cost JIB benefits package for furloughed employees will also continue to be on offer up to 31st October.

These flexibilities currently exist only as part of a full-time or flexible furlough arrangement. See F2. below for the quite different situation where a JIB employer wishes to introduce changes to employees’ usual terms and conditions outside of a furloughing arrangement.


B1. What is ‘flexible furlough’? How does it differ from full-time furlough?

‘Flexible furlough’ is available as an option from 1st July for employers who have successfully furloughed at least one worker during the period 1st March to 30th June 2020, and only in relation to workers who have themselves been previously furloughed for a minimum of three weeks by 30th June.

The Government’s definition of ‘flexible furlough’ is very broad, describing it as potentially encompassing ‘any amount of time, and any work pattern’.

The two key differences between full-time and flexible furlough are as follows:
  1. With a few minor exceptions, workers on full-time furlough may not carry out any work for or on behalf of their employer. For those on flexible furlough, these restrictions apply only to their furloughed hours; during working hours, they are free to perform all their normal work duties in the usual way.
  2. For workers on full-time furlough, employers can apply for a Government grant to cover 80% of pay, up to a maximum of £2500 per month. For flexibly furloughed workers, a proportion of this grant is available to cover furloughed hours only, whilst the employer must pay for all worked hours itself, without any Government subsidy.

B2. Does a flexible furlough arrangement also need to be agreed with the employee concerned?

Yes. The UK Government guidance confirms that the same rules apply to flexible furlough agreements as to those for full-time furlough. Additionally, flexible furlough agreements will need to include details about the split between working and furloughed hours.

ECA has developed a sample flexible furlough agreement letter, which is available in the member-only ‘Furlough’ guidance note, on our Engineering Services Recovery webpage.


C1. Can we put any of our employees on furlough?

Not in all cases. Various restrictions are set out in the UK Government guidance here.

From 1st July 2020, only workers who have previously been furloughed for a minimum of three consecutive weeks can remain furloughed, or be re-furloughed or flexibly furloughed, under the rules of the Scheme. In effect this means that, unless someone was furloughed for the first time on or before 10th June 2020 (at the latest), they will fall outside the scope of the scheme.

The only specified exceptions to this 10th June cut-off date are workers returning from a period of statutory family leave or from a period of armed forces reserve duty – see further here.

C2. What additional considerations are there when furloughing apprentices?

Although apprentices can be furloughed just like any other employee, there are further implications which an employer will need to bear in mind.

Principally, these relate to the ability of the apprentice to continue learning and, if this is not possible, the need to consider some sort of break, or interruption, in learning. The relevant authorities in all four constituent parts of the United Kingdom have all put in place similar arrangements and guidance in order to try to maintain some degree of continuing learning for apprentices during the COVID-19 crisis, which you are recommended to read in full:  
When undertaking training, apprentices – like other employees – are entitled to receive at least the applicable National Living/ Minimum Wage rate. In practice, for furloughed apprentices, this means checking that their hourly rate of pay whilst on furlough is at or above the applicable National Living/ Minimum Wage rate. See here for further details about the National Living/ Minimum Wage, including applicable rates for apprentices.

C3. Can we still move people onto furlough who are shielding or have caring responsibilities or long-term health conditions?

Yes, provided that they have completed a minimum three weeks’ furlough before the final cut-off date of 30th June 2020.

The relevant UK Government guidance covering shielding and caring responsibilities may be found here. For long-term sickness, click here and scroll down to the heading: ‘If your employee is self-isolating or on sick leave’.

C4. Apart from employees, does anyone else qualify for furlough?

The Coronavirus Job Retention Scheme allows all employers to claim for all workers (i.e. not just employees) provided they are reported as part of a PAYE payroll. The following categories of worker are therefore, potentially eligible under the Scheme:
  • Agency workers;
  • ‘Limb b’ workers;
  • Umbrella company employees;
  • Company directors – including owners of personal service companies – and other officeholders;
  • Salaried members of limited liability partnerships.
For detailed UK Government guidance on different types of non-employee – including the role of agencies and umbrella companies as the ‘employer’ for furloughing purposes – see here.

C5. How many employees can we claim for at any one time?

From 1st July, the number of workers that an employer can furlough and claim for in any claim period may not exceed the highest number claimed for by the employer in any claim period between 1st March and 30th June. ‘Furloughing’ for these purposes covers both full-time and flexible furlough arrangements.

As with the 10th June cut-off period (see C1. above), the main exceptions to this cap on numbers are workers returning from a period of statutory family leave or from a period of armed forces reserve duty. A further, less commonplace exception may occur where groups of employees, under particular circumstances, are transferred from one employer’s PAYE scheme into another. This is considered further at C6. below.

C6. What are the furloughing implications where employees are transferred from one PAYE scheme into another – for example, in the event of a payroll consolidation, a TUPE transfer or change of ownership?

In these circumstances, any eligibility which the employees concerned may have had in connection with furlough is preserved and carried over with them into the new PAYE scheme.

The full UK Government guidance on payroll consolidations, TUPE transfers and furlough may be found by clicking here, then scrolling up to the headings, ‘If you’ve consolidated your payroll and have new employees on it’ and ‘Employee transfers under TUPE and on a change in ownership’.


D1. What can/can’t we ask employees to do for us whilst they are on furlough?

Whilst on furlough, workers may not be asked to do any work that:
  • Makes money for their employer or any organisation linked or associated with their employer; or
  • Provides services for their employer or any organisation linked or associated with their employer.
Furloughed workers may, however:
  • Take part in training, provided they receive at least the National Living/ Minimum Wage for this time – see further here and here.
  • Volunteer for another employer or organisation
  • Work for another employer (if allowed by you or their employment contract).
Furloughed workers are also free to continue carrying out any additional duties or activities they undertake as union/non-union representatives or as pension trustees. For further details, click here and scroll down to the heading: ‘Furloughed employees working as union or non-union representatives or as pension trustees’.

D2. What rights and entitlements do employees continue to enjoy whilst on furlough?

The relevant UK Government guidance states that workers should continue to enjoy their normal statutory employment rights whilst on furlough. For those who are ‘employees’ in the strictest sense of the term (i.e. with a full contract of employment) these rights will include all of the following:
  • Statutory Sick Pay – for further details, click here and scroll down to heading: ‘If your employee becomes sick while furloughed’.
  • Statutory minimum annual leave entitlement – see below.
  • Statutory maternity and other family rights – click here for further details.
  • Rights against unfair dismissal.
  • Statutory redundancy payments.
  • The right not to be discriminated against.
For ‘workers’ who are not ‘employees’ (e.g. agency and limb ‘b’ workers) these rights may include Statutory Sick Pay and minimum annual leave entitlement and protection against unlawful discrimination, but not the other rights listed above.
So far as paid holidays are concerned, the basic principle is that furloughed workers are in the same position as if they were at work, other than that in the former case the employer should be able to recover most of any holiday pay paid out to a furloughed worker through a grant claim under the Coronavirus Job Retention Scheme.

Detailed UK Government guidance on holiday and holiday pay entitlements for workers who are on furlough can be found here, here and here

Workers’ contractual rights over and above any statutory rights would also apply during furlough unless agreement is reached and preferably, confirmed in writing, with the worker to amend the contractual provision. 


E1. What are the rules governing grant claim periods from 1st July 2020?

You are recommended to read these in full, as set out in the relevant UK Government guidance – available here.
By way of summary, the key points outlined in the guidance are as follows:
  1. From 1st July 2020, HMRC will not accept claims which overlap calendar months.
  2. Claims will also normally need to be for a minimum of seven days, although periods shorter than this will be allowed if there are only a few days of a calendar month left at the end of an employer’s previous claim period.
  3. Where a period of furlough straddles both June and July, it will need to be separated between at least two claim periods: one (or more) running up to and including 30th June, and one (or more) covering July. The deadline for submitting any claim relating to a period ending on or before 30th June will be 31st July.
  4. Likewise, from now onwards, where an employer’s pay period straddles more than one calendar month, the employer will need to split any claim between at least two claim periods.
  5. Claims in respect of workers on flexible furlough are best submitted only once the actual hours worked are known – otherwise the employer risks having to submit a correction to its claim for furloughed hours to HMRC after the event.

E2. Which payments can be included in our grant claim?

These rules remain largely unchanged from before and can be found set out in full here.
The following regular payments can therefore still be taken into account when calculating a grant claim in respect of a furloughed worker, or for furloughed hours in the case of someone on flexible furlough:
  • regular wages;
  • non-discretionary payments for hours worked, including overtime;
  • non-discretionary fees;
  • non-discretionary commission payments;
  • piece rate payments.

E3. What effect does a previous period of reduced pay (e.g. because of statutory family leave or sick leave) have on our grant claim calculation?

This question gets asked quite frequently on ECA’s Employee Relations Helpline.

The definitive answer now appears to be that such periods should normally be disregarded when calculating a grant claim – and, by extension, when calculating workers’ ‘furlough pay’. Rather, employers are directed towards using a different reference point or period, better reflecting the pay the worker would typically receive in more normal circumstances.

For the detailed UK Government guidance, click here and then scroll down to the headings, ‘Employees returning from family-related statutory leave’ and ‘Employees returning to work after being on sick pay’.

E4. How do we go about calculating ‘usual hours’ and ‘furloughed hours’ for flexible furlough grant claim purposes?

Extensive UK Government guidance is available here, and you are strongly advised to read this in full.
Key points to note include:
  1. The (rather complex) rules for calculating a flexible furlough grant apply only where, during the relevant claim period, the worker concerned spent some of their time working. Accordingly, if your claim period is seven days and during the whole of that period a flexibly furloughed worker carried out no work, then it would be open to you to treat them for grant calculation purposes, during that claim period, as the same as someone on full-time furlough.
  1. Where, however, the flexible furlough grant rules do apply, the first step is to determine if the worker concerned is employed on ‘variable’ or ‘fixed’ hours. The UK Government guidance sets out its own definitions here, but in an engineering services context most salaried staff will likely fall within the ‘fixed hours’ category and hourly paid operatives within the ‘variable hours’ category. In addition, there is a third category, which is those paid on a piecework basis.
  1. The detailed guidance on calculating ‘usual hours’ for someone on ‘fixed hours’ can be found here.
  1. The detailed guidance on calculating ‘usual hours’ for someone on ‘variable hours’ can be found here. The starting point here will be the higher of either:
  • the average number of hours worked in the tax year 2019 to 2020; or
  • the corresponding calendar period in the tax year 2019 to 2020.
  1. For detailed guidance on the ‘usual hours’ calculation method for the third category of worker – i.e. those who are paid per task or piece of work done – click here, then scroll down to the heading: ‘Work out your employee’s usual hours if they are paid per task or piece of work done’. In an engineering services context, this method will most likely be relevant to operatives who, when they are working, are on ‘pricework’.
  1. Once you have calculated the ‘usual hours’ figure, it should be relatively simple to work out the furloughed hours by subtracting hours worked from ‘usual hours’ 

E5. How do we calculate the value of our furlough grant claim?

HMRC’s online calculator is designed to assist with simple claims, but does not accommodate more complex situations, such as where workers:
  • have returned from statutory family leave;
  • get director’s payments;
  • have been transferred under TUPE;
  • have been employed at separate times throughout the year;
  • receive employer pension contributions outside of an auto-enrolment pension scheme; or
  • have an annual pay period.
The relevant UK Government guidance provides detailed information on the manual calculations required when HMRC’s online calculator cannot be used. This includes the methods required (in different circumstances) for working out:
  • the maximum wage amount available for the claim period – click here;
  • 80% of the worker’s usual wage – click here;
  • how much to claim for employer national insurance contributions (no longer claimable from 1st August) – click here;
  • how much to claim for employer pension contributions (no longer claimable from 1st August) – click here.

E6. When and how is the UK Government’s contribution to ‘furlough pay’ going to decrease (and employers’ contribution increase)?

Full details, including a useful table, are available here. This table is also reproduced at Appendix E, below.
The key points are as follows:
  • The previous levels of UK Government contribution will continue unchanged during June and July – in other words:
    • 80% of the worker’s usual wage, up to £2500 per month; and
    • Employer national insurance and pension contributions on that amount.
  • From 1st August, the UK Government will no longer provide a grant to cover employer national insurance and pension contributions on the 80%/ up to £2500 amount, which the employer will therefore need to fund itself.
  • From 1st September, the UK Government will cut its share of the monthly wage payment from 80%/ up to £2500 to 70%/ up to £2187.50, with the employer making up the difference (i.e. 10%/ up to £312.50).
  • From 1st October, the UK Government will cut its share further to 60%/ up to £1875, with the employer again making up the difference (i.e. 20%/ up to £625).

E7. What practical guidance is there available for the actual process of completing a claim?

This can be found here, and includes:
  • A list of the information you should have to hand before starting to input your claim – including the extra information required for large claims (100 workers or more) and flexible furlough claims;
  • A link to the online claims portal;
  • Further actions to be taken after submitting a claim, including record-keeping requirements (6 years minimum) and the making of payments to and on behalf of each worker claimed for.
In addition, click here for separate UK Government guidance on how to report payments made to furloughed workers, using the PAYE Real Time Information system.


F1. We are struggling to keep our employees fully occupied, but some of them don’t qualify for furlough. What can we do about these employees?

This situation is not unusual, especially where some people might have kept working for you throughout (and therefore fall foul of the 10th June cut-off date for furlough).

One option, of course, is to furlough, or re-furlough, the people you can, and keep the unfurloughable people busy that way.

If that isn’t possible, or isn’t enough, then there are various alternatives available, other than the (worst) option of redundancy. ECA members can find these fully explained in our guidance entitled ‘Alternatives to Furlough’, available on ECA’s Engineering Services Recovery webpage. They include:
  • Training
  • Paid or unpaid leave
  • Reduced hours
  • Temporary lay-off.

F2. We are a JIB company. Does this affect our ability to implement alternatives to furlough, such as unpaid leave, reduced hours, temporary lay-off, etc.?

If you can’t – or don’t wish to – rely on the Government’s furlough scheme to subsidise earnings, your freedom to agree reductions in hours or pay with your employees is currently more limited under the JIB than under general employment law.

Temporary lay-off, for example, is expressly prohibited under the JIB except in cases of industrial action.
Cutting hours below the 37½ hours JIB guaranteed week, outside of a furlough/ flexible furlough arrangement, is also potentially problematic. JIB National Working Rule 3.2 does, however, permit employers and employees to agree part-time working arrangements.

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