Probably the best business advice is to “protect your cash”.
Cashflow is going to become a major issue for many businesses over the next few months because of Covid-19 or Coronavirus. Sales are likely to be down. Customers will also be experiencing cashflow difficulties so may delay payment. Worse, they may not pay at all. Your costs may increase.
This may not be the best time to splash out on expensive purchases, particularly purchases which do not quickly reduce costs or improve cashflow in some way.
We are already receiving reports from clients about issues they are experiencing. Some of these have surprised us involving industries and businesses which don’t spring to mind as being obviously affected.
One which particularly surprised us was a potential impact on road building. There is the obvious potential problem of workers contracting Coronavirus or self-isolating for some reason. However, we were surprised to hear that the supply of gravel may be disrupted because of issues at quarries and delivery vehicles. No gravel, no road building.
Several clients involved in the retail trade have reported reduced sales. This particularly applies to non-essential retail such as coffee shops, restaurants, pubs, travel etc. Staffing costs and other overheads remain the same so even a 10% reduction in revenue can turn a profitable business into a loss making one. For suppliers of that business, their sales will also be down and customers could delay payment. In worst case scenarios the customer may go out of business.
Another highlighted business area with problems is the Care industry. Often there are stipulated ratios of staff to residents. If staff aren’t available, they may need to use agency staff (if they are available) which will increase costs and reduce profit.
The situation is fluid with different information, advice and recommendations being announced daily. We are going to try to summarise the main points as we understand them and as we think they apply to businesses. Note that these are our interpretations of current information and advice, so do not rely on it as advice from us. We can put you in touch with HR and Employment Law specialists from our network of professional advisers.
Please check before doing anything.
Just letting a situation drift is doing no one a favour. If you think you have a problem, do not ignore it. Speak to your suppliers, staff, bank (and even your accountant).
Maintain (and improve) hygiene
Obviously critical for food handling and anything remotely medical or involving contact with members of the public, but use common sense to minimise the risk of infection in your premises. Keep everything as clean as possible and encourage staff to wash hands regularly.
Facilitate remote working
Obviously not possible for customer facing, retail, environments. However, if it is possible for staff to work from home and they are happy to do this (some may not), don’t wait until it becomes essential. Plan for it. Check what computers staff have at home. Set up a remote working facility. Programmes such as Teamviewer or Ultraviewer can allow someone to operate their work computer remotely. Your IT specialist may be able to set up a VPN (Virtual Private Network) connections to make it better.
Be aware of, and consider, legal implications such as GDPR.
Using VOIP (Voice Over Internet Protocol) may make it possible for the member of staff to have a phone extension connected to their home computer.
One issue with home computers is that they are often laptops with small screens, making them difficult to work on. Most laptops have the ability to connect to a television. Provided an employee is happy to do this, it could make it easier (and improve efficiency). However, they may not have a suitable cable. Cables are pretty cheap – and using a home TV as a monitor could improve productivity.
Alternatively, you may have a spare monitor which you can lend to the employee. If they are going to be working from home, it may also be possible to let them borrow a monitor they use in work.
The government has issued Guidance for Employers which can be found here
And details of the government’s support for businesses (announced to date – or more precisely four days ago)
The situation is changing frequently and new measures are being announced regularly. Also, there isn’t, currently, a mechanism to process some of the undertakings which may mean a delay in receiving some of the benefits.
Statutory Sick Pay (SSP)
The rules on SSP are being relaxed and will now be paid from the first day, rather than an employee having to wait until Day 4.
Crucially, employers with fewer than 250 employees (at 28 February 2020) will be able to claim a refund for the SSP paid out – for up to 2 weeks per eligible employee.
There is little doubt that this will take effect. However, there is currently no mechanism within PAYE to facilitate this refund. The guidance says that it will work with employers over the coming months to set up the repayment mechanism. Employers will be required to fund this until the method of reclaiming the amount paid is established.
The delay in payment will not help cashflow. Accurate record keeping will be essential.
SSP is also being extended to employees who have been advised to self-isolate and who may not actually be ill. There is some uncertainty about defining eligibility. To minimise pressure on GP practices, the original advice was to contact NHS111. Now it appears that NHS111 should only be contacted in more serious cases. In his budget, The Chancellor said that there would be a mechanism for confirmation of the advice to be issued by NHS111 rather than an employer asking for a Fit (or Sick) note from a GP. Since this doesn’t seem to have been mentioned since whether it is going to happen isn’t clear.
Even under current legislation, medical evidence is not required for the first seven days of sickness. An employee can self-certify. Employers are being encouraged to use their discretion in dealing with the periods after the seven days. Whether this means that an employer accepting an employee’s continued self-certification will not have this decision challenged by HMRC isn’t clear.
We can see that insisting on a Sick Note could put extra strain on the NHS and stress for an employee. Our recommendation is to keep notes of conversations and reasons for accepting an employee’s self-certification.
From the government guidance:
“We strongly suggest that employers use their discretion around the need for medical evidence for a period of absence where an employee is advised to stay at home due to suspected COVID-19, in accordance with the public health advice being issued by the government.”
A recent announcement is that SSP can also be paid to an employee having to stay at home to care for another individual, such as a child or elderly relative. This is restricted to 14 days. What we can’t establish at the moment is whether this 14 day period applies to the employee or the patient. A parent with three children could, theoretically need to look after each child consecutively, then contract Covid-19 themselves (or be advised to self-isolate) meaning a total time of up to eight weeks.
One thing which was said is that the person claiming should live at the same place as the patient. This would, presumably, exclude situations where an employee is caring for an elderly relative living on their own (even next door). This doesn’t seem reasonable so may be changed.
Coronavirus in the workplace
If a member of staff or the public who has recently been in your workplace is either suspected of or confirmed to have Covid-19, the recommendation is not to close the workplace.
If it is only suspected, tests will be carried out and further action will depend on the results of the tests.
Most suspected cases turn out to be negative so do not take precipitous action.
If a case of Covid-19 is confirmed, you will be contacted by the local Health Protection Team to discuss the action to be taken.
Employees surplus to needs
If trade reduces or premises are closed, you might feel that you do not need all of your employees. This is to be expected.
It is a tricky area and we recommend that professional advice is taken about your particular circumstances before acting. We can provide access to an HR professional via our network of professional advisers if you don’t have your own.
One thing which struck us when reading the guidance is that an employee facing the prospect of being laid off is more likely to self-certify they are sick to preserve employment.
So far as we are aware, there have been no announcements changing the legal requirements regarding reducing hours or laying off staff. This is likely to be dependent on individual contracts and how amenable staff are to changes. A great deal will depend on employment contract terms and conditions.
Zero Hours Contract
The simplest case for an employer is if an employee is working under a Zero Hours contract. It is likely that this contract will allow you to simply not offer any more work.
Employees in this situation who find they have no more work will be able to claim Universal Credit.
The simple, but probably not helpful, answer is that what you can do will depend on the contract terms. You need to check what is in those contracts.
Often contracts contain clauses enabling an employer to vary working hours. If this is the case, a discussion with the employee is advised. Depending on the amounts involved, the employee may be able to claim either Universal Credit and/or Working Tax Credit or Child Tax Credit.
Laying off an employee temporarily is allowed under common law. However, there is no right not to pay them, which might defeat the objective.
Employees can be laid off without pay if this is specifically included in their contract. Even so, the employee may be entitled to a statutory guarantee pay from the employer. This is limited to a maximum of five days in any three month period.
When a guarantee payment isn’t due, the employee may be able to claim Jobseeker’s Allowance.
As mentioned, this is an area where we recommend specialist HR and Employment Law support. Contact us to put you in touch with one of our recommended professional network.
Communicating with employees is recommended. You may be surprised at how amenable and helpful your staff can be.
If the situation becomes worse and you decide to contemplate making staff redundant, there are a whole set of rules and regulations you need to follow.
We will do our best to help in this situation but recommend speaking to one of our HR professionals.
It’s not all gloom. The government has said they will provide some support, financial and otherwise.
As already mentioned, SSP paid to employees affected by Coronavirus will be refunded. This applies to employers with fewer than 250 employees.
The precise way of doing this hasn’t been published yet so there could be a wait.
The Business Rates retail discount will be increased to 100% for properties below £51,000 rateable value.
This means that retailers will not have business rates to pay if the rateable value of their property is less than the £51,000 threshold.
As well as retailers, the concession is being extended to the leisure and hospitality sectors (precise definitions to come).
This may require an application to be made to the local authority. If you receive a Business Rates bill and the discount has not been applied but you believe it should be, you will probably have to contact the issuing council.
Grant of £3,000
An announcement has been made that businesses currently receiving Small Business Rate Relief (SBRR) will be entitled to a one-off grant of £3,000.
On the face of it, this will apply to many businesses (including us) but we can’t find details of how this will work or how to apply, or if it will be automatic. We will try to find out.
Business Interruption Loan Scheme
This is an extension of current loan guarantee arrangements. The government will guarantee 80% of loans made by participating banks to qualifying businesses.
It is hoped that this will give confidence to banks and encourage them to support businesses which are suffering because of Coronavirus.
This is due to be launched within a few weeks.
Support for tax
There is an existing “Time to Pay” arrangement where businesses having difficulty in paying taxes can often (sometimes!) agree with HMRC to pay taxes later and over a longer period.
The government has said that applications made under this scheme resulting from Coronavirus related situations, will be treated sympathetically. This should apply to all taxes. It is important to make contact with HMRC as soon as you believe there may be a problem.
Companies House filing
An announcement has been made by Companies House that requests to extend the period to file accounts because of Coronavirus will be treated sympathetically. There are already policies in place to extend deadlines if applications are made because of poor health. Covid-19 causes will be considered under the same process.
Note, an application must be made before the deadline. Retrospective applications will almost certainly fail because the registrar has very limited legal powers to cancel a penalty once issued.
After the Coronavirus crisis
The problem isn’t going to last for ever. Take time to plan for the future. Those businesses which have a strategy for recovery will have a head start.
Think about any long term consequences and how you are going to make your business even more successful as the crisis fades. We can help with planning. You may find you have time on your hands, Use it wisely.
Sorry this has been such a long article and sorry because it might be out of date very quickly if new rules, guidance and initiatives are announced. Please feel free to contact us (01509 816150). We will try to help. This might be a referral to an HR specialist.