This week, the Fox Williams HRLaw team examines the legal implications of working (and not working) from home and provides guidance for employers and employees on the following issues:
- An update on the Furlough Scheme
- Contractual working hours
- Confidentiality in a shared home workspace
- Working under the radar
- Cyber security
- Health and safety
- Reimbursement of employees’ expenses – the tax position
- What are furloughed employees permitted to do and what shouldn’t they do?
- When are home based employees permitted to leave home?
1. An update on the Furlough Scheme
Jim Harra, CEO of HMRC, said on Radio 4’s Today programme on Wednesday 15 April that HMRC’s portal through which employers make claims for furlough grants would be operational with effect from Monday 20 April, to enable employers to receive funds in time for April payrolls. The site has already been tested by a group of employers.
To make claims employers will need to upload: the employee’s name, National Insurance number, payroll number and taxpayer reference or company registration number.
Government guidance on the scheme has been updated twice in the last week with the most recent update being made on Wednesday 15 April. The key new points that emerged in the last iteration were:
- furlough leave can be taken by employees who are shielding or who are on long-term sick leave, but should not be used for short term illness or self-isolation
- employees cannot work for any associated or linked company whilst on furlough leave
- when calculating pay under the scheme, employers should base this on an employee’s normal salary and not pay received whilst on any statutory leave (such as maternity, paternity, adoption, sick leave and parental bereavement leave)
- all the grant received under the scheme must be paid to the employee in the form of money
- where there is a transfer of employees to a new employer after 28 February 2020, the new employer may make a claim under the scheme if either TUPE or PAYE business succession rules apply to the change in ownership
- the eligibility cut off date for the scheme has been extended to 19 March 2020 (from 28 February 2020), this means that employers can make a claim for 80% of wages for any employees who have taken up a new job up until 19 March 2020.
Across the board, working from home has given rise to many tricky legal issues
2. Contractual working hours
Many employees are struggling to work during their normal contractual hours: whether that’s because they’re looking after children; need to shop for food during normal working hours or have caring responsibilities for sick or elderly relations. Without their employer’s prior consent to a change in working hours, the strict position is that employees who are not working for their contractual working hours may be in breach of their employment contracts.
In our experience, most employers recognise the need to be flexible and supportive during this time and have accordingly agreed different working hours where needed provided the employee’s duties can still be performed. Where this is not possible, some employers have agreed furlough leave with some members of staff or have reduced hours of work (with a reduction in pay) during the lockdown.
One challenge for employers is how to monitor employees’ output and productivity, especially where employees do not normally complete time sheets. It can also be more difficult to allocate work tasks amongst a dispersed and “invisible” workforce.
Employers may be concerned about the scope for abuse of highly flexible working arrangements and may even feel compelled to take some form of disciplinary action for what they perceive to be serious or persistent abuse. Such action should be handled with great care, especially if some female employees are bearing the brunt of the extra child-care and shopping responsibilities. Not all home workplaces will be equal opportunities workplaces, giving employers the headache of trying to avoid a gender discrimination claim while seeking a reasonable level of delivery in the role.
3. Confidentiality in a shared home workspace
Flat/house shares and family households may contain employees of one or more organisations all working in the same, shared space, listening in to a variety of highly confidential calls or glancing at confidential documents on screens or desks. This may make it nigh on impossible for an employee to adhere to their normal duties of confidentiality to their employer and their clients and other third parties.
Employers now find themselves not only having to trust their employees to maintain confidentiality but also their family members and house mates. It’s difficult for employers to issue guidance other than a general exhortation to take all reasonably practicable steps to maintain confidentiality.
The greatest risk arises where employees are working on price sensitive deals, contentious matters or secret projects for their employers and where others in the household work for rivals, “the other side” or on virtual trading floors. Where employees are working on particularly confidential or sensitive matters, employers should ask the employee whether they are able to maintain the necessary level of confidentiality and if not, work with the employee to see how the risk of a breach can be managed.
Housemates may not be the only ones listening. Some employers are insisting that virtual assistance devices such as ‘Alexa’ are turned off during working hours, as these devices may be listening and recording conversations which the device can hear. This may apply to situations where the device has not been purposely activated by the user but may have been accidentally triggered. The same point applies to other electronic devices since smart phones also have a voice-activated virtual assistance feature with recording capability. Employers may be considering introducing rules regarding these as well which may continue when back in the office.
4. Working under the radar
There is a risk of some employees operating outside of their employers’ normal systems and controls to carry out trades or transactions “off the record” by using their personal mobile phone and home phones to make decisions and trades. Such use without the organisation being able to record the conversations could circumvent the normal compliance procedures, with potentially serious consequences for the employer and the individual. Employers may wish to issue modified instructions for recording all transactions to take account of the risks presented by home working.
5. Cyber security
Some cyber scammers are exploiting the crisis to trick remote workers into downloading files containing malware, so IT teams within employers need to be vigilant to warn remote workers of the risks and to ensure cyber security processes are adhered to. Employers also need to check the security levels of their video conference provider, to ensure that people who should not be on the call are not listening in.
We recommend that employers and employees look at the National Cyber Security Centre’s webpage (see here) containing their advice to help organisations manage the cyber security challenges of increased home working.
6. Health and safety
Employers have the same health and safety responsibilities for employees working at home as they do for employees working in the office, but in the current circumstances it is difficult for employers to discharge these responsibilities to the same standard. Employers should be doing what they can to support the practical arrangements for home working including providing equipment for employees to carry out their jobs in a safe manner. Both large and small organisations may not be able to provide employees with furniture such as chairs, desks etc. because of the cost implications. Assessing workplace set-ups in person is not practicable at the moment and employers may have to resort to guidance over the phone where needed. Employers should seek to mitigate their risks by following the guidance available from the Health and Safety Executive and Public Health England.
One measure an employer can implement is to ensure that managers are regularly checking in with employees at home to support them to deal with the unprecedented difficulties caused by the pandemic including, in some cases, personal tragedies.
Employees may find it difficult to separate their work and personal lives, leading to continuous pressure, and an unspoken expectation of 24/7 availability. To counter this, employers should encourage employees to take regular breaks, to exercise (outdoors if possible!) and set out reasonable expectations of working hours and availability.
7. Reimbursement of employees’ expenses – the tax position
Employees are likely to incur additional expenses as a result of remote working. Most employees have a contractual entitlement to reimbursement of reasonably incurred incidental expenses, but even without an express entitlement the law is likely to imply one.
Reimbursed expenses are not taxable if they were incurred “wholly, exclusively and necessarily in the performance of the duties of the employment”.
HMRC has recently published guidance (see here) on how this is to be interpreted where an employee is working from home due to coronavirus. HMRC has confirmed that the provision of laptops, tablets, computers and office supplies which are mainly used for business purposes and not for significant private use, and broadband where a connection was not already available and private use is limited, are non-taxable. The provision of a mobile phone and SIM card is also non-taxable, with no restriction on private use. Whilst the provision of equipment from the office to allow the employee to carry out their duties may be exempt, reimbursement of the cost of office equipment bought by employees, such as office furniture, computers and printers, will be taxable.
In most cases, tax exemptions for work related benefits will only be available where it is possible to show there is no significant private use. Employers should therefore ensure they restrict significant private use of such equipment through their employee guidance and policies.
Additional household expenses such as heating, electricity and broadband can be reimbursed up to a value of £6 per week, without further justification. If the employer chooses to reimburse employees for a higher amount, then the employee will need to keep receipts. If employers do not have an agreement with the employee to reimburse additional household expenses, the employee will be entitled to claim a tax relief of the same value and make a claim directly to HMRC.
Expenses and benefits related to the coronavirus should ideally be recorded separately. The tax and NICs on such expenses and benefits can be settled at a later date via a PAYE settlement agreement rather having to be accounted for through payroll and P11D systems.
8. What are furloughed employees permitted to do and what shouldn’t they do?
a) They can’t work for the employer who’s asked them to take furlough leave
The employer can’t ask the employees to “to undertake work for, or on behalf, of the organisation.” This includes providing services or generating revenue. They remain employees, but ones that are not working.
Employees cannot be asked to do work “off radar” even if it’s for the apparently worthy cause of helping the organisation to get through the current crisis. We believe employers can ask questions of their employees, for example in relation to work being undertaken prior to furlough leave where this is needed to help colleagues at work, or where an employer is investigating a problem or disciplinary issue of which an employee has knowledge, although this has not been specifically confirmed by Government. But if answering the odd question morphs into undertaking tasks for an employer a line has been crossed, resulting in a breach of the conditions for furlough leave.
The Government Guidance confirms that company directors are eligible to be furloughed and although they too are prohibited from working for the company, they can continue to carry out their statutory duties; similar exceptions apply to pension trustees.
b) They can volunteer
Employees are permitted to take part in volunteer work whilst on furlough leave. The Government wishes to encourage people to take part in the national effort against coronavirus. The NHS launched its “Your NHS Needs You” call for volunteers, but after 750,000 applications, there appears to have been a temporary pause in recruitment.
Employees do not need to be an NHS volunteer; it is possible to volunteer to help in other ways, such as shopping for vulnerable members of the community, provided that work as a volunteer does not generate revenue for the employer.
Some employers are supporting employees to find volunteering opportunities and they may even be organising a volunteering programme.
c) They can undertake training
This may be a good opportunity for employees to undertake training to improve their skills. This is permitted and the pay received while training must be at least the National Minimum Wage or National Living Wage, as appropriate. Training “on the job” is not permitted as this would amount to “undertaking work”.
d) They can sometimes work for another employer
If the employee already has two jobs, and is on furlough leave from one, the employee can continue working for the other employer as normal.
The Government in its most recent guidance stated that you can, “if your contract allows”, “undertake other employment while your current employer has placed you on furlough”. On the face of it, if an employee’s contract allows it the employee will be able to take on a new role. If the employment contract does not allow the employee to work for another employer, the employer may agree to amend the contract to allow the employee to do this.
Many were surprised that this was permitted, but it is possibly indicative of the fact that the Government are prioritising the need for people to fill essential roles in retail, food, medical, farming and care sectors.
9. When are home-based workers permitted to leave home?
This is now a more hazardous activity than would ever have been thought possible. In addition to the risk of catching the virus, and not being able to buy any food or medicines safely, there’s also the risk of getting into trouble with the police!
The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (the “Regulations”) prohibit home based employees (different rules apply to employees still attending their workplaces) from leaving their home unless they have a reasonable excuse and from gathering in a group of more than two, unless these are members of the same household.
A reasonable excuse includes
- obtaining basic necessities
- to take exercise either alone or with other members of their household
- meeting a legal obligation, including attending court or satisfying bail conditions
- seeking medical assistance
- attending a funeral
- moving house
- caring for or assisting a vulnerable person who is someone: aged 70 years or older / under 70 years old with an underlying health condition / pregnant.
Whilst the police are charged with enforcing the Regulations through engagement, explanation and encouragement, they may as a last resort issue a Fixed Penalty Notice (FPN) (£60 for first time offenders reduced to £30 if paid within 14 days). For a repeated breach the fine doubles by the amount specified in the previous FPN up to a maximum of £960. If the fine is paid within 28 days, it will not amount to a criminal conviction.
As is often the case, it’s how an employee responds to the police that may be more important than the initial offence. For example, refusing to provide details to the police is a ground for arrest which could result in the matter being referred to the Magistrates’ Court where fines have been issued for larger sums. In these circumstances, the offence of breaching the Regulations will become a criminal conviction appearing on a person’s criminal record. Other offences may be committed such as committing a breach of the peace, obstructing a police officer in the course of his or her duty, or other public order offences which are likely to carry more serious penalties.
If an employee gets into trouble with the police it may have ramifications for their professional standing with a regulator such as the FCA/PRA, it could amount to a breach of the employer’s code of conduct and may bring the employer into disrepute, all of which may expose the employee to the risk of internal disciplinary action or external regulatory action.
In such a scenario, Fox Williams have a team of employment, criminal and regulatory lawyers who will give prompt advice either to an employee or the employer on how best to deal with the difficulty that has arisen.
If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.