NEWS – 9 October 2020
Insolvency – what HR needs to know
Personnel Today has run a good article, we notice, on the various issues HR professionals should understand about insolvency. It flags how HR will often be an integral part of any employer’s recovery plans and a crucial support to staff. It's timely piece because, obviously, these are difficult times for businesses in almost every sector, and we are now seeing a marked increase in the number of business failures, with HR being called upon to help. The article points out that in cases of insolvency, when the administrators are called in, HR will often have an important role to play, yet for many HR professionals this will be a completely new experience. It also makes the very good point that whilst insolvency is a clear sign of a company's poor financial health, it doesn't have to be terminal because one of the statutory objectives of the administrators is to try to turn the company around so that it can be rescued as a going concern, so redundancies, whilst common, are not inevitable. With his thoughts on all those points, and more, Ed Goodwyn who joined me by video-link:
Ed Goodwyn: "From a practical point of view, why these sales have to take place so quickly is because as soon as the liquidation proceedings are commenced there is a concern within the business that customers and creditors may catch wind of this and start to put pressure on the business. So if the business is to be sold, then speed is of the essence and very often one will see a sale move from appointment of administrator to completion in a matter of a few days. So it's really important for the HR professional to have the core data, as I was mentioning before, to hand ideally. Ideally he or she should have the core employment issues on a spreadsheet readily available to be handed over to the potential purchaser. That will include names, salary details, holiday rates, contract terms, etc. all the pricing information that a purchaser would need to know to make a quick understanding as to what the HR liabilities it will be taking on look like. In addition, there may be certain employees which the HR manager will need to consider whether there's any need for attention in the period leading up to the sale if these people are vital to the sale of the business and, again, the HR professionals are perfectly placed to help in those decisions. The last thing is HR should be in the front, in the vanguard, on communications. So while there will be obligations to formally informed consultant under TUPE, generally communicating to the business, particularly if there's a sale and light at the end of the tunnel, will be a key job for HR to get involved in.”
Furlough fraud – due diligence by employers is crucial
As the government’s job retention scheme winds downs the CIPD's People Management is warning employers that they are now at increased risk of falling foul of the more complex strict rules, now operating, which are attached to the government's grants. They say HMRC is upping its game, using sophisticated computer software to uncover evidence of fraud and then conducting in-depth investigations. So far, HMRC has written to 3,000 employers asking them to check their furlough claims. The latest figures on this show that over 80,400 UK businesses have voluntarily returned a total of more than £215 million in furlough payments to the Revenue, repaying cash they claimed in error or realised they did not need. Commenting on this for Outlaw, litigator Andrew Sackey says employers should carry out due diligence into the way furlough compliance has been monitored internally and be aware of the Revenue’s 20 October amnesty deadline, which is fast approaching. To find out more on that, and what he thinks employers should be doing right now, I phoned Andrew and put those points to him:
Andrew Sackey: "Well I think the first thing to say is that furlough in all its guises has been an absolutely massive undertaking. At its height, over 1.2 million businesses were supported by it so there's a huge number of moving parts involved and when people engaged with furlough they had to comply with a variety of rules and they've complied, or they appear to have complied, with the core rule that you can't work whilst furloughed, pretty well, and people understand what that means and what that looks like. But there was another requirement, and that was you can't provide a service to your employer and that is a little bit more nebulous because that could include responding to emails, arranging meetings with people who are not furloughed, or doing other sort of promotional activities. The issue there is that if staff are doing this, even though they are well intentioned and well meaning, they are actually storing up a big compliance issue for their employers because it's not why they were working, it's the fact that they are working, and because so many people are working remotely the centre don't necessarily have visibility of what's going on and so the issue around due diligence is, certainly in terms of how it's expressed by HMRC, a growing acknowledgement that they anticipate that employers will be doing due diligence to make sure that their claims are properly formed and that means checking, to one extent or another, that your staff not only weren't working, but they also weren't providing a service to the employer. So the concept of due diligence, and you have to be mindful of course of data, privacy, etcetera, but it's a concept of checking, for example, whether your furloughed staff have been transmitting or receiving volumes of emails, and you don't need to look into, necessarily, the content of the emails because they may be personal, of course, they may be in respect of well-being, but you need to understand what the subject matter is. So there are different types of searches that you could format to begin to give you a first indicator either that everything is good, or that there might be some problems that you might need to look at a little bit more closely. The pace of this is quite important because if there have been problems, if there have been breaches, then HMRC has put out an amnesty. So you know that if you notify HMRC before the 20th of October, for example, you're not going to be liable to any other sanction or penalty. So the clock is really ticking to understand whether you've had an issue because you need to know you've had an issue before you can notify it. So that's the sort of thinking behind due diligence.”
Just to add, Andrew and his team have produced a flyer setting out essential next steps to carry out before that 20 October deadline he mentioned. We have put a link to that on our website for you. Incidentally, he told me that currently it is chiefly HR Directors that his team is engaging with, and advising IT departments on the types of searches that people need to consider running. Do get in touch if you think you may need help too.
Covid-19 advisory – employers face £10k fine for failing to enforce self-isolation
As you may be aware, at the end of September new regulations came into force placing on employers a legal duty to ensure staff which they know to have tested positive for Covid-19, or have been in close contact with somebody who has tested positive, do not attend the workplace. Failure to comply with the law is a criminal offence and organisations and workers could face a fine of £1,000 for their first offence, rising to £10,000 for repeated infringements. As for workers, they are now also required to inform their employer if they have to self-isolate, and face a £50 fine if they fail to do that. Personnel Today reports on this and highlights the nature of the liability - fines will be applied to employers that break the law “without reasonable excuse”. So, although that's not an issue if the worker can work from home whilst self-isolating, it will be problematic for employers with workers who cannot work remotely in that they will be dependent on their workers informing them if they need to self-isolate. The article suggests that this is something employers will need to police internally. Richard Fox at law firm Kingsley Napley is quoted saying in practice it is likely that the new rules will be policed internally and that employers should be policing this proactively. We have a slightly different take on this. On the line to explain, Anne Sammon:
Anne Sammon: "I think one of the key things to be aware of is the fact that the offence under the new Coronavirus regulations is only where the employer knowingly permits a worker to attend a place other than where that individual should be self-isolating. So for most employers the most likely defence that they're going to run to those kind of claims is that they didn't knowingly do anything. If they were ignorant of the fact that the employee had to self-isolate then they couldn't be in breach of the law. My understanding of the purpose behind this piece is to prevent employers from effectively forcing employees who say to them “I am self-isolating” to come into the office in breach of those self-isolation regulations. So I think that's what's driving this rather than employers needing to proactively police self-isolation in the way that that some have suggested. I can see, potentially, issues around whistleblowing if employees become aware of colleagues who have been told to self-isolate, who don't do that, who come into the office, and raising issues around that. I think the other thing that employees need to be mindful of in connection with that is their general health and safety obligations. So from a health and safety perspective, you have to create a safe working environment and arguably, if you're not taking the right steps to make sure that employees aren't coming into the office if they should be self-isolating, you might be in breach of those health and safety obligations as well as all the employment law piece.”
For now from me that’s the news. Good bye.