Emergency Volunteering Leave

The Coronavirus Act 2020 which came into force on the 25th of March 2020 introduces a new statutory right to take emergency volunteering leave (EVL).  It comes as no surprise that such measures were introduced, given that health and social care workers are under immense pressure to continue providing services and early signs show levels of absenteeism have increased.  In order to incentivise those who may be able to provide critical support, the government have introduced a variety of measures to address these pinch-points.  One of them being the introduction of an EVL scheme.

What is EVL?

The leave was introduced as part of emergency measures to help tackle the effects of the COVID-19 pandemic and is a new concept.  Statutory Emergency Volunteering Leave (EVL) will enable workers, employees and agency staff to take unpaid leave to volunteer in health and social care.  This could include a local council, district council or the NHS for example.  As EVL is a statutory right, workers and employees must not suffer detriments or be treated unfairly when exercising this right, although further regulations are required to formally implement the Act in this regard.

How do people apply for EVL?

Where an individual wants to volunteer, and in order to take EVL from their ordinary paid employment, they need to obtain an emergency volunteering certificate from the appropriate authority.  EVL can only be taken once in any “volunteering period” which last for 16-weeks.  The first one began on the 25th of March 2020 at which point the government may decide to set another period.

Employees or workers can choose to take unpaid volunteer leave in blocks of two, three or four weeks, including while on furlough leave.  However, changing from furlough leave to EVL would stop their period of furlough leave, and would mean they are ineligible for furlough pay during this period.  The 3-week minimum furlough claim period will still apply.

Do I have to pay them while they are on EVL?

The regulations suggest that a compensatory scheme will be introduced to financially compensate those for loss of earnings and expenses involved with their volunteer work, to ensure they are not disadvantaged by playing a key role.  As yet, there are no further details on what this scheme might look like, and the secondary legislation will hopefully clarify.  All other employment rights will remain in tact for the employee in the same way they would for any other leave taken, e.g sick leave, maternity leave.

Am I able to say no?

Generally, no, as this is a statutory right  However, there is an automatic exemption if you have a headcount of less than ten staff. If you employ ten or more individuals, you must grant EVL requests provided that the employee follows the relevant procedure, which involves giving written notice to the employer.

There are other categories of employees and workers exempted from insisting on EVL, which include those working in the Police and Military, Crown employees, Parliamentary employees and those others as specified by the Secretary of State.

For further information on this, and for any accompanying advice or documents, please get in touch with our HR experts.


Workplace pensions and Coronavirus

The current economic conditions are having a huge impact on us all, however it’s at times like this when we can support our clients and provide the guidance they need.

We have put together some Questions and Answers about what Employers or Employees may need to consider at this time in relation to meeting the Auto Enrolment Pension obligations.

Can the Furlough Grant be used to cover pension contributions?

Employers must pay at least the minimum AE employer pension contributions on behalf of their furloughed employees.  But they can only claim back the minimum AE employer pension contributions on the earnings paid.

The minimum mandatory employer contribution is 3% of income above the lower limit of qualifying earnings (which was £512 per month until 5th April and is £520 per month from 6th April 2020 onwards).

The employer will also need to consider their employment contracts, any scheme rules and communicate with their employees before they make any changes to the contribution levels

What if the employer’s scheme operates on a salary exchange basis?

Updated guidance from the Government makes it clear that the salary for calculating the grant should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind. Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.

HMRC has confirmed that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements if the relevant employment contracts are updated accordingly.

Can an Employer put their Pension on a “Contribution Holiday”?

The Pensions Regulator (TPR) have confirmed that they expect employers to continue making contributions into their scheme, and we would encourage any employers to do so if they can.

However, if the employer is concerned about whether they can meet their ongoing duties, we would suggest they speak to TPR but we are also here to help.

What should employers do if any members want to stop paying into their pension?

Members can stop their contributions at any time and should inform their scheme provider and Employer.

If an employee stops their contribution, automatic enrolment rules do allow employers to stop making their contributions.

If the member and/or the employer want to re-start the contributions, this can be done and again the member should inform the scheme provider and Employer of their intentions.

Getting in touch with TPR

If you need to get in touch with TPR here is a note of the website.


How to post coronavirus grants in XERO

We’ve been getting some queries from clients asking how to account for the various funding in XERO so we thought we’d do a short video with our thoughts and how we’d do this.

This short video will show you:-

  • How to set up a nominal code in other income, and
  • How to allocate grant receipts from the bank reconciliation screen to it.

If you have any queries about how to post these transactions or any others please call us on 01522 81 5100 and ask to speak to any of our XERO team.


Bounce Back Loans

When Rishi Sunak got up in the House of Commons we were all waiting for an announcement modifying CIBILS. Maybe bringing in a 100% guarantee for small loans under £25,000.

What we got instead was yet another new and dare we say it unprecedented  measure. A new loan scheme for small  businesses to tap into.  As we have learnt from other measures introduced over the last few months the detail will follow but this is what we know so far.

  • Businesses trading as sole traders, partnerships or Limited Companies will be eligible.
  • Businesses from any sectors will be eligible except for; banking, insurers and re-insurers, public sector bodies, Further Education institutions if grant funded and state funded primary and secondary schools.
  • Businesses must be based in the UK.
  • Business must have been negatively affected by the coronavirus crisis.
  • Was not an “undertaking of difficulty” on 31 December 2019. This means the scheme may only be open to businesses of a certain age and/or who do not have accumulated losses > 50% of share capital.
  • Loans will be between £2,000 and £50,000 with a cap of 25% of last accounts turnover. 
  • No Personal Guarantee required.
  • No interest for the first twelve months.
  • We don’t expect there to be a fee or early repayment penalties.
  • Loans can be repaid up to six years.

We expect these loans to be available through a number of lenders including high street banks from Monday 4 May.

You won’t be able to have both a CBILS and bounceback loan but you may be able to move a CBILS loan to a Bounceback loan up to 4 November 2020.

More to follow when further details are announced.

NB The broad definition of an ‘undertaking in difficulty’ is here:

“This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital.”


Top Tips for making a CBILS application

With the shock and emotion of this crisis behind us we’ve been talking to a lot of business owners about cash and in particular how to fill gaps in cash flow.

Most business owners are taking advantage of the various measures and schemes put in place to support them. But what’s next ?

For most a dip in liquidity will need to be funded by a cash injection. Whilst a small number of businesses may be eligible for a quasi equity loan the majority will turn to the governments’ flagship scheme CBILS (Coronavirus Business Interruption Loan Scheme).

For a recap on the scheme please read our guide and initial thoughts, here.

Here’s the problem though…

On the 15 April The Guardian reported that 6,020 loans had been issued under CBILS worth £1.1bn. A week later according to UK Finance a further 9,000 applications had been approved worth a another £1.45bn. Whilst this is great news for those accessing funding there were according to the Guardian (at 15 April) more than 300,000 informal inquiries, seeking out more information. This isn’t a surprise either since most business owners are currently working their way through cash flow models to identify how much funding might be needed to survive.  The majority of applications will be made in the weeks ahead.

At least 8/10 business owners that I am speaking to are reporting a significant “cash drain” that will need plugging with cash through CBILS.

The problem is obvious. Whilst the banks are doing a great job in dealing with applications as CBI economist Rain Newton-Smith said “…while the pace is picking up, many firms are still missing out. More loans must get out the door faster for the businesses facing distress, especially smaller businesses.”

We need to find a faster way for small businesses to access cash

It was therefore great to hear the announcement by the British Business Bank on 17 April that Funding Circle had been accredited under CBILS. As Funding Circle put it themselves on their website they are “Revolutionising a broken system”. They do this by deploying technology into the lending process meaning that they can process applications quickly through their platform.  Maybe this kind of approach was what Rain Newton-Smith meant when he said …

“Finding quicker and simpler routes for smaller firms to access cash, and extending repayment schedules to encourage more businesses to take them up are two ways that could make a difference.”

I was therefore surprised to hear local Relationship Managers caution small businesses about Funding Circle at a recent event. Whilst I appreciate that Funding Circle’s debt collection process could be described as “proactive” clients with Funding Circle loans that have needed to reschedule debt have always been able to.

That aside though if CBILS is to be successful banks need to accept that they need some help processing applications from smaller businesses and that through Funding Circle there is a way to achieve this leaving them available to deal with more complex funding requests.

Top tips if you are thinking about funding through CBILS

Be prepared

It might be obvious, but we think that well thought through and structured applications will be seen in a more positive light by the bank/ lender than general conversations around support.

Lenders will assess applications in the same way they always have (because they will use the same process, systems and people) and therefore management accounts, a business plan and forecasts will be essential parts of the application. You might also keep an analysis of creditors, debtors and time to pay arrangements with HM Revenue & Customs (HMRC).

If you are making a Funding Circle application you will also need copy bank statements for the last six months as detailed below:-

Impact of the Coronavirus Crisis

In your narrative you should be ready to outline the impact the coronavirus crisis has had on your business dealing with facts and figures within the narrative. It will be vital to ensure the lender understands the impact on the business the crisis has had.

Structure your argument

In your business plan, you should focus on the strength of the business before the crisis, its trading performance and ability to generate cash.

You should also outline the path back to this position making clear the steps you are taking and the time frames you are working to.

From early discussions with local Relationship Managers across the four main high street banks each lender is adopting a slightly different interpretation of what constitutes “viable” and whilst I have sympathy, given the constant changing CJRS guidance, it’s not helpful when you are trying to write an application for funding. Your narrative here needs to focus on the success you had prior to the crisis and why you were viable and sustainable before.

In their appraisal of the business plan, lenders will want to understand management capability and whether there are any long-term implications of the economic fallout on the business or industry it operates in.

Go for the maximum amount of funding

CBILS  is not very flexible in how you draw down cash. We’ve run a few cash flow models that show two peaks where funding is required. Ideally the scheme would offer an overdraft now to cover the short term variability in cash and then a medium to long term loan covering off (1) the debt pile built up over lock down, (2) the costs of re-opening and (3) the losses that may be encountered as sales are developed after fully re-opening.

It doesn’t allow for this flexibility though so you need to make one application that covers both and then repay what you don’t use. Not ideal but with interest payments being covered by the Government for twelve months and no early repayment penalties the scheme is flexible enough for you to do this.

The CIBLS is going to be an important measure for any business looking to plot a course to safety out of the current crisis. Key to a good application will be the narrative and cash flow forecasts. If you have any doubts over these or would like our assistance in generating them please contact funding specialist Stephanie Smith or Director Richard Hallsworth on 01522 81 5100. 


What a week that was! End of week summary from team Nicholsons

This week has been extremely busy for the team at Nicholsons as we worked with over 100 clients to complete their CJRS claims on the portal. With guidance changing rapidly and the people working from home it was a great team effort.  A lot of the team are looking forward to a break in the sun this weekend!

To keep you up to date with the latest developments on Coronavirus related to you and your business we have prepared a roundup of the latest measures and actions taken by the Government.

If you have any queries relating to any of the points covered in this update or you require support with any matters, please speak to a member of our experienced team early next week. They can be contacted on 01522 81 5100.

Administering the Coronavirus Job Retention Scheme

We appreciate that you are probably hard at work making the necessary arrangements and sourcing the required information for the Coronavirus Job Retention Scheme (CJRS) at the moment.

The portal went live this week and can be accessed by clicking here. Initial reports suggest that there are been a huge number of claims so far.

To help you make sense of the CJRS and the application process, we wanted to share some useful documents and calculators with you:

Step-by-Step Guide 

HM Revenue & Customs (HMRC) has created a useful step-by-step PDF guide to help with the application process, which can be downloaded and followed here. Please also check out our tips here

CJRS claim calculator 

To help calculate your claim and check it, the Government has designed a dedicated calculator. This is useful for calculating a basic regular salaried claim but is not able to calculate complex claims involving TUPE, top-up payments or pension contributions made outside of auto-enrolment, so please be aware. The calculator can be accessed here.

Webinar

HMRC has also created a 25-minute webinar that covers the CJRS basics and how applications can be made. This can be accessed here.

What we are learning from those who are applying for the scheme is that this isn’t a one size fits all process and certain employees or businesses will have requirements that are outside of the usual parameters of the scheme.

You should prepare all of the necessary information for the application beforehand, including calculations for those staff members that have been furloughed to make administering this task easier.

We thoroughly recommend that you seek advice if you are struggling to apply for the scheme or if you need help calculating your payroll.

Government announces Future Fund for fast-growing businesses

The Government has announced a new scheme to help businesses with the impact of Coronavirus. The Future Fund is aimed at rapidly growing businesses that typically rely on equity investment.

These businesses are often pre-revenue or pre-profit and have been unable to access existing schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS).

The scheme will provide loans from the Government worth between £125,000 and £5 million, which must be at least matched by private investors. There is also a requirement to have raised funds via equity in the past too.

Loans under the scheme will automatically convert into equity on a firm’s next qualifying funding round or if the funds have not been repaid by the end of the loan period.

The scheme will be delivered in partnership with the British Business Bank and full details of how to apply are expected to be announced shortly.

Government launches Business Support Finder tool

With an increasing array of Coronavirus business support measures available to different types and sizes of business, the Government has launched a new Support Finder tool to help businesses identify what support packages they could be eligible for.

The new tool asks for some basic information about a business, including turnover and the number of people it employs, before highlighting packages that could be suitable.

These include measures such as:

  • The Coronavirus Job Retention Scheme (CJRS), which allows employers to furlough eligible staff and claim a grant in respect of up to 80 per cent of their usual wages, capped at £2,500 a month, plus employer National Insurance Contributions (NICS) and minimum automatic enrolment pension contributions.
  • The Coronavirus Business Interruption Loan Scheme (CBILS), which enables businesses with a turnover of up to £45 million to access Government-backed loans of between £1,000 and £5 million.
  • A three-month VAT payment deferral.
  • A range of business rates breaks and grants.

The Business Support Finder can be found at: https://www.gov.uk/business-coronavirus-support-finder.

Supporting the wider business community 

Whilst the team have been focused on processing CJRS claims we have also been reaching out into the wider community to help spread the word about support available to Lincolnshire businesses.

In addition to taking part in a panel discussion around funding we have also supported Lincolnshire Chamber of Commerce webinars on the Job Retention Scheme (CJRS) too. If you haven’t taken part in any of these please do check out the list of future events as they are very good. They can be found here.