Building Legacies Covid-19 Briefing – 27/05/2020
This Bulletin includes information on:
- Extensions to Mortgage Holidays
- CJRS Furlough Scheme Changes
- Part-Time Workers’ Rights
EXTENSION TO MORTGAGE HOLIDAYS
The Financial Conduct Authority (FCA) has announced proposals which will continue support for customers who are struggling to pay their mortgage due to Coronavirus crisis.
The proposal outlines the options Lenders will be required to provide customers coming to an end of a payment holiday, as well as those who are yet to request one.
For customers yet to request a payment holiday, the time to apply for one would be extended until 31st October.
For those who are still experiencing temporary payment difficulties due to Coronavirus, Lenders should continue to offer support, which could include extending a payment holiday by a further three months.
Here is what the FCA would expect:
- Customers who can afford to return to full repayment should do so in their best interests – at the end of a payment holiday, firms should contact their customers to find out if they can resume payments and if so, agree a plan on how the missed payments will be repaid.
- Anyone who continues to need help gets help – lenders should continue to support customers who have already had a payment holiday where they need further help. Lenders are expected to engage with their customers and find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support. As part of this firms should consider a further three-month payment holiday.
- Extending the time the scheme is available to people who may be impacted at a later date – customers that have not yet had a payment holiday and experiencing financial difficulty will be able to request one until 31st October 2020.
- Keeping a roof over people’s head during a public health crisis – the current ban on repossessions of homes will be continued to 31st October 2020. This will ensure people are able to comply with the Government’s policy to self-isolate if they need to.
- Payment holidays and partial payment holidays offered under this guidance should not have a negative impact on credit files. However, consumers should remember that credit files aren’t the only source of information which Lenders can use to assess creditworthiness.
This guidance would not prevent firms from providing more favourable forms of assistance to the customer, such as reducing or waiving interest.
Firms should consider signposting customers towards sources of debt advice. Debt advice may be helpful for customers coming to the end of payment holidays and may be particularly useful for consumers with pre-existing payment shortfalls or who are likely to be in longer-term financial difficulty.
When implementing this guidance, Lenders should be particularly aware of the needs of their vulnerable customers and consider how they engage with them. For customers who aren’t able to use online services (such as digital channels), Lenders should make it easy for customers to access alternatives.
The FCA may issue additional guidance as the Coronavirus situation develops.
FURLOUGH SCHEME CHANGES
On 20/05 the Chancellor announced an extension of the Coronavirus Job Retention Scheme (CJRS) furlough scheme until at least 31/10. However, it is likely that by the end of this week the Chancellor will announce modifications to the furlough scheme to take effect from 01/08.
These changes have not yet been agreed in Cabinet but there is most likely to be a phased reduction from the current 80% Government subsidy, down by perhaps 5% each month until 31/12.
Another option being considered is a single reduction from 80% to 60%, to take effect from 01/08.
The intention is to encourage some legally-sanctioned part-time return to work for some people, with employers increasing their financial contribution to salaries whilst still benefiting from the revised CJRS.
We will advise you when the details are confirmed.
PART-TIME WORKERS’ RIGHTS
The Government has updated guidance on part-time workers rights and how employers should act.
Part-time workers are protected from being treated less favourably than equivalent full-time workers just because they’re part time.
A part-time worker is someone who works fewer hours than a full-time worker.
There is no specific number of hours that makes someone full or part-time, but a full-time worker will usually work 35 hours or more a week.
Part-time workers should get the same treatment for:
- pay rates (including sick pay, maternity, paternity and adoption leave and pay)
- pension opportunities and benefits
- training and career development
- selection for promotion and transfer, or for redundancy
- opportunities for career breaks
Some benefits are applied ‘pro rata’ (in proportion to hours worked). For example, if a full-time worker gets a £1,000 Christmas bonus, and a part-time worker works half the number of hours, they should get £500.
Overtime pay – part-time workers may not get overtime pay until they’ve worked over the normal hours of a full-time worker.
When employers can treat part-time workers differently
There are some situations when employers do not have to treat part-time workers in the same way as full-time employees. In these situations the employer must be able to show there is a good reason to do so – this is called ‘objective justification’.
For example, an employer may provide health insurance for full-time employees but not part-timers if this can be objectively justified.
Their reason may be that the costs involved are disproportionate to the benefits part-timers are entitled to.
In this case the employer may come up with an alternative like asking the part-time worker to make a contribution to the extra cost.
If a part-time worker has been treated less favourably
Part-time workers should first discuss this with their employer or trade union representative. They have the right to get a written statement of reasons for the treatment from their employer.
The request should be in writing and the employer must write back within 21 days. If the worker is not satisfied that the reason given was objectively justified, they may be able to take a case to an employment tribunal.
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We will issue further advice and guidance Bulletins as the Covid-19 situation develops.