27 March 2020
Coronavirus Job Retention Scheme – Further Details from the Government
By Anissa Hallworth, Director, Hayes + Storr.
The Government has published further details on the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme).
It is unclear whether HMRC intends to rely upon the guidance they have issued or whether there will be actual legislation however, there is a summary below of the information which is currently available.
- The Scheme is open to all UK employers that had a PAYE scheme in place on 28th February 2020.
- Any organisation with employees can apply, including charities, recruitment agencies and public authorities; however, the Government does not expect public sector employers to use it as long as Central Government continues to fund wage costs in the normal way. With agency workers, the Scheme is only available for agency employees who are not working.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolement pension contributions on that wage. Fees, commissions and bonuses are not included.
- An employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements).
- For employees whose pay varies, the employer can claim for the higher of (1) the same month’s earnings from the previous year (e.g. earnings from March 2019); or (2) average monthly earnings in the 2019-20 tax year.
- Individuals are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid national minimum wage for any time spent training.
- To be eligible, the employee must have been on the payroll on 28th February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28th February 2020 and has been made redundant can be rehired and put on the Scheme.
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.• There is nothing in the guidance which prohibits rotating furlough leave among employees, provided each employee is off for a period of at least three weeks.
- The employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
- When agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough to. There is however an argument that prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
- Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
- Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
- Employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement. Claims can be backdated to 1st March 2020 if the employee was not working during this period of time.
The Government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the Scheme will be up and running by the end of April 2020.
If you require advice on this matter at this difficult time, contact Anissa on 01328 850726 or email firstname.lastname@example.org.
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.