Following on from the Government’s announcement of the Coronavirus Job Retention Scheme, we now have some further information about the scheme following updated guidance issued by the Government (https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme).
In summary, the following will apply:
- Employers will be able to apply to HMRC for a grant to cover 80 per cent of an employee’s regular wage or £2,500 per month (whichever is lower) plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions for employees who are not working but are “furloughed” and kept on payroll, rather than the individual losing their job
- The Scheme covers any UK organisation with employees including businesses, charities, recruitment agencies and public authorities (although there is a clear expectation that employers who receive public funding for staff costs won’t furlough their staff)
- The Scheme covers employees who were on an employer’s payroll on 28 February 2020. It doesn’t cover any employees who started working with their employer after 28 February 2020
- Employees who have been made redundant since 28 February 2020 can be furloughed if they are re-hired by the employer who had them on their payroll on 28 February 2020
- Employees must be furloughed for a minimum of three weeks
- Employees who are furloughed cannot undertake work for the employer who has furloughed them but can take part in volunteer work or training
- If an employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually
- The Scheme will cover the cost of eligible employee’s wages, backdated to 1 March 2020 and for at least three months going forward
- Employers can choose to “top up” the salary of those employees on furlough (to bring them up to 100% of their salary), but are not obliged to do so under the terms of the Scheme
- An employee on furlough can be paid less than the national minimum wage without legal risk as long as they do not undertake any training for their employer during furlough
- There will be no limit on the amount of funding available to the Scheme
- It is not a condition of the grant under the Scheme that employers have an overall freeze on redundancies — furloughed (or other employees) can still be made redundant subject to existing employment law. However, the Government’s aim by introducing the Scheme is to avoid redundancies, but this may still have to happen in some businesses
The following employees will not be covered by the Scheme:
- Those employees who are already absent from work as a result of self-isolation/social distancing guidance from the Government and who are eligible for statutory sick pay (and perhaps occupational sick pay);
- Employees who were on unpaid leave before 28 February 2020;
- Those employees who are able to do their job from home even if their normal place of work has been shutdown;
- As above, those employees who have reduced their hours/pay but are still working; and
- Those employees who are otherwise able to attend work and whose employers are not considering redundancies.
To access the funds, employers must:
1. Identify affected employees - establish those employees who have no work to undertake as a direct consequence of coronavirus;
2. Change status of employees — employees will need to be changed to ‘furloughed workers’ — this can only happen with the agreement of your employees and will result in a change to existing terms and conditions of employment. It is unlikely that an employee will not agree to this change on the basis that the alternative could mean that they receive no pay or are made redundant.
3. Let HMRC know — you will require to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required which is why you need to ensure that you are keeping a close watch on when this portal is up and running). Once you have done that, then HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
