Update – Coronavirus Job Retention Scheme
The government has released further details regarding the Coronavirus Job Retention Scheme (‘furlough leave’) that was announced last week. This will come as a welcome relief to many employers who have understandably been anxious to know more about the scheme and how it will operate.
As you may remember from our earlier Legal Update Government Help for Employers, the Scheme is intended to give financial support to employers who have ‘furloughed’ employees by allowing employers to apply for a grant of up to 80% of the employee’s usual monthly wage costs, up to £2,500 a month.
So, what do we now know about the Scheme? Below we look at some of the key points.
The scheme is open to all UK employers that had a PAYE scheme in place on 28th February 2020. It’s important to be aware that employees hired after 28th February 2020 cannot be furloughed or claimed for in accordance with the Scheme.
An employee who was on the payroll on 28th February and has since been made redundant can be rehired and put on the Scheme.
How Does the Scheme Work?
In general terms, it will apply to employees who are designated as furloughed workers – they remain employed but are not carrying out work for the employer. If an employee is ‘furloughed’, the employer can claim a grant from HMRC to reimburse them for 80% of furloughed workers wage costs, up to a cap of £2,500 per month. An employer could choose to fund the difference between this payment and the employee’s salary, but does not have to do so.
In more detail what does this mean?
Placing employees on furlough
If an employer wishes to place an employee on furlough they will need to agree a variation of contract with them. This is because furloughing employees will involve a change to their terms and conditions. If an employer is not going to pay furloughed employees their full pay, this will also need to be agreed as part of the variation. In some situations, it may be necessary to undertake collective consultation regarding furlough because of the numbers of employees that are involved. Employers should seek advice from Kingfisher Professional Services Ltd before taking any action to furlough employees. It will hopefully be of some comfort to employers that in the overwhelming majority of furlough cases we have dealt with, employees have been agreeable to the change.
The latest government guidance has also covered some practical matters that will be of assistance to employers to be aware of when it comes to placing employees on furlough:
- As employers staffing needs can be affected in different ways not all employees have to be furloughed. But it should be born in mind that if only some are to be furloughed there should be a fair selection to avoid claims such as those for discrimination.
- 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 amongst employees, provided each employee is off for a period of at least three weeks.
- The employee must not be working for their employer at all. 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. However, if employees are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the National Minimum/Living Wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
- 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.
- Employees on sickpay or who are self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding in accordance with public health guidance can be placed on furlough.
- Employees who have been furloughed have the same rights as they did previously, including the right to claim unfair dismissal. The guidance unfortunately does not expressly cover the position regarding holiday and the furlough period.
If you require advice regarding furlough and a situation in your organisation, please contact Kingfisher Professional Services Ltd as we are happy to help.
In terms of how much employers can claim under the Scheme, the government guidance states that employers can claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Fees, commission and bonuses should not be included.
The government have said that for full time and part time salaried employees, the employee’s actual salary before tax, as of 28th February should be used to calculate the 80%. Fees, commission and bonuses should not be included. They have also made provision for calculating salary for employees whose pay varies.
Further information regarding the scheme and how to claim can be found here
If you would like assistance with an employment law matter, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.