Job Retention Scheme Update
In the last 8 hours or so, the government has released further details of the Job Retention Scheme and information about furloughed workers. We still don’t have all of the answers from the government so please do bear with us when it comes to specific queries about your business, below are the main points hot of the press that you need to know.
As a result of the further guidance, we have also drafted a new letter, covering all of the new points within the guidance, for those employers who make the decision to designate employees as Furlough workers. We suggest that any business that has already sent out letters to employees, and who wish to designate their employees as Furlough workers, send this newly drafted letter which is designed to supersede any previous correspondence. The letter can be accessed within your client portal (Precedent Documents Section). We are of course continuing to keep abreast of all legal developments as they happen and in the event that we believe any further amendments to this letter are required we shall communicate this to you.
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus and should be set up from the end of April.
Employers will be able to use a portal to 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. Employers can use this scheme anytime during this period. Fees, commission and bonuses are excluded.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
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 (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) 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 NMW for any time spent training.
Who can claim
Any UK organisation with employees can apply, including:
- recruitment agencies (agency workers paid through PAYE)
- public authorities
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.
Employees you can claim for
Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
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.
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 statutory leave (e.g. maternity) can continue to draw statutory 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 1 March 2020.
If your employee is on unpaid leave
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
We will bring your more details as soon as we have them but in the meantime, here is the link to the Government website if you wish to read further details yourself – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.