COVID-19 - New Guidance On The Coronavirus Job Retention Scheme

This is our sixth update on COVID-19 guidance and details new guidance on the Coronavirus Job Retention Scheme.

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New Guidance On the Coronavirus Job Retentions Scheme

A few points have been clarified regarding the scheme as follows:

  1. All employers are eligible for the grant as long as they are in the UK and have created and started a PAYE payroll scheme for employees by 28 February 2020 and have a UK bank account. This includes businesses, charities and some public sector employers.
  1. Employees include full-time and part-time employees, agency workers paid through PAYE, zero hour contract employees, casual workers and company directors.
  1. Furloughed pay can be backdated to 1 March if appropriate.
  1. The three month period of the scheme runs from 1 March – not three months from when the employees are first furloughed. The scheme may be extended by the government.
  1. Employers will need to designate affected employees as furloughed workers and notify employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

To avoid problems, it is best to get the employee to agree to furloughing in writing. If you have concerns about an employee's contractual position, speak to your HR advisor or an employment law solicitor, especially if the employee does not wish to be furloughed, may prefer redundancy as an option or if you have 20 or more employees to furlough and may therefore need to consult them collectively first. Employees cannot insist on being furloughed.

  1. The employee should be given a letter to explain their furloughing. According to ACAS this should state the start date, the review date and provide a contact number for employees to use if needed. It should also state that the employee is furloughed and will not work for the company during the furlough period. A company director can work to the extent that company statutory duties must be undertaken.
  1. Employees who have been furloughed have the same rights as usual, namely maternity and other parental rights, rights against unfair dismissal, rights to redundancy payments and to annual leave. It is unlikely that you can furlough an employee on maternity or similar leave but may be able to claim for any enhanced contractual pay paid in excess of the statutory amounts during this leave. If an employee falls ill while on furlough they should be moved to sick leave and are entitled to SSP.
  1. Furlough leave is not annual leave and it is unlikely that an employee can take annual paid leave while furloughed. ACAS suggests an employer can close the business for a short while, for example one week, and insist on all staff taking that closure period as annual leave but we would suggest obtaining further advice before making that decision. Carry forward rules on annual leave have been relaxed for this year.
  1. When the new online portal is set up for claims by employers this month, they will need:
  • The PAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Their bank account number and sort code
  • Their contact name and phone number
  • Calculation of the amount being claimed

Additional details may be announced as being required by HMRC.

  1. Employers can only submit one claim at least every three weeks, which is the minimum length of time an employee can be furloughed for.
  1. The grant from HMRC is to cover the lower of 80% of an employee's regular wage or £2,500 per month, plus the associated employer NIC and minimum automatic enrolment employer pension contributions on that subsidised wage. It will not cover fees, commission and bonuses or any sums employers decide to pay above the 80% or £2,500 pay rate. Tips and overtime payments have not been mentioned in the guidance.
  1. It does not matter if the pay under furlough is less than the national minimum wage as that applies only to hours worked. If the employee undertakes training, they will be eligible for the national minimum wage.
  1. While furloughed, employees can take part in volunteer work or training as long as this does not provide services to, or generate revenue for or on behalf of their employer.
  1. Subject to the three week minimum furlough period, employees can return to work and be furloughed again during the three month period so the workload in a business can be shared evenly. It is not clear to what extent employees can work for other employers while furloughed but it is believed this would be subject to their employment contract and should be undertaken outside of their usual working hours.
  1. In respect of employees on a variable salary, including zero hours contracts, where the employee has been employed for a full twelve months, employers can claim for the higher of either the same month's earning from the previous year or average monthly earnings for the 2019-20 tax year. If the employee has been employed for less than a year, employers can claim for an average of their monthly earnings since they started work.
  1. Employees on sick leave or self-isolating are not furloughed and they should receive Statutory Sick Pay. They can however be furloughed after returning from sick leave or when their period of self-isolation has ended.

We will update you as more details are announced.

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