Our business partner Rebecca Lynch, from Incegd.com, shared a useful Q&A document with us regarding the Job Retention Scheme, that you can find below.
On the 26 March 2020, the government published further guidance for the rollout of the Coronavirus Job Retention Scheme. This guidance was updated again on 4 April 2020.
While the objective of the scheme is to support employers whose operations have been severely affected by a coronavirus (COVID-19), the scheme is also being utilised as a means of ensuring individuals are supported through this difficult time.
Common questions asked by employers
The latest information regarding the Coronavirus Job Retention scheme can be found at Guidance: Claim for wage costs through the Coronavirus Job Retention Scheme and Business support. It is important that an employer thinks practically and maintains perspective regarding their short and long-term business needs if considering furloughing employees.
Which employees can you claim for?
The key element is whether an employee is paid through PAYE. Furloughed employees must have been on your PAYE payroll on 28 February 2020. The employee can be on any type of contract, including; full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts. The government has confirmed that Apprentices can be furloughed in the same way as other employees, meaning that they can continue their training provided they do not generate income for their employers.
As an anti-fraud measure, the government has stated that employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
What about employees who have already been made redundant?
The government has expressly stated the scheme covers employees who have been made redundant since 28 February 2020. You may rehire the employee and place the employee on furlough leave. It is for this reason that the scheme is backdated to 1 March 2020.
I have employees identified as vulnerable, can I place them on furlough leave?
The government has expressly stated that employees who are shielding in line with public health guidance can be placed on furlough leave. This covers those who are at particular risk of contracting the coronavirus and who have received an NHS letter telling them they had to stay inside for 12 weeks. However, employers should ensure that their decisions on who to select for furlough leave are not based on discriminatory criteria, except where such discrimination is likely to be justified – this is in very limited circumstances.
Can I furlough an employee currently on unpaid leave?
If an employee was placed on unpaid leave after 28 February they can be furloughed. Employees placed on unpaid leave before or on 28 February cannot be furloughed.
Can I furlough an employee who is on sick leave?
You would be unable to place them on furlough leave and claim reimbursement until they have returned from sick leave.
What can I claim?
The scheme will provide a grant of the lower of either:
- 80% of an employee’s regular wage; or
- £2,500 per month.
Plus, the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that reduced wage.
An employer can also reclaim 80% of compulsory commission from HMRC. This refers to any commission from past sales as furloughed employees cannot be completing new sales.
Employers can also claim 80% of fees from HMRC. There is no guidance yet on what constitutes “fees”.
Non-monetary benefits, such as the value of health insurance, cannot be claimed for.
How do I furlough employees?
Employers should consult with their staff and make any changes to their employment contracts by agreement. They must notify employees of their furlough status and other changes to their terms and conditions of employment in writing and keep a record of that written notification for five years.
Are employers obliged to top up the remaining 20%?
The government does not require the employer to pay the additional 20%. However, most employment contracts will not permit an employer to reduce an employee’s pay. Withholding 20% of an employee’s salary will amount to a breach of contract and unlawful deduction of wages unless the employee consents to a reduced salary. It is expected that employees will consent since furlough leave is a better alternative than unpaid leave, lay-off or redundancy.
What if I have an employee with an irregular income?
If the employee has been employed for a full twelve months prior to the claim, the employer can claim for the higher of either:
- the same month’s earning from the previous year; or
- average monthly earnings from the 2019-20 tax year.
If the employee has been employed for less than a year, the employer can claim for an average of their monthly earnings since they started work.
Can I rotate employees on furlough leave?
Employees can be furloughed multiple times provided that the minimum length of furloughing is three weeks. This means employers can rotate staff every three weeks.
Will employees accrue holiday during furlough leave?
While furlough leave is a new concept within UK employment law, it is believed that holiday will continue to accrue during this period.
Can employees take holiday whilst on furlough leave?
The government has not provided clear guidance on this but following recently published ACAS guidance, it seems very likely that holiday can be taken whilst employees are on furlough leave – although see our guidance below.
One issue, however is that the government has not confirmed that it will reimburse payments made to employees taking annual leave whilst on furlough leave. We would advise employers who are concerned about this point to include in the furlough letter a term prohibiting employees from taking annual leave if on furlough leave until this is clarified.
If I decide that employees can take annual leave whilst on furlough leave, what do I pay them?
Again, the government has not provided clear guidance. Until this is clarified, most employers are opting to pay employees the normal holiday pay they would receive before they were placed on furlough leave. This includes for bank holidays.
What if an employee has a lot of annual leave and limited time to take it due to the coronavirus?
The government has announced proposed amendments to the Working Time Regulations, which would allow workers who have not taken up to four weeks of their statutory annual leave entitlement due to COVID-19 to carry it over into the next two leave years. The balance of 1.6 weeks’ statutory leave will not be affected, although it can currently already be carried over for up to a year by agreement between the employer and worker. This will ease the requirements on the employer to ensure that their workers take the statutory amount of annual leave in any one year. Otherwise, the employer may have faced a financial penalty.
Can I require employees to take annual leave?
During furlough leave, employers should not force employees to take holiday as this is likely to be an abuse of a worker’s rights. The exception to this relates to bank holidays which employees can be required to take during furlough leave and possibly any pre-booked holiday.
As always, if you need any further advice, please don’t hesitate to contact us on 020 7460 5050 or firstname.lastname@example.org.