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Covid 19 Coronavirus Job Retention Scheme

If you are an employer and need to furlough employees we can help.

COVID 19 Coronavirus Job Retention Scheme (CJRS) – The Scheme  

On Friday 20 March 2020 the Government announced it would provide assistance, subject to eligibility, to employers of UK businesses, charities, public authorities and agency workers (those paid through PAYE) or on zero hours contracts and some fixed term contracts, by giving access to a grant designed to cover most of the wage costs who had an operational PAYE scheme on 28 February 2020.

The grant covers the cost of wages to the value of up to 80% of their employees’ wages, capped at a maximum £2,500 per month plus the employers National Insurance contributions and minimum auto enrolment employer pension contributions for those who work either full or part time and who would have otherwise been laid off during the coronavirus pandemic.

An employee’s pay is classed as their normal salary along with regular payments obliged to be paid such as wages, past overtime, fees and compulsory commission payments, although bonuses are excluded.

Where an employee’s pay varies from month to month (subject to the cap), if they have been employed for a full 12 months or more before the claim is made their pay will be based on the higher of the same month’s earning from the previous year or average monthly earnings from the tax year 2019-2020.  

For eligible employees, employed less than 12 months, the claim is based on their average monthly earnings since they started work.

The grant may be backdated to 1 March 2020 and has initially been offered for 3 months although this may be subject to review and may be extended if necessary.

Access to the grant, via a HMRC online portal, is expected to be up and running by the end of April and once submitted, subject to eligibility, receive payment by BACS.

To access the scheme an employer will need to provide the following:

  • Its ePAYE reference number;
  • The total number of its employees to be furloughed;
  • The start and end date of the claim period;
  • The amount to be claimed (note: the minimum period to furlough is three weeks);
  • The employers UK bank details for payroll;
  • Contact details.

HMRC will reserve the right to retrospectively audit all aspects of the scheme.

The employer has a discretion to continue paying full pay during furlough leave (i.e. the remaining 20%) but it does not have an obligation to do so.

Furlough – what does it mean?

Furlough is defined as ‘grant leave of absence to’ and ‘Lay off (workers), especially temporarily’. The term originated in the US and essentially means employees have been put on a period of leave of which they are not required to work. Given it is an entirely new concept in UK Employment Law, there is likely to be further updates and clarification as to how the scheme will work in practice and how it may be applied. 

Once an employee is furloughed, they are not to carry out any work of any kind for that employer.

The existing employment relationship

The introduction of the scheme does not alter the employment relationship between the employer and the employee, and importantly what is clear, is that established employment law rules and principles will still continue to apply and underpin the scheme. That said, it appears likely there may be some limited deviations from some established practices which is likely to depend upon the individual circumstances of the employer, such as their size, resources and financial position given the current broader issues. However, in this regard, legal advice should be sought in order to protect your business from falling foul of established employment law.    

Many employers may be considering furloughing some or all of their employees (subject to the employees’ eligibility) and if so, fundamental changes will be made to the employees’ contract of employment. As a contract of employment cannot be changed unilaterally by the employer without agreement being sought from the employee(s) an agreement must be reached, and if necessary, advice sought on how to ensure this is done in line with established employment law requirements.

An employer can only make a claim for the grant if they have notified the employee in writing they are to be furloughed and they must keep a copy of that communication.

Employment Law Advice

It is advisable to seek legal advice to ensure you protect your business economically, in so far as you are able to, and also from possible future claims such as breach of contract, unfair dismissal, statutory redundancy pay and discrimination. The issues listed below may cause potential problems for employers should they be unaware of their legal obligations in respect of:

  • Obtaining agreement from an employee to amend their contract of employment;
  • How to notify employees who are furloughed
    • The employer must notify the employees to be furloughed in writing and this written communication must be kept by the employer for 5 years, presumably from the date of sending.
  • How furlough leave is to be implemented and the steps to be taken;
  • Deciding who to furlough (Equality and Discrimination laws will continue to apply);
    • If necessary, establishing a fair criteria for selection.
  • Establishing if a redundancy scoring exercise or collective consultation will apply;  
    • With regard to collective consultation, this may depend upon the numbers of employees to be furloughed.
  • Considerations on Furlough and sick leave;
    • For eligible employees on sick leave or who are self-isolating they cannot be furloughed until they are ready to return to work but employees who are shielding or those that need to be at home with someone who is shielding (and in accordance with the current public health guidance) can be furloughed.
  • Employees who have been placed on reduced hours and furlough leave;
    • For those employees whose hours were reduced or are receiving reduced pay and still working, will not be eligible to be furloughed.
  • The eligibility requirements to access the scheme;
    • An employee may be eligible for the scheme if they were in employment on 28 February 2020; 
  • The contractual rights of the employee’s contract of employment and/or their statutory rights;
  • Volunteering and a furloughed employee.
    • It is acceptable for furloughed employees to volunteer, providing they do not provide work or services or generate income for the employer making a claim on their behalf.

This is designed to provide a snapshot of the essential information of the furlough process as each business will have varying needs, contractual terms and competing challenges. As a result, businesses are having to adapt to their individual needs on a daily basis.

Our employment law team shall be pleased to assist with navigating you through this process. Please email Karen Heal directly on kheal@edward-harte.co.uk .

Karen Heal Employment Law solicitor
Karen Heal Solicitor Employment Law

Other Resources which may assist:

https://www.businesssupport.gov.uk/coronavirus-business-advice/

https://www.gov.uk/log-in-register-hmrc-online-services

https://www.acas.org.uk/

Update: The ICO has launched a data protection and Coronavirus (COVID-19) information hub to assist both businesses and individuals access data protection requirements and to be aware of their obligations during this unprecedented period.

The ICO will keep updating as and when is required with access to the link here:

https://ico.org.uk/global/data-protection-and-coronavirus-information-hub/