Update on the Coronavirus Job Retention Scheme

The government have finally given further details of the scheme which can be found here.

It is worth a read, but these are some of the headline points:

  1. All UK employers can access it as long as they have a payroll scheme and that scheme was in operation on 28th February 2020.  It includes all businesses, charities and recruitment agencies (who can claim for agency workers paid through payroll).
  1. All employees that were employees on 28 Feb 2020 are eligible.  The implication of this is that for many that have very recently started, or are about to start, these people are not covered under the scheme.
  1. Employees that were made redundant after 28 February, can be rehired and are eligible.
  1. Furloughed employees cannot perform any work for the employer during the furlough period.  Charities in particular will question whether employees can be furloughed, but continue to donate time where they historically volunteered, as well as performed employed work.  This does not appear allowable unfortunately and presumably is to prevent abuse of the scheme.
  1. Employees on furlough will have tax and NI taken off the money that they receive – normal PAYE deductions.
  1. Not all employees need to be furloughed, but you need to avoid any kind of discrimination based upon a protected characteristic, or selecting individuals based upon whistle blowing, asserting statutory rights, health and safety issues etc.  A rough and ready matrix approach in selection would be ideal but in truth, a solid business reason will be enough – e.g. retaining working the most experienced members of staff.
  1. Employees on sick leave are NOT eligible but are eligible after the sick leave.  For members of staff who are isolating in accordance with advice from Public Health England, these members of staff can be furloughed.
  1. Employers can claim 80% of the wage costs of an employee up to £2,500 per month.  Employers can also claim for Employer’s NI contributions and auto enrolment pension contributions (at the minimum level).  Employees CAN opt out of contributions to their auto-enrolment pension.
  1. Employers may have employees with variable wages.  You should carry out an average of their wage in the last 12 months.  If they only started in Feb 2020, it’s an average of earnings so far.  If they have less than a year of service, it’s an average of their wages so far.
  1. When calculating average wages, commission and bonus is not included.  This will no doubt affect the estate agents amongst you.
  1. Employees on National Minimum Wage will be concerned about how the scheme affects them.  As suspected, the NMW does not apply to the furloughed wage – presumably because no work is being performed.
  1. Employers can only claim once every 3 weeks, which is also the minimum length of time for which an employee can be furloughed.
  1. The guidance is silent upon whether employees can be furloughed, de-furloughed and re-furloughed – furloughed in rotation in other words.  It would be safer to avoid this.
  1. If you need to make employees redundant, you will need to follow the normal employment law practices for doing so.
  1. All monies received from the government (the 80%) must be paid to the employee (subject to PAYE deductions).  Employers cannot seek to make a profit.
  1. Employers can choose to top up employees’ wages to the 100% but do not have to.  If you will have employees that remain working, and employees that you will furlough, you may find resentment if furloughed employees get their furlough pay topped up to 100% when other people have to work to get 100%.
  1. It will be necessary to get employee’s consent to changes to T&Cs.  There is an obvious tension in the last 2 points.  In practice though, employees are likely to agree to be furloughed and have 80% of their wage if they understand that the alternative is that they are made redundant and lose their job altogether.

Andrew Buckley