Laura Livingstone Partner, Head of Employment
Coronavirus Job Retention Scheme
On the 26 March 2020, the government published further guidance for the roll out of the Coronavirus Job Retention Scheme. While the objective of the scheme is to support employers whose operations have been severely affected by 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. 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 were 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 stated that employees who are shielding in line with public health guidance can be placed on furlough leave. This means that it only covers those who are at particular risk of contracting the coronavirus and received an NHS letter telling them they had to stay inside for 12 weeks. It is unlikely that this policy extends to all vulnerable employee since not all vulnerable employees have been told to stay at home for 12 weeks even if it is recommended. 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 Februarycannot be furloughed.
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. Further guidance on calculation is due to be published. Fees, commission and bonuses should not be included.
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. 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
- 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?While there is no explicit prohibition of rotating furlough leave amongst employees, an employer should note that the minimum length of furloughing of 3 weeks. It should therefore be possible to rotate staff every three weeks.
Will employees accrue holiday during Furlough leave? While furlough leave is a new concept within UK employment law, it seems likely that the 5.6 weeks' leave under the Working Time Regulations 1998 would continue to accrue during furlough leave. The government has stated employees that have been furloughed have the same rights as they did previously.
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 4 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.