The anticipated guidance in relation to the Coronavirus Job Retention Scheme (CJRS), which will see employers reimbursed for 80% of employee salaries up to a cap of £2,500 per month and associated wage costs for furloughed workers, has been published.
Who can claim?
All UK employers that had a PAYE scheme in place on 28 February 2020. This is for any type of contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
N.B. Employees can be placed on furlough by one employer but continue to work for another. Those placed on furlough by more than one employer will receive separate payments from each employer.
For single director companies, we don’t believe furloughing is possible. But for companies with 2 or more directors furloughing could be possible.
What can you claim?
Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer National Insurance contributions and minimum auto-enrolment pension contributions that wage. Any fees, commissions and bonuses are not included.
An employer can choose to top up the pay to 100%. Again, remember that an employee must consent to be “furloughed” on the lower pay unless the employer has an express lay-off clause in the contract.
An employee who was on the payroll on 28 February 2020 and was subsequently made redundant can be ‘re-hired’ by the employer and put on the furlough scheme.
It is hoped that the scheme will be operative by the end of April, and the grant will start on the day a person is placed on furlough and can be backdated to 1 March 2020. where applicable. HMRC will pay the amounts via BACS to the designated employer bank account.
How long can you claim for?
Claims can be for a minimum of three weeks and a maximum of three months. Tthis may be extended depending on how the situation relating to the outbreak of coronavirus evolves. Any periods shorter than 3 weeks will not count for the grant. Therefore you cannot rotate employees weekly, but there is nothing in the guidance which prohibits an employer rotating furlough leave amongst employees (provided each employee is off for a period of at least three weeks). There also does not appear to be any limit on the number of times an employee can be “furloughed”.
Can the employee do any work while they are on furlough?
The employee must do no work at all. If they work at all, for even a very short period during the entire three weeks the employer will not be eligible for the grant. The employee may be able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer. The scheme will not apply to a reduced hours or short-time working scenario.
What about employees on Sick Pay?
Employees on sick leave or who are self-isolating cannot be furloughed. But they can be put on furlough leave after they return.
Employees who are ‘shielding‘ due to being in the vulnerable class can be placed on furlough.
When the scheme ends, employers must decide whether employees can return to their duties. If they can’t, redundancies may be considered.
Employees who have been furloughed retain the same employment rights, such as entitlement to SSP, maternity rights, other parental rights, redundancy payments and protection against unfair dismissal.
Full guidance can be found here. But as always we are here to answer any questions you might have.
If you decide that putting employees on furlough is the best option for you and your employees, then you need to prepare a notification letter. Here is a sample furlough letter. Please note that this letter has not been written by a lawyer. You may wish to speak to a HR Specialist first.
JUST RELEASED! Statutory Annual Leave
Workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.
Currently, almost all workers are entitled to 28 days holiday including bank holidays each year. However, most of this entitlement cannot be carried between leave years, meaning workers lose their holiday if they do not take it.
There is also an obligation on employers to ensure their workers take their statutory entitlement in any one year. Failure to do so could result in a financial penalty.
The regulations will allow up to 4 weeks of unused leave to be carried into the next 2 leave years. This will help ease the requirements on business to ensure that workers take statutory amount of annual leave in any one year.
To receive regular updates you can sign up for our newsletter by clicking here.
As always we are here for you! And we will do our very best to continue to answer your questions and provide you with guidance as soon as updates are available.