Your Questions on the Government’s Coronavirus Job Retention Scheme Answered Here
Updated as of 8th April 2020
1. What is it?
The Chancellor announced the Coronavirus Job Retention Scheme (CJRS) on Friday 20 March. If an employer “cannot cover their employee costs due to Covid-19”, they may be able to access support to continue paying up to 80% of their employee’s wages, in order to avoid redundancies. The employer will need to have the employee’s status changed to “furloughed” with the HMRC. This has been brought in as a temporary measure to protect employees from becoming redundant or being “laid off” (lay-off being suspension with no pay).
2. What do the employees get?
The employer can claim a grant of up to 80% of the employee’s wage for all employment costs, up to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Therefore a furloughed employee would be entitled to this.
Is commission included?
An employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary. Please note though it can only be referring to the commission from past sales as the furloughed employees cannot be completing new sales when on furlough.
Please note the 80% does not include non-monetary benefits (e.g. the value of health insurance or a car).
3. What about the remaining 20%?
The employer can choose to fund the differences between the government grant payment and salary, but does not have to.
4. What if you were too quick and already dismissed employees?
People who have already been dismissed for Covid-19 related reasons can be re-employed and covered by the CJRS as long as they were on payroll on 28 February 2020.
5. Who qualifies?
Anyone who was an employment contract including agency workers/ zero hour contract workers/apprentices and company directors that were on the employer’s payroll from 28th February 2020. Please note if you are off sick you cannot apply for this until you return to work. Similarly if you are on maternity leave you cannot apply for this until you have returned to work.
6. Furlough and TUPE (This is not yet in the official guidance)
If you were TUPE’d over on to employers payroll after the 28th February 2020 then then the new employer cannot claim and neither can the old one. David Johnston MP however has emailed a number of employers that they will be eligible for the job retention scheme. This is not the case in the current legislation as it stands but it’s likely we will get another update to confirm this.
7. Conditions of the Scheme
If an employer makes an application under the scheme:
· an employee should not undertake work for them while furloughed. The can engage in voluntary work that does not benefit the employer financially.
· a company director can still perform their statutory duties, but not other work for the company. We are waiting on clarification of what this means
· Apprentices on furlough can continue their training as long as it does not provide services or generate revenue for their employer. HM Treasury will not be pausing apprenticeship levy payments for employers
Watch out for a hotline being set up for employees reporting any employer making them work when they should not. Fraudulent claims may have criminal implications.
8. What’s the process?
The following steps need to be considered:
· The employer will need to discuss with the employee becoming classified as “furloughed”. This would mean that the employee is kept on the employer’s payroll, rather than being terminated or laid off.
· The employee needs to consent to this and this will be seen as a variation to their existing terms and conditions.
· Employers must notify employees of their furlough status in writing and keep the record of that written notification for five years.
· The employer will need to make an application to change the employee status to “furloughed” will need to be made via an online portal.
· Payment of grant is made to the employer. The employer needs to process payroll and make payment to the employee.
9. When the HMRC portal scheme will go live
This is being built from scratch! Senior rep from HMRC told parliament it will open and ready on 20th of April and payment will be made by 30th April. Live testing has already started! Should be able to cope with around 450,000 an hour. I claim can made per pay period. Claim can be made 14 days in advance.
We think to claim, you will need:
· your ePAYE reference number
· the number of employees being furloughed
· the claim period (start and end date)
· amount claimed (per the minimum length of furloughing of 3 weeks)
· your bank account number and sort code
· your contact name
· your phone number
10. Furlough and annual leave (This is not yet in the official guidance)
Yes you can take holidays and these can be enforced by an employer but it is likely that the payment will need to be topped up to full pay. ACAS guidance has previously said taking holiday whilst on furlough would be impractical and it can therefore be carried over 2 years. This guidance has now changed to it can be taken. For example taking the easter break holiday will not break the 3 week furlough minimum requirements.
11. Employees taking another job whilst furloughed
employees can start a new job when on furlough provided they are not prohibited from doing so under their existing contract (meaning they might end up earning 80% of the old salary and 100% of a new one).
12. Can you be furloughed more than once?
Yes. This means, they can be furloughed for a minimum of 3 weeks, brought back to work, then re-furloughed.
We aim to keep you up to date on the quick paced changes that are afoot in employment law. This is no doubt a stressful and anxious time for all of you. If you would like to discuss the furlough process or indeed anything else effecting your business please book in for a free zoom consultation with me Ramiza Mohammed, experienced employment lawyer and CIPD accredited HR professional now.
Send an email to Ramiza@mmlegal.co.uk or find out more here.