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Job Retention Scheme
Additional Information and Clarification
(26 March 2020)

Further details of the Coronavirus Job Retention Scheme have been published by the government, providing clarification on some key points. This post provides a summary of the guidance.

Other Guidance Notes

We’ve issued a series of guidance notes since the beginning of this and you can find them here:

We also remind you that, although these are unusual times, all associated employment laws still apply.

Which employers is the scheme available to?

The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020

Any organisation with employees can apply, including charities, recruitment agencies and public authorities; however, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. With agency employees, the scheme is only available for agency employees who are not working.

Which employees are eligible?

To be eligible, the employee must have been on the payroll on 28 February 2020; If they were hired later, they are not eligible.

Does this cover employees made redundant if they are rehired?

Yes. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme.

How much subsidy can be reclaimed?

Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (rather than including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Fees, commissions and bonuses are not included.

An employer can choose to top up (to 100%), but does not have to (subject to employment law and renegotiating any contractual entitlements).

For employees whose pay varies, the employer can claim for the higher of

  • the same month’s earning from the previous year (for example earnings from March 2019); or
  • average monthly earnings in the 2019-20 tax year

How does this align to National Minimum Wage?

Individuals are only entitled to the minimum wage for the hours they are working.

Furloughed workers must be paid the lower of 80% salary or £2,500 even if this takes them below NMW.

They are entitled to be paid National Minimum Wage for any time spent training.

For how long must employees be furloughed?

Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding

There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.

The employee must not be working at all. Any work undertaken during the furlough period makes them ineligible for the claim.

Employees can undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.

Can employees on sick leave be furloughed?

Employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards. Employees who are “shielding” can be placed on furlough.

Can employees on maternity leave be furloughed?

Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments.

The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed

What are the mechanics of making a claim?

Employers will claim once every three weeks; they cannot make weekly claims.

Claims can be backdated to 1 March 2020.

The specific information required to make a claim is listed here: what you’ll need to make a claim.

The government will issue further guidance on the mechanics of claiming the payment in due course. Access to the scheme is planned for the end of April.

What are the options for employees starting after 28 February 2020?

There are two key points of clarification which you may consider regarding employees hired after 28 February:

  • only employees on the payroll on 28 February are eligible
  • payment of NICs and minimum pension contributions are in addition to the £2,500

Our thoughts are that, although you won’t be able to claim for employees you need to lay-off who started after 28 February, you may wish to consider whether the cost to your business may be offset by your ability to claim for the NICs and pension contributions of the furloughed workers.

Is an employer obliged to place people back on the payroll at the end of their furlough leave?

What happens if the employer cannot afford to do that?

When the Job Retention Scheme comes to an end, the employer will need to determine whether the employee can return to employment.

There are likely to be three broad options:

  • The employee returns to employment as per the terms before the furlough leave
  • The employee returns to employment but the terms of employment need to change, for example, a change in contracted hours.
  • The employer makes the position redundant and therefore the employee’s employment is terminated.

If it’s either a change to the employment terms or the position is redundant, the employer must follow the appropriate process.

Note: Employees that have been furloughed have the same rights as they had before, including rights against unfair dismissal and redundancy payments. We recommend that you seek support, preferably from us, before changing employees terms or terminating employment.

Employment laws still apply

When making changes to working hours or other terms and conditions, assuming your employment contract does not already allow for that, normal employment law applies – refer to our post on employment law: Job Retention Scheme – Employment Laws Still Apply (23-Mar-20).

Also, the employer must be careful not to discriminate in deciding who to offer furlough too – refer to our post on furlough discrimination: Furlough Decisions – Beware of Unintended Discrimination (24-Mar-20).

For more information

We recommend that you read the full guidance published by the government here: Claim for wage costs through the Coronavirus Job Retention Scheme

If you’d like help with the impact of Coronavirus or any other HR matter, contact us on 0203 319 1649 or fill in the form below.

Contact Us

If you’d like help with the impact of Coronavirus or any other HR matter, contact us on 0203 319 1649 or fill in the form below.

Contact Us

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