03/09/2020 CJRS Scheme heads towards its final month
With September comes the penultimate month of the Covid Job Reduction Scheme, the CJRS launched by the government in March and used to pay more than 9m workers their wages. For September the government will underwrite 70% of wages to maximum of £2187.50 per month, employers must pay the rest (to a maximum of £2,500 plus employers NI and pension contributions.) Next month government CJRS funding reduces to 60% to a maximum of £1,875.
For a reminder of the rules around refurlouging or newly furloughing employees now, please see our earlier article.
In other Covid-19 related developments:
SSP for 14 days quarantine prior to a hospital operation
People due for surgery or a hospital procedure who are advised by their GP or hospital to self isolate at home for 14 days prior will, if unable to work from home, be eligible for SSP. Obviously if they are able to work from home they should do so and be paid as normal.
3,000 employers contacted by HMRC over excess CJRS claims
HMRC have written to 3,000 employers to suggest that they check their CJRS claims – presumably the first step to encourage employers to return excess payments prior to an investigation. We believe another 24,000 employers will be similarly contacted, amounting to around 2% of those claiming furlough pay.
Legal challenge to Arcadia for basing notice and redundancy pay on furlough pay rate
Arcadia, owners of Topshop and Topman, made employees redundant but based their redundancy pay and notice pay on the furlough rate of pay rather than their employee’s pre-furlough earnings. This practice has been common in the retail industry, although at myHRdept we have consistently advised our clients to use actual current pay rates rather than furlough rates. Employees of Arcadia are reported to be in the process of hiring legal representation to challenge the decision to use the lower furlough rate of pay.
Was Arcadia right?
It’s going to be a complex argument – Arcadia will argue that at the time it took the decision to base redundancy and notice pay on reduced furlough pay, it did not have the benefit of government guidance that full pay should be used (this arrived late in the day). It will say that it instead relied on other Companies decisions to use reduce pay and its own legal advice that it was lawful to do so.
The issue of whether or not notice pay could be based on furlough pay was however a frequently featured topic not just in myHRdept’s news pages but throughout industry and legal advisor pages. Anecdotally those who thought ‘normal’ pay should apply (including myHRdept) sat in the majority but there were a significant number of eminent dissenters.
It’s a complex topic and our guess (it is only that) is that the government guidance took so long to arrive is because of that complexity. The fact that .gov eventually came out with the advice to base final monies on full normal pay may indicate that Arcadia will have a tough job convincing the courts though, and we would stack the odds in favour of Arcadia’s employees winning the day, albeit that could be some considerable time away.
Of course we have to remember that underneath the legal arguments is a Company struggling for survival and employees with mortgages and families who need every penny. The moral argument is equally complex and not a subject for today’s article.