15th April 2020
We have updated our employer’s Q&As based on the government guidance published on 15th April. This is article is for general guidance only and is not a substitute for HR or legal advice on your particular circumstances.
What is the CJRS and what is furloughing?
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
Employers can use a portal (expected 20th April) to claim for 80% of furloughed workers’ (workers on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period but employees must be furloughed for at least 3 consecutive weeks.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme from 19th March 2020 and applies to any employee or worker who was on the PAYE payroll from that date (earlier iterations of the guidance referred to 28th February – the extension to cover workers on payroll from 19th March was announced 15th April.)
How long will the CJRS go on for and what happens when the government ends it?
At least 3 months from 1st March and it may well be extended. When the scheme ends employers will have to decide whether to return employees to work or consider redundancy (subject to following a fair process.)
How do I claim & what can I claim?
Employers can submit one claim every 3 weeks to cover 80% of the worker’s gross salary up to £2,500 per month + employer’s NICs and minimum employer’s auto enrolment contributions. The worker must have been employed on the employer’s payroll from March 19th .
For each eligible worker you will need to work out 80% of their monthly pay (to a max of £2,500) and the employer’s NICs and minimum auto enrolment contributions and register these on an HMRC portal expected in April/May. You will need to keep copies of the furlough letters for 5 years to prove that the worker was furloughed for the period claimed. You can only claim from the date you furloughed the worker or made them redundant if that fell since February 28th.
Which workers can I claim for?
Anyone furloughed and paid through PAYE and who has been on your PAYE payroll since 19th March 2020, including:
- full-time workers
- part-time workers
- workers on agency contracts
- workers on flexible or zero-hour contracts
The scheme also covers workers who were made redundant since 28 February 2020, if they are rehired by their employer.
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
Can I furlough workers and then have them do some work still?
No, they must not work for you at all while on Furlough leave from your employment, neither can they work for an associated or linked employer.
If there is some work to do but less than normal, a more appropriate route would be to agree with the worker to reduce their working week for a period. Our earlier article and another earlier article containing a template agreement to reduce hours covers various ways of achieving this.
What about national minimum wage?
This won’t apply during furlough leave unless the employee is asked to undertake training.
Can I require furlough workers to undertake training e.g. on-line courses?
Yes, but you must ensure that they receive at least the national minimum/national living wage for the duration of the training.
Can I automatically furlough workers?
You will need a written agreement from your workers to go on furlough leave and they must confirm in that agreement that they will do no work for you while furloughed and you must keep these letters for 5 years as evidence. (myHRdept has template letters for this purpose, free for existing retained clients.)
Can I switch people in and out of furlough status?
To be eligible for the grant the worker must furlough for a minimum of 3 continuous weeks.
Can a worker carry out voluntary work while furloughing?
Yes, but not for the employer or any linked or associated employer – they could work for the NHS as a volunteer for example. They must not do anything to generate revenue for their employer or provide services on behalf of their employer.
I’ve already made redundancies because of COVID-19…can I reverse them and furlough workers instead?
If you made redundancies since Feb 28th you can rehire the worker and furlough them.
Can I furlough workers I wasn’t planning to make redundant?
To an extent – if you were planning to lay workers off without pay for a period because of COVID-19 (i.e. a step short of making them redundant) the furlough route would seem a viable alternative. Obviously if you still have work to do then it is not.
Does the employer have to pay the other 20% of a furloughed worker’s wages?
No, but it might choose to top up wages to the CJRS cap of £2,500 per month or indeed to the workers normal wage if higher. This is entirely at the employer’s discretion.
Is pay while furloughing taxable & pensionable?
Yes, tax and NICs will be deducted from furlough pay as well as auto enrolment contributions unless the worker has opted out.
Can I top up some people’s wages but not others?
Provided the employer is careful not to select workers for top up on discriminatory grounds this should be possible. Seek advice from myHRdept.
What if someone is on unpaid leave, off sick or on maternity leave – can they be furloughed?
Workers placed on unpaid leave AFTER 28th February can be furloughed (but not before), workers on sick leave or self-isolating should get SSP, but can be furloughed after their sick leave or self-isolation ends. Workers on maternity and other statutory family leave should continue to receive SMP, SAP, SPP etc. but can be furloughed once the statutory leave comes to an end. Workers who are shielding in line with public health guidance can be placed on furlough leave.
What is ‘shielding?’
Certain high risk people have been asked to stay at home and not go out at all with the exception of if they have a private garden. Those most at risk include:
- Solid organ transplant recipients
- Some people with cancer who are undergoing treatments such as chemotherapy and radiotherapy
- People on immunosuppression drugs
- Women who are pregnant and have heart disease
- People with severe respiratory conditions – cystic fibrosis, severe asthma and COPD
- Some people with rare diseases such as severe combined immunodeficiency.
I have workers self-isolating on SSP – can I furlough them instead?
They should remain on SSP but can be furloughed once they finish sick leave or self-isolating.
What if the worker has more than one job or wants to get another job while furloughed?
A worker can be furloughed from more than one job, and the cap will apply to each employer individually. The guidance states that a worker can get a second job while furloughed providing it is not with the employer or any associated employer.
Does a furloughed worker continue to accrue holiday?
We will need further government guidance here, but in the absence of that it would be safest to assume that holiday will continue to accrue during furlough absence.
Will a zero hours worker be entitled to furlough?
Anyone paid through PAYE since 19th March will be eligible for furlough leave and if furloughed their employer can claim a CJRS grant based on the higher of:
- the same month’s earnings from the previous year (if furloughing for March, the earnings from March 2019); or
- average monthly earnings for the 2019 – 20 tax year.
How do I select who to furlough (if it’s not everyone?)
Follow a similar exercise to redundancy – if you only need to furlough say 10 out of 20 drivers, then the selection criteria must be fair e.g. last in, first to furlough. Workers on maternity leave or with other special characteristics may have additional protections – take advice from myHRdept or your employment legal advisor.
Practically how do I put workers on furlough?
myHRdept have developed two template letters for this purpose: a) for situations where the employment contract has a lay off without pay clause and b) for cases when no such clause exists. The difference is that in a) you can get on and do it whereas in b) you’ll need to get the worker’s agreement (we’ve included an acceptance signature bar.)
In circumstances where the business damage is likely to take a very long time to recover is furloughing the answer?
We know that furloughing will continue for at least 3 months, but we don’t yet know if it will be continued. Sometimes an event like COVID-19 requires a permanent or semi-permanent adjustment to business headcount and if that is the case then redundancy might still be the most appropriate option.
Are there any risks to furloughing workers?
The risks as we see them are far outweighed by the benefits, but here are our thoughts:
- If a worker has just short of 2 years service when being furloughed, they could reach the 2 year point while on furlough. At 2 years UK workers acquire certain rights including the right to a redundancy payment and the right to claim unfair dismissal.
- A furloughed worker who has had their earnings reduced may bring a breach of contract claim. This risk can be mitigated by a) having a contractual right to reduce pay or b) to obtain the worker’s agreement prior to furloughing them. Agreement is always best in employment law and employers may seek to gain agreement even if they have a contractual right to impose.
If you’re thinking of outsourcing your HR or employment law needs, why not call us on 01628 820515 to discuss your requirements or contact us and we’ll call you back.