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Covid-19: Coronavirus Job Retention Scheme

30th March 2020

Covid-19: Coronavirus Job Retention Scheme

On 26 March 2020, the government published updated guidance on the Coronavirus Job Retention Scheme (‘the Scheme’): https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme which answers a number of the questions which had arisen since the scheme was announced.

The COVID-19: support for businesses guidance https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme and COVID-19: guidance for employees https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees#furloughed-workers have also been updated to reflect the new scheme.

The government has also created a new website http://www.businesssupport.gov.uk/ which has a section on the Coronavirus Job Retention Scheme. There is also some further information in the business support: FAQs https://www.businesssupport.gov.uk/faqs/.

We recommend you read the above guidance in full.

We have summarised the key points to take from the guidance below:

Who does the Scheme cover?

  • The Scheme covers full-time employees, part-time employees, employees on agency contracts (who are not working) and employees on flexible or zero-hour contracts provided they were on the employers’ PAYE payroll on 28 February 2020  
  • The Scheme will cover employees who were made redundant after 28 February 2020 if they are rehired by their employer
  • Employees on unpaid leave cannot be furloughed unless they were placed on unpaid leave after 28 February 2020
  • Employees who are working on reduced hours, or for reduced pay, will not be eligible under the Scheme 
  • Employees on sick leave or self-isolating in line with Public Health England (‘PHE’) guidance should get statutory sick pay or company sick pay, but can be furloughed after this
  • Employees who were advised to shield themselves at home in line with PHE guidance can be placed on furlough leave
  • Employees who qualify for Statutory Maternity Pay are still eligible to receive this at the usual rate. Where an employer offers enhanced contractual pay, this is included as wage costs which can be claimed through the Scheme
  • The employee must not carry out any work for the employer during furlough. However, they can take part in volunteer work or training as long as it does not generate revenue for the employer
  • Where an employee has more than one job, the employee can be furloughed from both jobs. The £2,500 cap applies to each employer separately

Which employers are eligible to claim?

Any UK organisation with employees can apply, including businesses, charities, recruitment agencies and public authorities, providing they have a UK bank account and started a PAYE payroll scheme on or before 28 February 2020.

What can employers claim?

  • Employers can claim a grant from HMRC to cover 80% of employees’ wages up to £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on the 80% wage. Fees, commission and bonuses are not included
  • Employers may choose to fund the difference between the 80% payment and their employees’ salaries, but they are not obliged to do so
  • Where employees’ pay varies, if the employee has been employed for 12 months prior to the claim, the employer can claim for the higher of (i) the same month's earning from the previous year; or (ii) average monthly earnings in the 2019-20 tax year. If the employer has been employed for less than 12 months, the employer can claim for an average of their monthly earnings since they commenced work.
  • As furloughed employees are not working, they are not entitled to the National Living Wage (NLW) or National Minimum Wage (NMW). In some instances, 80% of an employee’s normal earnings may take them below NMW. However, employees are entitled to be paid NMW for any time spent training.

What employers will need to do to make a claim:

  • Employers will need to discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on this process
  • If the employer wishes to place 20 or more employees on furlough leave, then it may be necessary to engage in collective consultation to procure agreement to change the employees' terms and to notify the Secretary of State using form HR1
  • Employers can only submit a claim every three weeks. Furlough leave must also be taken by an employee for a minimum of three weeks in order to be eligible for reimbursement

If you need support with any employment issues, please get in touch with our head of employment, Tim Jones, via phone 07815 167206 or email tim.jones@higgsandsons.co.uk 

For help and support with any other personal or business legal issues during the Covid-19 crisis, please call us on 0345 111 5050 or email supportingyou@higgsandsons.co.uk 

 

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