The Coronavirus Job Retention Scheme: Key Points
The Government has released further guidance on the help available to UK Employers whose businesses are affected by the Coronavirus. Employers are able to claim 80% of furloughed employees’ usual monthly wage costs. The idea is that employers can avoid the need to make staff redundant, for the time being at least
Businesses should carefully consider the assistance available to them. The crisis looks like it will continue for some time yet and the economic impact is likely to be felt in the months and years to come. Failing to make the right decision now, will for many businesses be the difference between being able to weather the storm and going bust.
Some key points to note:
- The online service through which claims will be made is not yet up and running but it is hoped that it will be live by the end of April.
- Available assistance is up to the lower of 80% of the employee’s regular wage or a maximum of £2,500 per calendar month.
- Save where there is a contractual right of “lay off”, an employee’s agreement to Furlough leave is required. It is strongly advised that any such agreement / amendment to contract is confirmed in writing.
- Employers should be careful about the way in which they select employees for possible Furlough leave. Discrimination laws will continue to apply and employers must ensure that they make all decisions on a fair and objective basis.
- Employers may decide to top up the Employee’s pay to 100%. Whatever the decision on this, arrangements will need to be agreed with the employee.
- Employees must have been on the PAYE Payroll on 28th February 2020.
- The scheme is only available for employees who are not working and is not available for those employees on reduced hours. In that sense, its operation is somewhat “all or nothing” / “on or off”.
- There is a degree of flexibility which allows employers to rotate furlough leave between staff. However, furloughed employees must be furloughed for a minimum of 3 weeks.
- With regard to salaried employees, the calculation will be based on the employee’s actual salary before tax, as of 28th February 2020. Fees, commission and bonuses will not be included.
- For employees whose pay varies, the claim will be for the higher of either the same month’s earning from the previous year or average monthly earnings from the 2019-20 tax year If the employee has been employed for less than a year, the claim would be for an average of their monthly earnings since they started work.
- Remember employees that have been furloughed have the same rights as they did previously. That includes rights against unfair dismissal and to redundancy payments.
- If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
The Government guidance can be found at:
We are able to advise employers in respect of all aspects of the scheme, including procedural requirements and implementation.
Please contact Louise Purcell or Loureen Palmer for more information and help.