The Government has introduced guidance in an attempt to manage levels of unemployment during the coronavirus pandemic. This guidance, known as the Coronavirus Job Retention Scheme (aka Furlough Scheme), is guidance only and certain elements of it remain unclear.
What is the Scheme?
- The Scheme acts as a safety net as an alternative to a business having to dismiss workers by instead placing them on furlough, that they are sent home and do not carry out any work.
- Through the Scheme, the Government will pay wages of workers and a business will not be asked to repay the contributions.
- Employment rights and continuous service are generally unaffected by any period of furlough.
- The Scheme is temporary, from 1 March 2020 and it will run for 3 months, unless it is extended by the Government.
Who is eligible?
- Any business across any sector, with the broad exception of public sector organisations or those businesses who receive public funding to respond to the pandemic, can recover up to 80% of wages for any employee or worker.
- Employee and other categories of worker are eligible.
- The employee must have been paid through PAYE payroll on or before 19 March 2020. The sum is capped at £2,500 per month, per worker.
- Your business is responsible for NI and pension contributions at the lower, furlough rate, unless salary is topped up.
Who can be furloughed?
- Any employee who has ceased working completely as a result of the measures to restrict the spread of the virus.
- Any employee whose employment terminated after 28 February 2020 can be rehired and placed on furlough.
- Any employee who is unable to work because of care responsibilities, including childcare, can be furloughed.
- Although employees employed after 19 March 2020 are not eligible for furlough, an employee who is transferred under TUPE after 19 March 2020 is eligible.
- Training and voluntary work which does not generate revenue for a business is permitted during a period of furlough.
What about sickness absence?
- If an employee is claiming statutory sick pay they cannot be placed on furlough at the same time.
- Once the employee recovers, or is no longer self-isolating and is otherwise fit to work, they are eligible to be placed on furlough.
- If an employee is shielding or off on long-term sick leave and not claiming SSP, they can be furloughed.
What about holiday?
- The guidance is unclear, but it seems that annual leave accrues and can be taken throughout any period of furlough without affecting eligibility for the grant. Pay ought to be at the normal amount (100% of salary).
- Untaken annual leave can be carried forward into the next two years.
How do I furlough my staff?
- Employees must consent.
- You must confirm to the employee in writing that they have been furloughed and keep a recover for at least 5 years.
- Any period of furlough is for a minimum of 3 weeks, which means that you can rotate staff on and off furlough if appropriate.
What happens if an employee doesn’t agree to be furloughed, or to a reduction in pay?
- It is unlawful to unilaterally change terms and conditions of employment. Where a contract expressly allows this, any exercising of this right must be reasonable.
- If there is no consent, the employee must be paid as normal and allowed to work, or the business may need to consider alternatives such as whether there is a fair reason to dismiss them e.g. redundancy.
How do I claim?
- You will need to submit the relevant employee details through the HMRC portal, using the payroll information for your employees.
- Once paid, you must use the money to pay your employee the total amount of the grant. The grant money cannot be used to pay redundancy payments, or charges for processing payments.
- Tax and pension contributions will be paid as normal out of the employee’s wages.
When does the Scheme start?
- It is scheduled to be available to submit claims from 20 April 2020 and payments will start to be made from 30 April 2020, although it may well take longer to process.
What happens if I claim incorrectly?
- HMRC have the right to retrospectively audit all aspect of any claim, which could mean civil and criminal consequences for any fraudulent claims.
For further advice, please contact Employment Law Partner Joe Nicholls on 0117 943 4820 or email email@example.com.