We’ve tried to gather together some of the most frequent questions we’ve been asked around the Coronavirus Job Retention Scheme, this list is by no means exhaustive and new infomartion is being realeased all the time so may be subject to change.
As we take the first steps towards moving out of lockdown, the Chancellor has announced changes to the Job Retention Scheme that will take effect over the coming months as he prepares to wind the scheme down.
Employers will be able to use the scheme to bring their staff back part-time
From 1st July, employers will be able to return furloughed workers on a part-time or reduced-hours basis while still claiming from the job retention scheme for the hours the employee isn’t working. This means that you can use the scheme to implement a phased return to work.
Employees must be on the scheme by 10th June 2020
The flexible furlough scheme described above will be introduced as a new scheme, with the current system coming to a close on 30 June. However, claims will be restricted to employees already furloughed before this date who have been furloughed for the minimum continuous period of three weeks during the furlough period. This means that if an employer wants to make use of the new scheme, they will need to have furloughed these staff by 10 June, to allow them to complete the minimum three weeks required by the current scheme before it comes to an end.
Employers will begin to contribute towards costs from August 2020
From August onwards, the government will still cover the cost of wages, but employers will need to pay employer national insurance and pension contributions. The Chancellor has estimated that this averages about 5 per cent of total employment costs.
From September, the government will drop its contribution to 70% of wages, with employers expected to contribute the other 10 per cent, on top of national insurance and pension contributions.
Full details are available on the governments website: GOV.UK
What is the Coronavirus Job Retention Scheme?
It was announced on Friday 20th March that Businesses will now be able to claim a grant from the Government to cover 80% of furloughed employees’ wages, to a maximum of £2,500 per employee per month. Guidance on how to claim will follow. All businesses will be able to access the grant, regardless of size or type. Claims will be able to be backed dated to 1st March.
What does furlough mean?
“If workers are given furlough, they are told to stay away from work for a certain period because there is not enough for them to do” (Collins Dictionary). The Job Retention Scheme now enables employees to make the decision to send employees home, without the need to lay them off on nil pay. Due to the Coronavirus pandemic the government will now be paying 80% of each employee’s wages up-to £2,500 per month.
Who can be furloughed?
In theory any employee can be furloughed, they need be on PAYE in order for a business to be able to claim the grant for their wages. You will need to consider the £2,500 per employee cap (per month), for those on higher pay will mean a greater cost to the business if they are furloughed.
Do contracts need to include a furlough clause?
It is unlikely that many contracts will refer to furlough, however contracts that contain a right to lay-off employees on no pay already gives businesses the right to send employees how and not pay them for a temporary period and so can likely to be used for furlough employees.
If your employment contracts don’t include a lay off clause you can ask employees to agree to furlough. Although 80% of wages may not be initially an attractive option next to full pay, it is likely to be more attractive that redundancy, which may be the end result if alterative options cannot be found. It would be advisable in this case to meet with employees to explain the business situation and see if employees can be agreeable.
What if I have already laid-off employees?
In this situation we could suggest that you get in touch with your employees and agree to change their current status from lay-off to furlough. Employees need to be made aware they will move from nil pay to 80% wages (up to £2,500 per month).
How do I select who should be furloughed?
If you are not placing all employees on furlough, you need to carefully consider who it should be. You need to consider which skills will continue to be in demand, if the role critical and if so can it be done wholly from home? You must ensure that your decision for placing employees in furlough is robust and agreed by each employee in order to avoid age, disability or pregnancy discrimination claims.
You may wish to ask for volunteers from across your workforce and then select based on skills and risk of remaining at work.
There does not appear to be a maximum or minimum number of employees who can be furloughed.
We can provide a basic letter template that you can use for this process, please contact us if you would like this providing.
Do I need to pay the 20% shortfall in wages for those furloughed?
There is no requirement to do this, but a business can do so if they wish. If you don’t have a layoff clause in your employment contracts do be mindful that if you furlough employees and don’t pay the 20% you could be seen as being in breach of contract. You must ensure that the arrangements in this instance are agreed by the employee.
If an employee is furloughed am I able to ask them to work from home?
A furloughed employee is they are theoretically laid-off, therefore, to amend this status engage with the employee and confirm the amendment from being furloughed to working from home in writing. If you need a template letter please get in touch.
Are casual workers / zero-hour employees entitled to furlough?
There is no clarity on this yet, but the Chancellor has said the intention was to try to cover as broad a group of people as possible.
What should I do if I have a new starter joining the business soon but I don’t have the work for them?
If the employee is not needed in the short term consider furloughing them, alternatively if they have a required skill then considered if the role can be performed from home.
Should you require further contractual or human resources advice around these matters, we are happy to put you in touch with industry professionals who are best placed to help.