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Posted on 03 April 2020


The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. The scheme is expected 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 to claim for 80% of furloughed employees’ (employees 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. An employer can choose to top up a furloughed employees’ usual monthly wage costs but does not have to (subject to employment law
and renegotiating any contractual entitlements).

It is unclear whether HMRC intends to rely on published government guidance only, or whether there will be legislation.

Which employers can claim it?

Any UK organisation with employees can apply, including;
 businesses
 charities
 recruitment agencies (agency workers paid through PAYE)
 public authorities

The employer must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

Employees you can claim for

To be eligible, furloughed employees’ must have been on the PAYE payroll on 28 February 2020. If they were hired later, they are not eligible.
The employee can be on any type of contract including:
 full-time employees
 part-time employees
 employees on agency contracts
 employees on flexible or zero-hour contracts, in each case paid via the PAYE system.

The scheme also covers employees who were made redundant since 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 whose pay varies

The employer can claim for the higher of (i) the same month's earning from the previous year (e.g. earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year.

If the employee has been employed for less than a year, employers can claim for an average of the employee’s monthly earnings since they started work.

Can an employer insist on putting someone on Furlough?

No one is likely to have such a clause in their contract given the term does not exist in UK employment law. However, if the employer has a clause in the contract which allows for the employer to eitherintroduce lay off, or short time working, then likely yes you will be able to do this because you already have the right to send employees home without pay.

If the employer has no lay off clause in the contract, technically consent will be needed. However, a brief negotiation is not likely to be difficult if the alternative is redundancy or no pay. This will be about persuading employees that you are trying to secure the future stability of the business and save jobs.

Where more than 20 staff are affected employers should be mindful of the requirements of collective consultation, particularly when resistance is encountered and staff are reluctant to agree.

Where redundancies would otherwise be contemplated, A HR1 form should be completed and filed, a covering letter that the proposal was to seek agreement to furlough rather than compel redundancies should accompany the form. If there are existing employee representatives, such as a recognised trade union, they should be consulted in accordance with the S.188 duty. If not, the letter should make clear that if employees are not willing to agree to furlough then redundancies are
proposed and the nomination of employee representatives for election is invited, but only in respect of whom it is proposed to make redundant. The letter should make clear that it is not presently proposed to make redundant any employee who agrees to being furloughed.

What if I have already put staff on lay off/short time working?

Employers have already taken action, can it be reversed?

It appears that if an employee is on lay off or short time, they need to be taken off that and placed on furlough for you to claim the 80% wages. It seems reasonable to do this in the circumstances. Claims can be made from 1 March 2020. To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation, though it appears they could undertake training and tasks on a voluntary basis that do not involve providing services for or ‘make money’ for
their employer.

If you have dismissed short service employees (i.e. under 2 years), there is no risk in upholding that.
You would not be obliged to reinstate as we understand the situation currently.

How do you select for Furlough?
It may be that a whole department is affected. In which case, it applies to all. If you need to select only certain staff from the same team, our advice would be some form of objective criteria. It might be from productivity records, or appraisals, disciplinary.

A risk of discrimination claims arise selecting employees solely on the basis they may be a high-risk employee. Those are likely to have a disability or age discrimination claim, though it may be possible to justify selection on this basis. If they happen to be in a group that are all being placed on Furlough leave, this should not be an issue.

What about employees on maternity or long-term sick leave, and what of annual leave?

They cannot be laid off or placed on furlough if they are not in the business.

The scheme is designed to avoid redundancy, retain jobs and financially assist both employees and employers. If an employee is not able to work because they were already on long-term sick or on maternity leave, this does not apply to them and we cannot see HMRC accepting claims for reimbursement for those that were not earning salary.

However, the guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.

Applying the same logic, while employees accrue annual leave, periods spent on annual leave are not considered furlough. Payments for annual leave potentially cannot be recouped under the JRS scheme and annual leave would potentially interrupt a furlough. Care should be taken to ensure that each furlough is at least 3 weeks otherwise grants cannot be claimed.

What about staff self-isolating?

Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after his. Employees who are shielding in line with public health guidance can be placed on furlough.

Can an employer rotate staff on furlough?

There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided  each employee is off for a period of at least three weeks.

The government will issue further guidance on the mechanics of claiming the payment in due course. They have yet to clarify the use of the term “grant” and if any repayment will be required.