Coronavirus Job Retention Scheme Update

31st March 2020

Coronavirus Job Retention Scheme Update

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We now have some clarifications from HM Government on the Coronavirus Job Retention Scheme (CJRS) for both employers and employees. Some important questions have been answered, but not all.

We’ll present that guidance below as a Q&A to make it easier to find the information you need as quickly as possible.

We urge you to consult the Government guidance for both employers and employees for full details.

Guidance for Employers

What is the Coronavirus Job Retention Scheme (CJRS)?

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from the 1st of 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 COVID-19.

How much can I reclaim under CJRS

The government has made a much welcomed clarification on the amount that can be reclaimed. Employees will receive 80% of their gross salary up to a cap of £2,500 per month. The Government will also reimburse employers Employer NI and auto-enrolment contributions.

If I maintain full pay, can I receive any payment for the difference between CJRS amounts and full pay.

No, Employers who want to offer better terms such as maintaining full salary or lifting the £2,500 cap will be not reimbursed for the extra costs.

Who can claim?

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020 who have a UK bank account.

Does the CJRS apply to Public Sector employers?

By and large the answer here is no. Where employers receive public funding for staff costs, and that funding is continuing, the government expects employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.

There are exceptions however – in a small number of cases, for example where organisations are not primarily funded by the government and whose employees cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

Which staff can I claim for?

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and 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.

Staff who invoice you for the work they do are not eligible under the CJRS but may be able to claim under the self-employment-income-support-scheme. (https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme.)

I had made some employees redundant in March 2020, can they be furloughed instead?

Yes.  The scheme covers employees who were made redundant since 28 February 2020, but only if they are rehired by their employer. Employers must obtain their employees consent.

What happens to the redundancy pay of those employees who are rehired to be put on furlough?

The scheme does not answer this question. In our view, if there has been more than one week between the employees’ termination date and the time they are rehired, the employees would start a new period of employment and you may still have to pay Statutory Redundancy Pay.

I had agreed that my employees would be on unpaid leave, can they be offered furlough instead?

Yes, furlough can be back dated to 1 March 2020.

Can CJRS help me top up the pay of those employees who had agreed to reduced hours?

No. An employee on furlough cannot carry out any work for his employer. If an employer has reduced activity, they cannot share the workload equally between remaining employees and must decide which employees are furloughed and which are not.

Can I enforce furlough on my employees?

As we discussed in our previous blog, there is no employment law concept of “furlough”.  We therefore strongly recommend that employers should discuss with their staff and make any changes to the employment contract by agreement.

Do I need to carry out a collective consultation if I intend to put more than 20 employees on furlough?

As the alternative to furlough is redundancy it is likely that an employer’s obligation to consult with employees’ representatives does arise. The penalty for failing to do so is a protective award of up to three months’ salary per employee affected by the redundancy. When the employer does not recognise a trade union or does not have an existing elected employees’ representatives forum, they would be expected to organise an election before the start of a mandatory consultation period of at least one month.

Obviously, many businesses may not be able to delay the furlough to comply with the duty to consult. Employers may be able to rely on the “special circumstances” exception. The few examples of these special circumstances insist that they need to be exceptional and not foreseeable. The current pandemic appears however to fit the definition.

Even if an employer intends to rely on the special circumstances defence, their duty to consult is not extinguished. They should do what is reasonably practicable to consult. 

Some of my staff are on SSP, what do I do?

Employees on sick leave or self-isolating should get Statutory Sick Pay but can be furloughed after this.

Some of my employees have more than one job.  Who is responsible for them under CJRS?

For the purposes of furlough, each job is treated separately, and it is up to each employer to decide with the employee affected.

Some of my employees on furlough have volunteered to help the NHS.

A furloughed employee can take part in volunteer work or training, if it does not provide services to or generate revenue for your organisation.

I employ a mix of full and part time employees – how do I calculate their salary under the scheme?

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February, should be used to calculate the 80%. Fees, commission and bonuses must not be included.

How do I calculate the entitlement of employees on zero hours contracts?

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you should claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

What do I need to make a claim?

First and foremost, employers should discuss with their staff and make any changes to the employment contract by agreement. If you are in any way unsure about this, you may need to seek legal advice on the process.

If enough staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

To claim, you will need:

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

How often do I need to claim?

You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated to the 1st March if applicable.

Do I have to pay the full amount of the grant to employees?

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

What rights do furloughed employees have?

Employees that have been furloughed have the same rights as they did previously.

How will the grants under the CJRS be treated for tax purposes?

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

What happens to the holiday entitlement for furloughed staff?

As your staff continue to be employed, they will continue to accrue their holiday entitlement. Employees who have not taken all of their statutory annual leave entitlement due to being furloughed or because they have been working and unable to take time off, will now be able to carry it over into the next 2 leave years. This applies only to the statutory holiday entitlement of 5.6 weeks (28 days including bank holidays, for full time staff). If your contractual holiday entitlement is longer than the statutory holiday, your current rules regarding carry over will apply to that portion of the holiday entitlement that is greater than the statutory holiday.

Guidance for Employees

How do I find out if I’m eligible?

The decision for you to go on furlough must be made between you and your employer. If your employer agrees that furlough is appropriate, they must write to you confirming you have been furloughed to be eligible to claim.

I’m currently on Universal Credit, will it be affected?

If you’re earning less because you’re on furlough, your Universal Credit payment might change – find out how earnings affect your payments.

Does this guarantee my job?

Unfortunately, no.  Your employer can still make you redundant while you’re on furlough or afterwards.  However, your rights as an employee are not affected by being on furlough, and this includes your redundancy rights.

How long will I be on furlough?

You will need to remain on furlough for a minimum of 3 weeks. However, your employer can place you on furlough more than once, and one period can follow straight after an existing furlough period, while the scheme is open.

I don’t know if I want to be furloughed, what are my options?

Quite simply, if your employer asks you to go on furlough and you refuse, you may be at risk of redundancy or termination of employment, depending on the circumstances of your employer.

If this happens, you are entitled to all your normal rights and protections under the law.

For more specific information or to discuss your requirements please call either Amanda Galashan or Julie Calleux at Employease on 03339398741, or email us at info@employease.co.uk. This note does not constitute legal advice on any particular situation you may have.

Copyright: Employease 2020

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