Further to our prior blog post available here, the UK Government has published more detailed guidance on the Coronavirus Job Retention Scheme (“CJRS”). That guidance is available here and here. Here are some of the key questions the updated guidance now answers.
What is the CJRS?
The CJRS is a government scheme set up to support UK employers who have been affected by the coronavirus. Under the CJRS, UK employers are able to obtain a grant equal to the lower of 80% of the wages or £2,500 per month per furloughed employee plus the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions (if payable) on the subsidised wage.
The CJRS will last for at least a three month period commencing on 1 March 2020 and is expected to be up and running by the end of April. Claims can be backdated to 1 March if applicable.
Which employers are covered?
The CJRS is open to all UK employers who have a PAYE payroll scheme (provided it was created before 28 February 2020) and have a UK bank account.
Which employees are covered?
Eligible employees can be employed on any type of contract, including full time and part time contracts, agency worker contracts and flexible or zero-hour contracts. Affected employees must have been on the payroll on 28 February 2020 so any employees hired after this date will not be covered. Employees that were made redundant after 28 February 2020 and have since been rehired by their employer.
To be eligible, when on furlough, an employee can not undertake any work for their employer, so employees who simply reduce their hours will not be covered.
What happens to employees on sick leave, who are self-isolating for other reasons or are shielding in line with public health guidance?
If an employee is:
- on sick leave or self-isolating: the employee should get statutory sick pay whilst on sick leave or is self-isolating and can be furloughed after this;
- shielding in line with public health guidance: the employee can be placed on furlough but they should speak to their employer about this.
What happens to employees who have already been made redundant?
If an employee was made redundant after 28 February 2020, then an employer can rehire them and then designate them as a “furlough worker” instead.
How is an employee’s salary calculated?
For employees whose pay does not vary, the employee’s actual gross salary as of 28 February should be used to calculate 80%.
For employees employed for a full year but whose pay varies, then the amount will be the higher of: (i) the salary the employee earned in the equivalent month last year; or (ii) an average of the employee’s monthly earnings from the last year.
If employed for less than a year, employees will be entitled to an average of their monthly earnings since they started work.
Bonuses, commissions and fees are not included as part of an employee’s monthly earnings.
Employers can top up salaries if they wish.
Does being placed on furlough, impact an employee’s right?
Employers can still make employees redundant while on furlough or afterwards but an employee’s rights, including their right not to be unfairly dismissed (if applicable) and their redundancy rights (including to redundancy pay), are unaffected.
It also means that the normal rules on statutory maternity pay, paternity pay and shared parental pay apply. This does mean though that if an employee is due to start maternity leave (or another similar leave) and are placed on furlough, it could have an impact on the statutory pay they are entitled to.
How should I place an employee on furlough?
Normal employment rules and protections apply in terms of placing an employee on furlough. For instance, employers will need to discuss the changes with employees and seek their agreement to change the employment contract. In addition, if the employer is selecting employees to be furloughed, then normal rules in relation to equality and discrimination apply and employers will need to consider any selection criteria accordingly. Employers should also consider if collective consultation obligations are triggered.
Employers should ensure that they have a confirmation in writing that the employee is furloughed.
Note that, employees must be placed on furlough for a minimum of 3 weeks, but need not be furloughed for the entire period.
How does the employer access the money for furloughed employees?
Employers calculate their claim and should submit it through an online portal that will be established by the UK’s HM Revenue and Customs (“HMRC”). HMRC expects that it will be available by the end of April 2020.
If the employer is eligible for a grant, the grant will be paid to the employer’s UK bank account.
What happens when the CJRS ends?
CJRS is currently open for at least 3 months through to at least 31 May 2020. The Government will keep the scheme under review and may extend it.
At the end of CJRS, the employer will need to make a decision on whether the employee returns to work or is dismissed/made redundant.