After nearly a week since the Chancellor’s initial announcement the Government have published some guidance on the Coronavirus Job Retention Scheme.
This answers most of the questions we have been asked in the last week but unfortunately not all. We are not aware at this stage if there will be any actual legislation from the Government.
We summarised the information published last week on our website https://www.peachlaw.co.uk/coronavirus-job-retention-scheme/
However, some of the key points that were not in the original announcement are:
- All UK employers are eligible that had a PAYE scheme in place on 28 February 2020.
- Employees must have been on PAYE payroll on 28 February 2020 to be furloughed. We are aware of some employers who have furloughed employees starting after this date. They simply do not qualify for furlough and the employer will not be able to recoup the cost. In addition to this there could be further employment law implications
- Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the Scheme.
- For agency workers to be eligible they must be on PAYE and must not be working.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated NICs and minimum auto enrolment pension contributions on that wage. There is currently no definition of what wage costs include.
- Fees, commissions and bonuses are not included. This could have a significant impact to those roles such as recruitment and sales, that rely on commission payments.
- It is up to employers if they want to top up or not, they are not required to.
- If the employee’s wage varies and if the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:
– the same month’s earnings from the previous year
– average monthly earnings from the 2019-20 tax year - Employees are only entitled to minimum wage for the hours they work. Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below minimum wage. However, any training undertaken during this time must be paid at minimum wage irrespective if it is more than 80%.
- Normal rules around Maternity Leave, contractual adoption pay, paternity pay or shared parental pay still applies. If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the Scheme.
- Furlough leave must be taken in a minimum of 3 week blocks.
- There isn’t anything in the guidance to suggest that rotating furlough leave is prohibited. For example if you have 6 employees carrying out a particular role but only have enough work for 3, you could rotate who is on furlough and who is working every 3 weeks.
- Although the guidance say that employees must not be working during furlough, it does say that employees are able to undertake training and do volunteer work providing that they are not making money for the employer.
- Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed when they are fit to return to work.
- Employees who are shielding can be placed on furlough. For example if you have someone who is off work due to shielding and there is no work for them to do in the business, they can be furloughed. We do not think this applies to employees who are shielding where there is still work to do.
- The guidance does NOT say that those who have childcare issues are automatically eligible to be furloughed.
We appreciate that there are still many questions surrounding this area and we would advise that you seek legal advice from us before putting anyone on furlough.
