Coronavirus Job Retention Scheme Q & A
- Employment Law
- 24th Mar 2020
We are frequently being asked questions about the new Coronavirus Job Retention Scheme that was announced by the Chancellor on Friday 20 March 2020. Here are some key questions and answers based on our early interpretation of the Scheme. At the time of writing there is still a lot of missing detail on how the […]
By aleksMLP Law
We are frequently being asked questions about the new Coronavirus Job Retention Scheme that was announced by the Chancellor on Friday 20 March 2020. Here are some key questions and answers based on our early interpretation of the Scheme.
At the time of writing there is still a lot of missing detail on how the Scheme will operate in practice and once we have received this information we will update this note.
Please also bear in mind that employers can continue to have employees attend the workplace where work cannot be done from home and can ensure employees can remain 2 meters apart.
What is the Coronavirus Job Retention Scheme?
It is a scheme which allows employers to continue their employees’ employment, and for the employees to continue to receive at least 80% of their salary (capped at £2,500 per month), during circumstances in which the employee would normally be laid off or made redundant (whether temporarily or permanently) due to a lack of work.
Who does the scheme apply to?
It is available to all employers, whether they are sole traders, partnerships, PLCs, private limited companies, charities or LLPs.
Can I force my employees to take leave under the scheme?
Leave under the scheme is being referred to as “furlough leave”, which is based on an American term referring to circumstances in which employees are sent home due to a lack of work.
Our view is that, if an employee’s contract contains a right for the employer to impose lay off or short time working, then this will also apply to furlough leave.
If there is no such clause in the contract, the employee’s consent will be required. In practice, many employees are likely to consent to furlough leave (and a guaranteed 80% of their pay) rather than face the potential alternatives, such as redundancy.
How can I get my employees consent when we are in lockdown?
It is preferable to obtain an employee’s consent to being on Furlough Leave in writing, although this can be done by an employee replying to an email, in addition to the more common method of having employee’s sign and date consent letters. Ultimately, if there is a record of the terms of the Furlough Leave being communicated to the employee and the employee does not respond/object, consent to the change can be implied.
It is not yet clear from the information which has been published whether it is possible to furlough employees for part of their working hours and have them work the rest.
Do I have to top up my furloughed employees’ 80% wages to 100%?
There appears to be no obligation on employers to do this, although some employers may choose to do so.
To minimise the small risk of unlawful deductions from wages claims, employers should get written confirmation of their employees’ agreement to go on furlough leave.
If my employees refuse to go on furlough leave and I am unable under the contract to impose it, can I make them redundant?
Employers will be using the Coronavirus Job Retention Scheme where they are unable to provide their employees with work. If the alternative of furlough leave is not accepted by employees, the option of making compulsory permanent redundancies remains for employers.
How does the process work? How is the 80% of salary claimed?
The Government confirmed that a new portal will shortly be set up.
From what we can tell from the detail so far, the process is likely to be as follows:
- Identifying employees to place on furlough leave, and the reasons why this is required;
- Obtain the employees’ consent to furlough leave and reduction to 80% pay;
- Send the employee home;
- Register with the Government’s online portal to recover the 80% pay paid out to the employee.
What does 80% of pay include?
Again, this is not entirely clear but it is expected that it will include pension and NI contributions up to the cap of £2,500 per month.
Is the scheme open to abuse by employers and employees?
Many commentators have already spoken of the potential for this scheme to be abused. The Government will no doubt be alive to this risk and we expect to see stringent anti-fraud measures being introduced, with severe penalties and public naming and shaming likely to form part of such measures.
There may be tension with some workers who are/are not furloughed, which may result in grievances. These should be responded to in accordance with your usual grievance procedures, although due to the current importance of working from home where possible, parties may agree to undertake the process by way of written submissions or using technology to avoid having to meet in person.
Employers should be mindful to avoid discriminatory reasoning in their decision-making process regarding who is/who is not furloughed i.e. choosing to furlough all full time employees, which may disproportionately affect men and therefore be indirectly discriminatory where it cannot be objectively justified.
About the expert
Stephen is the Owner of MLP Law and leads our Commercial, IP and Dispute Resolution teams which provide advice on all aspects of the law relating to mergers, acquisitions, financing, re-structuring, complex commercial contracts, standard trading terms, share options, shareholder and partnership agreements, commercial dispute resolution, joint venture and partnering arrangements, IT and Technology law, Intellectual Property, EU and competition law, Brexit and GDPR.
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