Coronavirus Job Retention Scheme

Ever since the Coronavirus Job Retention Scheme was announced by the Chancellor of the Exchequer, Rishi Sunak, on 20 March 2020 employers have been calling for guidance of how the scheme will work in practice.

Further guidance has now been published by the Government and can be read in full by clicking here. The guidance is not entirely comprehensive and employers are bound to have further questions about specific scenarios affecting their businesses, but some of the key points are set out below:

  • the scheme applies to any employer who, as at 28 February 2020, had a PAYE payroll scheme in place ;
  • only employees on their employers PAYE scheme as at 28 February 2020 are eligible for the scheme. Anybody who was on the payroll on this date but was subsequently made redundant can be rehired and put on the job retention scheme;
  • employees must be furloughed in minimum blocks of three weeks. The guidance does not prohibit the rotation of furlough leave amongst employees, as long as each period of furlough leave lasts at least three weeks;
  • employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, PLUS the associated employer NICs and minimum auto-enrolment pension contributions on that wage;
  • fees, commissions, and bonuses should not be included in the employer’s claim;
  • employers are not obliged to top up the employee’s wage to 100%;
  • for employees with variable pay, the employer can claim for the higher of (i) the same month’s earning from the previous year; or (ii) average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work;
  • employees on the national minimum wage are only entitled to 80% of their wage, even if this puts them below the national minimum wage rate for the hours they would have worked. The national minimum wage only applies hours actually worked (although employees should not perform any work for their employers during furlough leave);
  • employees must not carry out any work for their employer during furlough leave, otherwise they will become ineligible for the scheme. However, employees can undertake training and do volunteer work, provided they do not provide services to or make any money for their employer (with such training to be paid at at least the national minimum wage rate);
  • employees affected by the job retentions scheme are still protected by existing discrimination laws, which means employers need to carefully consider the grounds upon which they select employees for furlough;
  • employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards;
  • employees on maternity (or similar) leave continue to receive statutory maternity pay (or other statutory payments as applicable) payments.  The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed; and
  • employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement.  Claims can be backdated to 1 March 2020.

The Employment Team at MLP Law can help you with any issues raised in the update. Just contact us on 0161 926 9969, or on our employment law-specific Twitter account @HRHeroUK.