COVID-19: Employee Job Retention Scheme

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COVID-19: Employee Job Retention Scheme

At a glance -

Coronavirus Job Retention Scheme: a cash grant that is designed to allow employers to retain staff who would otherwise be laid off.

What does the government mean by furloughing?

Who can be furloughed?

How does it work?

HMRC will reimburse 80% of the wages costs of furloughed employees, subject to a cap of £2,500 per month per employee.

It is up to you whether you pay the 20% difference so that your employees receive their full pay.

Higher earners may be adversely affected.

The amount paid to a worker when furloughed is a decision for you as an employer and may be a matter of negotiation with your employees.

The employees you furlough must not work for you during the furlough period. They remain your employees. It is not clear whether they are allowed to take temporary work elsewhere during the furlough period, but it may be that their employment contract currently forbids it.

Do not forget about employment law. This is for your protection as an employer (against claims by employees once this is all over) as well as the protection of your employees.

*We are unable to give employment law advice but have included some suggestions below which should help manage your risk here. If in doubt you must seek independent legal advice.

Steps to take when furloughing workers

i) You could start with any employees who cannot work from home, if this is
appropriate, or those who need to stay home to look after children.

ii) Ask for volunteers.

iii) You could adopt the same sort of process you would if making people redundant, using pooling and selection criteria.

i) If their contract currently forbids this, you should advise them of your decision in writing.

ii) If the contract does not forbid this it would seem, unless the government advises otherwise, that employees are free to do this.

i) If you intend to top up their payments to maintain their normal pay you should not need the employees’ consent as you are not deviating from their contractual terms.

ii) If you do not intend to top up their payments then you will need the employees’ consent unless their contract allows for you to reduce or stop their pay when there is no work for them to do. If in doubt you may wish to take legal advice.

i) This should go through the payroll as normal with tax. Employee NICs should be deducted as normal. HMRC confirmed this on Twitter on 25 March 2020. It is not yet clear whether the employer NIC must be paid. We await guidance from HMRC on this.

We assume that once information has been submitted you will receive your grant from HMRC. More details are awaited on this.

Furlough v Redundancy -

What is the best course of action for an employer in dealing with staffing during the COVID-19 emergency?

If you want to retain your staff but cannot afford to pay them you can:

Furloughing as an option -

Do you wish to retain your employee?

Yes

Is your business, due to the effects of COVID-19:

Unable to offer home working for employees.

In other words, is it impossible for the employee to work for you at present or there is no other paid work currently available for them to do?

Yes

Are they employed by you under an employment contract i.e. a written or verbal contract?

Yes

Are they paid a regular wage in return for working regular hours?

Yes

You can furlough them, by keeping them on the payroll.

Casual workers -

Is your worker casual or subject to a zero-hours contract?

Yes

Does your business have any ongoing obligation to offer them work?

No

Does the worker only work when they want to?

Yes, or generally they accept work when its offered.

You do not need to furlough them as you already have no obligation to provide work. You may want to use the furloughing process as a way of ensuring their future their loyalty. *

*More information is awaited from the government as it is unclear what rights casual workers have in this instance.

Redundancy -

Employees -

Short-term and temporary lay-offs -

You can claim statutory redundancy pay if you’re eligible and you’ve been temporarily laid off (without pay or less than half a week’s pay) for either:

Write to your employer telling them you intend to claim statutory redundancy pay. This must be done within four weeks of your last non-working day in the four or six week period.

See HMRC Redundancy Pay Your Rights

Casual workers -

Workers are not normally entitled to:

See HMRC Employment Status Guidance for Workers

Letter to employee template

Employee response form template

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