An employer’s guide to the Coronavirus Job Retention Scheme & furloughing

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An employer’s guide to the Coronavirus Job Retention Scheme & furloughing

07/04/2020

As a result of the coronavirus pandemic, the UK Government has announced support for employers and employees via its Coronavirus Job Retention Scheme.

What is the Coronavirus Job Retention Scheme?

Designed to support employers whose operations have been severely affected by coronavirus, the CJRS is expected to be up and running by the end of April. The Government appears to be taking a broad approach to eligibility as employers are not required to prove they are in financial trouble or that they are unable to pay staff to qualify for the payment.

Who is eligible for the Coronavirus Job Retention Scheme?

Open to all UK employees on PAYE on 28 February 2020 (the key date), the scheme will provide employers with a grant from HMRC to cover 80 per cent of an employee’s regular wage or £2,500 per month (whichever is lower). The amount payable will be the employee’s actual salary before tax, as of the key date.

Full-time and part-time employees are covered by the scheme, as are those on agency contracts and flexible or zero-hours contracts.

What about employees already on unpaid leave?

Employees already on unpaid leave cannot be furloughed unless they were put on unpaid leave after the key date. Employees who have been made redundant since the key date can be rehired and covered by the scheme, although employers are not obliged to rehire employees that have been made redundant. An employee is also not obliged to agree to the withdrawal of a redundancy notice.

What happens if an employee is off sick?

If an employee is on sick leave or self-isolating, they are entitled to receive Statutory Sick Pay (SSP) from day one of their absence from work but can be furloughed when they have recovered or can come out of self-isolation. Those who are forced to self-isolate or go off sick once they are furloughed are entitled to receive SSP as well as contractual sick pay if this is stipulated in their contracts of employment.

What is furloughing and how does it work?

Employees are not allowed to do any work for their employer while they are furloughed. Employees must agree to be furloughed and employers must write to their employees to confirm they have been furloughed and keep a record of this.

Employees must be furloughed for a minimum of three weeks. The scheme is currently due to run for three months. Claims can be backdated to 1 March 2020.

Furloughed workers with more than one job

Employees who have two jobs can carry on working in one role while being furloughed by their other employer, or they can be placed on furlough by both employers. Whether employees can take other jobs when the Government is paying 80 per cent of their wages will depend on whether they have an exclusivity clause in their employment contract.

Any payments businesses receive through the scheme must be listed as income by the business in its calculation of taxable profits for income tax and corporation tax purposes.

For advice on the matters discussed above, please get in touch with your usual contact at Warners for a free initial telephone consultation.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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