Coronavirus: Government Job Retention Scheme and furloughed workers
The Government has published further details on the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme).
UK employers should be taking steps in preparation for making a claim under the scheme. This will involve discussing options with staff and making any changes to employment contracts by agreement. Please remember that all employment law will continue to apply and so businesses may need legal advice on the process.
Who can apply?
The scheme will apply to all UK employers that had a PAYE scheme in place on 28 February 2020. Any organisation with employees may apply, including charities, recruitment agencies and public authorities.
How much will be paid under the Job Retention Scheme?
It has now been clarified that employers can claim 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Fees, commission and bonuses are not included.
An employer can choose to ‘top up’ to 100% of salary, but does not have to. Please note that altering contractual terms of employees should be by agreement, otherwise employers risk breach of contract, Constructive Dismissal and other Tribunal claims.
National Living Wage (NLW) and National Minimum Wage (NMW)
It is now clarified by the latest guidance that individuals are only entitled to the minimum wage for the hours they actually work. This means that if they are furloughed and do not work, it will be acceptable that paying 80% of their normal earnings would take them below the minimum wage. However, they will be entitled to be paid NMW for any time spent training.
Which employees do you select to go on to furlough?
There are no rules laid down by the Government as to selection. Naturally, no decisions must be made on discriminatory grounds contrary to the Equality Act 2010.
When will you be able to make a claim from the Government?
The Government has said that the scheme will be up and running by the end of April 2020.
How we can help
Implementing the furlough arrangements correctly and quickly, so that employers can reduce salary costs and avoid claims, will need specialist employment law advice. The proper agreements must be in place with employees to vary their contracts of employment and to make the new pay arrangements effective.
Our specialist Employment Team is on hand to assist with all furlough arrangements. We can also advise on the following.
- Short-time working;
- Reduced hours and pay arrangements; and
- Redundancies and restructurings.
We know that expenditure at this time is an issue for almost all businesses. Any work we undertake for you can be on a fixed or capped fee basis so that you know what you will be spending in advance.
Please contact the listed team member closest to your location for further assistance.
This article is correct as at the date of its publication but it is not intended to be a definitive statement of the law nor relied on as advice but instead it provides general guidance.