WHAT IS THE CORONVIRUS JOB RETENTION SCHEME (CJRS)?
The scheme allows employers to furlough their employees which means that the employee remains on the Company’s payroll but they are not required to undertake any work for their employer. Employers can then claim 80% of their employee’s salary up to a maximum of £2,500 per month from HMRC. Employees cannot do any work whilst on furlough leave that generates revenue for the company. They can, however, undertake training, do voluntary work or do paid work for another employer if their contract allows.
HOW LONG DOES THE SCHEME LAST?
The scheme was announced on 20 March 2020 and was backdated to 1 March 2020. It was initially due to last until 31 May 2020, however the Government announced this will now run until at least until 30 June 2020.
ON WHAT DATE DOES AN EMPLOYEE HAVE TO HAVE BEEN EMPLOYED TO BE ELIGIBLE TO BE FURLOUGHED?
Employees who were employed on or before 19 March 2020 (previously 28 February 2020) are eligible for furlough, provided you had submitted real time information payroll data by that date.
IS IT ONLY EMPLOYEES WHO WOULD OTHERWISE BE MADE REDUNDANT THAT CAN BE PLACED ON FURLOUGH LEAVE?
No. The Treasury Direction on the scheme states it is eligible for employees who are furloughed, “by reason of circumstances arising as a result of coronavirus or coronavirus disease”.
This means that employees who are extremely vulnerable and have received a letter from the NHS or their GP advising them to stay at home to ‘shield’ for 12 weeks can also be placed on furlough leave
Employees who are carers of or, live with, someone who is vulnerable can also be furloughed.
CAN I BRING EMPLOYEES BACK FROM FURLOUGH IF WORK INCREASES?
You can bring employees in and out of furlough although the minimum furlough period is three weeks. You could therefore rotate furloughed staff on a three weekly (or more) basis.
HOW DO I MAKE A CLAIM FROM HMRC?
On 20 April 2020 the online system for employers to make a claim was launched. You will need your Government Gateway user ID and password. The guidance on how to use the system and what information you will need to have before making a claim can be found here.
CAN I EXTEND AN EMPLOYEE’S PROBATION PERIOD TO COVER THE PERIOD THEY ARE ON FURLOUGH LEAVE?
Yes. It is not possible to assess an employee’s performance whilst they are not undertaking any work and therefore you can extend their probation period. You should write to them to confirm this.
DOES THE TIME EMPLOYEES SPEND ON FURLOUGH LEAVE COUNT TOWARDS THEIR LENGTH OF SERVICE?
Yes. This will mean that if they reach two years of service while on furlough leave, they will have statutory rights in relation to unfair dismissal and redundancy pay.
CAN I MAKE STAFF REDUNDANT WHILE THEY ARE ON FURLOUGH LEAVE?
Yes. If after undertaking a review of your current and future projected workload you believe that there will not be work for employees to do after the Coronavirus Job Retention Scheme ends on 30 June 2020. You can begin a redundancy process while the employee is on furlough leave.
Employees with less than two years’ service do not usually have protection from unfair dismissal in relation to redundancy and therefore you would not usually be required to follow any process for those employees.
WHAT WOULD I HAVE TO PAY AN EMLOYEE IF THEY WERE MADE REDUNDANT WHILST ON FURLOUGH LEAVE?
If the employee has been employed for more than two years then they are entitled to at least a statutory redundancy payment which is calculated based on their age, length of service and normal weekly earnings (subject to a cap of £538).
Some employers may also offer an enhanced redundancy package and, if contractually bound they must also pay the employee in accordance with it.
All employees regardless of their length of service must receive their notice pay as set out in their contract of employment or the statutory minimum notice based on their length of service if there is no contract of employment in place.
CAN I CLAIM THE REDUNDANCY PAY OR NOTICE PAY AS PART OF THE CJRS?
No clear guidance on this has been provided. We would advise that you pay employees their full entitlement of redundancy and notice pay based on their normal salary.
You may then wish to seek specific guidance from HMRC as to whether you can reclaim 80% under the CJRS.
WHAT OTHER ALTERNATIVES ARE THERE TO REDUNDANCY?
Some alternatives include:
- Recruitment freezes
- Pay freezes or cuts
- Reduce or remove overtime
- Short-term or flexible working
- Reducing use of agency workers
- Cut bonuses or pension payments
- Redeployment in other parts of the business
If you require specific advice as to the options for your business including assistance with redundancy processes, please do not hesitate to contact me.