Keith Williams

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Coronavirus Latest – Job Retention Scheme

Coronavirus / 27 March 2020

Yesterday evening, 26 March 2020, the Government published eagerly awaited guidance on the Coronavirus Job Retention Scheme (‘CJRS’).

This does not contain, by any means, answers to all of the questions that we have in relation to how the Scheme works, but it does confirm the timescale for it being up and running (by the end of April),  provide important clarification on some matters, and throw up some unexpected issues.

The key points of further guidance are as follows:

– Any UK organisation with employees can apply under the scheme, provided they have created and started a PAYE payroll Scheme before 28 February 2020;

– Claims can be made in respect of any employee (including those on agency, flexible or zero hours) provided they were on the employer’s payroll on 28 February 2020;

– To be eligible, the employee must do no work for the employer at all during the period of furlough, so the Scheme will not apply in the case of short time or reduced hours work, but the employee may undertake volunteering work or training which does not provide services or generate income for their employer;

– Employers should discuss furlough with employees, and implement the Scheme by agreement.  Normal employment law rules on equality and discrimination will apply.  Collective consultation ‘may’ be required where large numbers of staff are affected;

– Employers should write to furloughed employees to confirm their change of status, and keep a record of this;

– Employees can be furloughed for a minimum of 3 weeks (in line with public health advice on social distancing).  Rotation of employees on that timescale (or longer) is permissible, but 1 or 2 weekly rotations are not.

– Employees on sick leave, or self-isolating, should continue to be paid sick leave, but may be furloughed when ready to return to work.  Employees who are shielding in line with guidance (identified vulnerable groups) can be placed on furlough;

– Normal maternity (and similar) leave and pay rules continue to apply.  Contractual enhanced maternity pay can be claimed through the Scheme;
 The same month’s earnings from the previous year; or
Average monthly earnings the 2019-20 tax year.

– The amount that an employer can reclaim in respect of each employee is equal to the lower of £2,500 or 80% of the employee’s regular salary.  Note that:
– Employer’s NICs and (auto enrolment minimum only) pension contributions can be claimed
in addition to the above;
–  Commissions, fees and bonuses are not included as pay;
–  If employers choose to top up pay beyond the set limits, the top up and any NICs
and pensions contributions associated with it will not be reimbursed.

– The whole claimed salary amount must be paid to the relevant employee;

– Pay data can be submitted on the basis of an actually run payroll, or a payroll which is to be run imminently.  Payments will be made to employers by BACS.

Much of the additional detail is as expected.

There is welcome clarification that the 80%/£2,500 limit relates strictly to salary levels, and not the full employment (NIC and pension) costs which are reclaimable in addition.

The means of calculating pay levels for those on variable pay are relatively clear and straightforward.

The unexpected applicability of the scheme only to those people employed on 28 February (and for employers with a payroll scheme in place on that date) are likely to be anti-abuse provisions to prevent the creation of fictional companies and/or employees.

There is some ambiguity in relation to the obligation (or otherwise) to consult with employees about the changes.  Furlough by agreement with staff looks to be the preferred option, and should not require consultation, but collective consultation rules are not suspended in respect of compulsorily imposed furlough under the scheme.

The guidance refers, throughout, to employees.  However, we take this to mean both employees and workers, as it seems that the guiding principle is that it relates to all of those paid through PAYE.

On the timing of payments, it appears that employers cannot expect the reimbursement until the payroll is paid, so cash flow for organisations where revenue streams have dried up will not necessarily be solved by the Scheme.

The Guidance is not very long, and can be found here.

If you have any queries in relation to this or any other employment law matter, please do get in touch.


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