CORONAVIRUS JOB RETENTION SCHEME FAQS - (CJRS) COVID-19 (CORONAVIRUS) - Morison KSi
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COVID-19 (CORONAVIRUS) CORONAVIRUS JOB RETENTION SCHEME FAQS (CJRS) 01/04/2020 WHERE KNOWLEDGE, STRENGTH AND COURAGE DELIVER ON AMBITION
CORONAVIRUS JOB RETENTION SCHEME (CJRS) IS FURLOUGHING DIFFERENT TO LAYING EMPLOYEES OFF? Furloughing is not a term used in UK employment law, but in essence a furlough is a temporary leave of absence from work. We have been oscillating the two terms on the basis they were interchangeable and for the same purpose. Whilst it has not been confirmed otherwise, it is logical to consider them separate. This is on the basis that a lay-off is linked to a consecutive 4-week or 6 in 13 weeks lay-off before redundancy is triggered. If the Government meant for the CJRS and the layoff law to be same then one would assume they would have used the same terminology, i.e.: “layoff”. It is likely that furlough is a specific term for a particular type of ‘lay-off’; in this case used by the Government to refer to the CJRS. IS THERE A TIME LIMIT FOR THE FURLOUGHING OF EMPLOYEES? Furloughing is for an indefinite period and its purpose is to avoid redundancies. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) DOES FURLOUGHING EMPLOYEES UNDER THE CORONOVIRUS JOB RETENTION SCHEME (CJRS) HAVE TO BE IN ACCORDANCE WITH CURRENT EMPLOYMENT LAW PRINCIPLES? To furlough employees should be via normal contractual or statutory consultation obligations. They remain! It is possible to seek mutual agreement as an alternative but this must be carefully crafted. Where changes affect more than 20 employees, there is a legal obligation to collectively consult. At this stage, there is no information to confirm that the Government will relax this legislation. There is no protection under the CJRS for the failure to consult, which can be up to 13 weeks of pay for each employee. An employee’s status to be a furloughed worker, is still subject to employment law principles. When agreeing changes in hours (and acceptance of 80% pay, a change in location etc), assuming the contract does not already allow for that, normal employment law applies. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) DO WE HAVE TO GIVE EMPLOYEES NOTICE PRIOR TO FURLOUGH? All businesses who are considering furloughing employees should review their employees’ contracts of employment before taking any action. Some contracts may have a clause that provides a consultation timeframe when considering changes. Where this is silent, employment law principles apply. It is advisable to seek employee agreement before implementing this. DO EMPLOYERS HAVE TO TOP UP THE SHORTFALL IN WAGES? Where employees are furloughed, they should be paid at least 80% of their pay, up to £2,500. The employer can choose to top up pay to 100% but does not have to (subject to employment law and renegotiating any contractual entitlements). HOW MUCH WILL THE GOVERNMENT PAY? Employers can reclaim up to 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, commissions and bonuses are not included. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) HOW ARE BENEFITS TREATED? At this stage, there is limited detail on how benefits are treated. It is reasonable to assume that pension contributions for auto-enrolment will continue unless the employee has opted-out. ARE ALL BUSINESSES ENTITLED TO THIS SUPPORT? The Chancellor announced that “Any employer in the country, small or large, charitable or non- profit, will be eligible for the Scheme”. It has now been confirmed that all UK employers that had a PAYE scheme with employees on it by 28th February 2020 can apply. ARE THE GRANTS UNDER THE CJRS AVAILABLE TO ALL EMPLOYEES? To be eligible, the employee must have been on the payroll on 28th February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28th February 2020 and has since been made redundant can be rehired and put on the scheme. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) WHAT ABOUT EMPLOYEES ON “ZERO HOURS” CONTRACTS? The detail around this area is quite vague. The Chancellor commented that the scheme will “cover everybody who is on the PAYE system through a company…and our desire is for the scheme to cover as broad a range of people as possible”. If that is indeed the case, then as zero hours employees would usually be on the employer’s PAYE payroll system, the Scheme would apply to them. As for their pay (which often varies under such contracts), the likelihood is that the employer will need to give details to HMRC of the employees’ average earnings for HMRC to decide how much to pay. HOW LONG WILL THE SCHEME LAST FOR? The Scheme will be backdated to 1st March 2020 and open initially for “at least” three months. The Chancellor said they would review it at this time. It is anticipated that payments will start to be made by the end of April 2020. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) HOW DO WE ACCESS THE SCHEME? The Scheme comes in the shape of a grant and will be provided through HMRC. The portal is expected to be available early April 2020. Employers will claim the grant through a new separate portal to be built by HMRC. From the information made available to date, employers will need to do the following: 1. Designate affected employees as ‘furloughed workers,’ and notify their employees of this change. 2. Submit information to HMRC about the employees that have been ‘furloughed’ and their earnings through a new online portal. We know HMRC are working urgently to set up a system for reimbursement, as existing systems are not yet set up to facilitate payments to employers. It is however anticipated that payments will start to be made by the end of April. We are told that HMRC will set out further details on the information required. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) CAN EMPLOYEES THAT ARE FURLOUGHED CONTINUE TO WORK FROM HOME AND COMMUNICATE WITH CLIENTS? Employees that are furloughed must not undertake any work therefore they must not contact clients. We would still encourage all businesses to keep in regular contact with their employees to keep them updated on business matters and on their health and wellbeing. CAN EMPLOYEES CONTINUE PERSONAL DEVELOPMENT? Employees are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer. HOW ARE THE AMOUNTS CALCULATED FOR EMPLOYEES WHOSE PAY VARIES? For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (e.g., earnings from March 2019) or (ii) average monthly earnings in the 2019-20 tax year. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) WHAT ABOUT EMPLOYEES ON THE MINIMUM WAGE? Employees are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However they are entitled to be paid NMW for any time spent training; IS THERE A MINIMUM TIME EMPLOYEES MUST BE FURLOUGHED BY? Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding. There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks. Remember the employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) HOW DOES THE SCHEME APPLY TO EMPLOYEES ON SICK PAY OR MATERNITY LEAVE? Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding can be placed on furlough. Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed. HOW OFTEN CAN EMPLOYERS CLAIM UNDER THE CJRS? Employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement. Claims can be backdated to 1st March 2020. This means that employees will only be able to take holidays after spending 3 weeks on furlough. However there seems nothing that would stop employees having 3 weeks on furlough, taking a period of annual leave at 100% pay, then going back on furlough. ©Fortus Group April 2020
CORONAVIRUS JOB RETENTION SCHEME (CJRS) Information provided as at 1pm on 27th March 2020. Please be mindful of the upcoming employment legislation amendments which include changes to employment contracts and the calculation of an average week’s pay. ©Fortus Group April 2020
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