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Emma O'Connor


Last night (26 March 2020), the government published initial guidance to its Coronavirus Job Retention Scheme (JRS) that it announced on Friday 20 March 2020. Emma O’Connor, Head of Training in the Employment Group explains the key headlines and advice for businesses.

This article was written back on 26 March 2020, and maybe out of date. For up to date information about the JRS click HERE.

Key headlines to the new JRS

Which Employers can use the scheme?

Any UK employer (save for the public sector), charitable and not-for profit organisations. Recruitment agencies too for those agency workers paid through PAYE. The rule is that they must have a PAYE scheme established on/before 28 February 2020 AND have a UK bank account as grants are to be paid via BACS.

The JRS is planned to be up and running by the end of April 2020. The JRS will run initially for 3 months from 1 March 2020 and Employers can use this scheme anytime during this period.

One claim can be submitted at least every 3 weeks, which is the minimum length an employee can be furloughed for.

Which employees can be included within the JRS?

JRS will cover employees who have been on the payroll since 28 February 2020 on any type of contract, including full-time and part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.

Please note - The scheme will not apply to any new hires after 28 February 2020 – this is significant.

What “wages” are covered?

The JRS will be in place for at least three months backdated to 1 March 2020. Employers will be able to claim back 80% of the wages (up to £2,500 per month) of employees who have been furloughed – those employees who are put onto a special leave of absence because they would otherwise have been laid off or made redundant because of the COVID-19 pandemic. 

Employers will be able to reclaim wage costs plus the Employer’s NI contributions and the minimum automatic enrolment employer pension contributions on that wage. The guidance notes that fees, commission and bonuses should not be included.

For full-time and part-time salaried employees, the employee’s actual salary, before tax, as at 28 February 2020 should be used to calculate the 80%. 

While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

What if employees are on variable pay?

Where an employee’s wage varies and the employee has been employed for at least a year, the guide says employers will be able to claim for the higher of the employee’s earnings in the same month the previous year or the employee’s average monthly earnings in the 2019/20 tax year. In the case of an employee who has been employed for less than a year, the employer will be able to claim for an average of the employee’s monthly earnings since they started work. In the case of an employee who only started in February 2020, the employer will be required to pro-rate the employee’s earnings so far.

The same calculations/restrictions apply as noted above.

Does the National Minimum and Living Wage rates apply?

No (and yes) – Whilst the employee is ON FURLOUGH the guide states that furloughed employees, who are not working, must be paid at the 80% rate (or £2,500) even if, based on their usual working hours, this would be below the applicable rate of NM/LW. However, the guidance goes on to state that if employees are required to, for example, complete online training courses while they are furloughed, then they must be paid at least the NM/LW for the time spent training, even if this is more than the 80% of their wage that will be subsidised. When the employee is working they should be paid at least the NM/LW – as the guide says “Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working”.

What does furlough status mean?

To be eligible for JRS, the employee’s status must change to that of a furlough worker. During furlough, an employee can not undertake work for or on behalf of the business which includes providing services or generating revenue. 

What about employee rights during furlough?

The guide says “Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.” There is no mention of holidays. Presumably these continue to accrue but there is nothing about whether employees can take holidays during furlough and if they do what will they be entitled to be paid (100% of pay?)? The guide is silent as to holidays.

Make clear that whilst on furlough your employees are bound by your policies and work rules.  

What about employees who have already been made redundant?

Significantly, employees who have been made redundant since 28 February can be furloughed if they are rehired. An employee is considered furloughed for the purpose of this scheme only if he or she does no work for the employer. The scheme therefore does not cover the wages of employees whose hours are reduced.

What if employees are working reduced hours?

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for JRS and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

What about the 20% top up?

Employers can choose to provide top-up salary in addition to the grant to cover the remaining 20% but Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this JRS. Also, the guide makes clear that any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards) will again not be funded.

If employers are not going to top up for furlough employees, they must write and tell them that they are going to be taking a pay cut and ask them to agree to this.

Are there minimum periods of furlough?

Furlough status must last for minimum 3 week periods. This seems to suggest there can be some work/rotation allowed after the 3 week period, so working 3 weeks off/on etc. would seem to be acceptable.

Can employee’s work for us during furlough?

No not for a minimum period of 3 weeks. However, see my point above with regards to rotation. Employees are allowed to do volunteering work. The key thing is if furloughed, they are furloughed and with the exception to training (which is payable), they should not be working.

What about those on SSP?

For those employees on SSP, they stay on SSP. If/when they return to work there is no work for them they can at this stage be furloughed (provided they meet the other criteria). Employees who are shielding in line with public health guidance can be placed on furlough.

What should we do now?

Identify your employees who would otherwise be laid off or made redundant. Do they meeting the furlough criteria? Remember that rules relating to equality and diversity still apply! Next communicate – this is a really confusing and difficult time and the guide recommends that employers discuss furloughing with their employees and make any changes to the employment contract by agreement. Employers should then write to their employees confirming that they have been furloughed and keep a record of this communication. Keep the situation under regular review and remember that the health and safety of your people must be at the fore.  
Find out more

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.


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If you have any questions relating to this article or have any employment issues you would like to discuss, please contact the Employment team on [email protected]

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