Updated 27th March 2020
The UK government have announced a range of measures to help employers and employees as a result of the COVID-19 pandemic and its effect on normal working practices. The aim of the measures are to deal with the expected hardship that employees will suffer and also to help businesses retain their workforce so that they can call upon when business picks up again (thereby avoiding mass redundancies).
Unable to cover staff costs due to COVID-19?
If you as an employer cannot cover staff costs due to COVID-19, one of the measures you may be able to access is support from the Government to continue paying part of an employee’s wage, to avoid redundancies.
If you intend to access the Coronavirus Job Retention Scheme, you will need to discuss with the employee the term “furloughed worker”. This would mean that employees are kept on the payroll, rather than being laid off. For those employers who need to lay off workers, please do check your employee’s contracts of employment to ensure you have such a clause within it.
Qualification for Furlough
To qualify for the furlough scheme, as an alternative to laying off your employees, the employee should not undertake work for you while they are furloughed. You can then claim a grant of up to 80% of the employee’s wage for all employment costs, up to a cap of £2,500 per month.
Employees will remain employed while furloughed. Employers can choose to fund the differences between this payment and the employee’s salary, but you are not required to.
If an employee’s salary is reduced as a result of these changes, they may be eligible for support through the welfare system, including Universal Credit.
Please be aware that only employees who were employed (i.e on your payroll) on the 28 February 2020 onwards can be included within the scheme. It’s also useful to know that employees cannot ‘decide’ that they wish to be furloughed. Anyone who was made redundant as a result of the COVID-19 situation can be re-hired and placed on furlough leave.
The Government intend for the Coronavirus Job Retention Scheme to run for at least 3 months dating back from 1 March 2020, but they will extend it if necessary.
New Claims Portal Launched
A dedicated claims portal has been launched and claims will be backdated to the 01 March 2020. https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
Things we know in addition to the above:
- Furlough leave must be taken in blocks of at least 3 weeks.
- In addition to the 80% of wage costs (capped at £2,500 per month per employee), employers can seemingly also claim back the associated employer NICs and the statutory minimum level of employer auto-enrolment pension contributions on those wages.
- Commissions and bonuses will not count as wages for the purposes of the scheme.
- As already confirmed employers don’t have to top up unless you chose to do so or you negotiate this with staff/unions.
- For those employees whose pay varies, you claim the higher of their month’s earnings from March 2019 or their average earnings this tax year.
- If 80% takes an employee below National Minimum Wage, based on their normal hours, there’s no increase above the 80% to take the hourly rate (for total normal hours) back above National Minimum Wage.
- Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are ‘shielding’ i.e, over 70, pregnant, or under 70 with a serious underlying condition, can be placed on furlough.
- The guidance does not prohibit women on maternity leave, or those on adoption and paternity leave, from agreeing to return to work early and then being furloughed, or in the case of women on maternity leave electing to change to shared parental leave and then being furloughed. Please refer to your contracts and policies, but we can see no reason that notice to return cannot be brought forward by mutual agreement.
- Following suggestions in Parliament that this might not be possible, there’s nothing in the Guidance to prevent staff rotation provided each furloughed employee is off for a period of at least three weeks.
- As we know already, employees must not work (though they can continue to work for another employer). If they work for you for even a minimal amount of time during their furlough period they won’t then be eligible under the scheme. However, they are able to undertake training and do volunteer work. Any training must be paid at their normal rate.
- Employers must be careful not to discriminate when deciding who to furlough.
As soon as we hear anything further we will let you know via our online blog.
Further information can be found on this link. Please do get in touch with your HR Consultant to discuss any changes you are considering and to review your contracts before taking any action.
We are working on a bank of templates to help organisations during this period. The first two documents have been upload. These are an Authority to Travel letter and a Furloughed Worker Offer letter. Just log into the document downloads via our resources page to access these templates. If you are not an SLA client, but would like to access our Document area, please get in touch to discuss options on 01924 827869.
