Coronavirus Job Retention Scheme – ‘Furloughed Workers’

posted by KeithDaniel

With the Coronavirus/COVID-19 pandemic continuing to develop here in the UK, both employers and workers may suffer financially in the coming weeks and months.

In an effort to assist both employers and employees during this crisis, the Government announced a number of measures on 20th March 2020, which included access to support under the Coronavirus Job Retention Scheme.

This new scheme allows UK employers to access financial support to continue paying part of their employees’ salary for those employees that would have otherwise been laid off as a result of the pandemic.

We understand that the scheme will apply to those employees on PAYE and is also likely to apply to those workers on zero-hours contracts. Therefore, the scheme will apply to many workers as well as employees.

In order to qualify for the scheme, the employee must not undertake any work for the employer while they are furloughed, but will remain on the employer’s payroll.

Any employer is eligible to apply for the scheme, including sole traders, partnerships, limited company’s, limited liability partnerships and charities.

Next steps for employers:

  • Decide which employees to designate as furloughed workers;
  • Notify those employees of the proposed change and obtain their written consent – we suggest you write to the employees concerned and set out the change clearly, attaching a consent form. Under most employment contracts an employer will be prevented from reducing an employee’s pay, changing their employment status and taking away their work without their consent. Giving the current circumstances and the alternatives to furloughed leave which consist of unpaid leave, lay-off, or redundancy, it is likely that most employees will consent to the proposed changes;
  • We are currently waiting on guidance from the Government to see whether employers will need to consult with employee representatives or trade unions in the event that 20 or more employees are affected;
  • Within the letter inviting the employees’ consent to the new changes an employer should include details of the employees’ new employment status. Employers should also set out how long they anticipate the furlough leave to be in place, however we understand that this may be difficult and therefore we would suggest that employers put employees on furlough leave for an initial short-term period and state that this will be subject to review;
  • Submit information to HMRC regarding the furloughed employees and their pay through a new online portal which will be set up soon; and
  • Ensure that the furloughed employees do not carry out any work for the business while they are furloughed.

Under the scheme, HMRC will reimburse 80% of furloughed workers wage costs (which is expected to include pension and National Insurance contributions), up to a cap of £2,500 per month. An employer may decide to pay its employees the extra 20% of their salary, however this is not compulsory.

In the event that an employee refuses to provide their consent to be deemed a furloughed worker the employer will need to assess the situation and consider redundancies if necessary, provided that a fair selection and fair procedure has been applied.

We understand that this is a difficult and confusing time for both employers and employees and we will endeavour to post employed related updates as soon as possible when further information becomes available.

We are currently offering a new retainer service for employers with regards to the Coronavirus pandemic. Through this retainer we are offering employment related guidance and template documentation for a fixed monthly fee. If you would like to learn more about this service please contact our employment department at employment@berrysmith.com