On Friday 20 March 2020, the Chancellor announced a new package of measures to help businesses during the crisis caused by the coronavirus.
Last night the Government published its guidance in respect of a very important part covering what is typically called ‘furlough leave’ or officially ‘the Coronavirus Job Retention Scheme’ (CJRS).
Furlough leave is designed to save jobs and effectively gives an employer another option, rather than having to dismiss staff, or lay people off because the work coming in has ‘dried up’. The Government under the scheme will be reimbursing employer 80% of furloughed workers wage costs (capped at £2,500 per month). It is unlikely to be a breach of the employment contract to place someone on furlough leave without their consent, provided you pay to them their full salary and deal with the matter in an appropriate way. However, if you are intending to pay an employee just the 80% element, which you will eventually recover from the Government, then express agreement will be needed from the employee to do so.
It is highly unlikely any employment contracts will allow an employer to force someone to go on furlough leave receiving effectively a 20% cut in their salary but no doubt in the future such clauses will be included in employment contracts.
The key features are:
- The Government is hoping the scheme to be up and running before the end of April. It is planned to run for at least 3 months and in all probability will be extended.
- Any business can apply under the scheme so this includes charities, recruitment agencies and even public authorities.
- Businesses that want to use the scheme need to register on a portal which is due to come live on 1st April 2020.
- The 80% grant is based on the higher of (i) the earnings in the same pay period in the previous year, or the average earnings in the previous 12 months (or less if they have worked for less than 12 months).
- Fees, commissions and bonuses are not included as ‘wage costs’ but National Insurance Contributions and auto-enrolment pension contributions on that wage are.
- Furloughed employees must have been on your PAYE payroll on 28th February 2020. It includes full time employees, part time employees, employees on agency contracts and employees on flexible or zero hour contracts.
- Employees taken on after 1st March 2020 cannot be included.
- Employers can re-employ people who have been made redundant since 1st March 2020 and then put them on furlough leave.
- Furlough leave must be taken in minimum blocks of 3 weeks to be eligible for funding. Furlough leave can be rotated between employees providing each employee is furloughed for a minimum of 3 weeks.
- Employees on furlough leave can do voluntary work and training but cannot earn any money for the employer. If they work even for just an hour they are not entitled to be on furlough leave.
- An employer must be careful not to discriminate when deciding who to place on furlough leave. Equality and discrimination laws will apply in the usual way, but presumably prioritising vulnerable employees and those aged over 70 will not fall foul of the discrimination laws.
- Employees currently on sick leave, or self isolating cannot be placed on furlough leave, but can be when they would able to return to work.
- If an employee has more than one job, then the employee can still be furloughed for each job.
- Employees are only entitled to the National Living Wage/National Minimum Wage for the hours they are working. As a result furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if based on their usual working hours, with would be below the NLW/NMW.
- When the scheme ends you must make a decision depending on the businesses circumstances as to whether a furloughed employee can return to their duties. If not, it may be necessary to consider termination of the employment.
We are currently running an employment law clinic for employees via phone and video conference appointments, 30 minutes initial appointment for £100 inc VAT. To book an appointment get in touch on 01795 472291 or email firstname.lastname@example.org