Furlough and the Job Retention Scheme FAQs7th Apr 2020
The term Furlough is one few of us were familiar with a month ago.
Now the job retention scheme is generating huge interest as people seek to understand how and indeed if it could help them during the COVID-19 crisis. We asked Hugh Reid, Employment Law Solicitor at Coles Miller Solicitors, for more details, including answers to Employers and Employees most pressing questions.
What is the CJR SCHEME?
The CJR is a Government Scheme set up to preserve jobs by enabling employers to pay their employees 80% of their salary or £2,500.00 per month, whichever is the lower of the two. This sum can be claimed back from HMRC. In addition, employers can claim the employer’s national insurance contributions and the minimum automatic enrolment employer pension contributions they are liable to pay in the subsidised wage.
The purpose of the scheme is simply to preserve jobs as the reality is many employers (if not all) could not afford to pay 80% of wages while revenue is impacted. Without the furlough scheme redundancies are inevitable.
EMPLOYERS:
Should I furlough or lay staff off (redundancy) what’s the difference?
Employers can lay staff off but only if it is a term of their existing contract of employment otherwise its furlough or termination of the contract.
How long can I furlough an employee for? Can I bring them back?
Any employee furloughed must be so for an initial minimum 3 week period. Employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then re-furloughed (subject to each furlough period being at least 3 weeks).
Which employees are eligible for the scheme?
HM Revenue & Customs guidance on the scheme published on the 26th March 2020 states that, in order to be eligible for furloughing, an employee must have been on the employer’s payroll on the 28th February 2020. There is no restriction as to employee status – the scheme covers workers on flexible or zero hour contracts as well as those on agency contracts.
What does the grant cover? 80% of what?
Employers can reclaim 80% of compulsory (presumably meaning contractual) commissions back from HMRC, as well as basic salary. This is particularly important for example car salesmen and estate agents but of course can only be for commission on past sales. Furloughed employees will clearly not be making any new sales.
Is an employer obliged to top up to 100%?
There is no employer obligation to top up to 100%.
Do I need to consult staff and ask their permission to be furloughed?
Yes, employers do need to consult staff as you are attempting to change the current terms and conditions of their contracts of employment.
Do I have to follow a set procedure as you do for redundancy?
No, unless it is redundancy of course. An offer letter and acceptance will be sufficient.
How do I make a claim from the government?
HMRC is at present setting up a portal for employers to provide the necessary details in order to re-claim the 80%. We have no indication yet as to when this will be live.
Can furloughing be back dated?
Claims can be backdated to the 1st March 2020 (when the scheme was introduced) providing the employee has done no work for the employer in the period claimed for.
Can I ask a furloughed worker to do any work during the furloughed period?
No, no work of any kind is allowed to be done to qualify for the scheme.
EMPLOYEE
Can I be made redundant whilst on furlough?
Yes, you can. The HMRC guidance does not state that a furloughed employee cannot be made redundant whilst the scheme remains open. Therefore, it appears that an employer could terminate an employee’s contract for redundancy while they are furloughed, providing they comply with the relevant redundancy procedures.
Can I request to be furloughed?
Yes you can but it will not necessarily be accepted by your employer.
Is there a maximum furlough term?
This is subject to further Government guidance which will be forthcoming (we trust) on or before the initial 3 month period has ended on the 31st May 2020.
If asked to furlough, do I have the right to decline and how does this affect me?
Yes, you can decline however this may very well lead to the termination of your contract of employment.
Can I wish to work voluntarily for my company whilst on furlough?
The guidance here is unclear. Messaging states an employee can take part in volunteer work, as long as it does not provide services or generate revenue for the employer making a claim under the scheme on that employees behalf.
Can I volunteer for the NHS or charitable work if I have been furloughed?
Again the guidance here is unclear. It states that an employee can take part in volunteer work, as long as it does not provide services or generate revenue for the employer making a claim under the scheme on that employees behalf.
Can I take up work elsewhere or get another job whilst I am on furlough?
Yes, but the guidance says it must be permitted under the old contract of employment. A former employer can presumably waive this.
Can I be made redundant once the three month furlough term is up?
Yes you can. It will depend on the circumstances at the relevant time and normal redundancy procedural rules will of course apply.
Do I still need to check in with work?
This depends entirely on the terms of your contract of employment.
What happens to my pay (including how I am taxed) and how does it work? Will work pay me or the Government ? When do I get paid?
Normal PAYE deductions apply to furlough pay and it is for your employer to pay you at the appropriate time and re-claim the money back under the scheme providing you qualified.
Please note that both the Government and HMRC are constantly updating and amending the guidance that has been provided regarding all of the above and all we can do is continue to monitor this ever evolving situation. However this lack of clarity in the guidance is leading to significant uncertainty.
Get Expert Legal Advice On Employment Law
Employment rights are a complex area of the law. Getting your paperwork right as an employer is absolutely vital if you are to avoid unwittingly falling foul of regulations.
Our employment law solicitors can draft section 1 statements for you and amend your contracts to ensure they contain the correct mandatory information.
Contact solicitor Hugh Reid at Coles Miller’s Poole office for more information.
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This document is not intended to constitute and should not be used as a substitute for legal advice on any specific matter. No liability for the accuracy of the content of this document, or the consequences of relying on it, is assumed by the author. If you seek further information, please contact Managing Partner Neil Andrews at Coles Miller Solicitors LLP.
