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Coronavirus Job Retention Scheme to Support Employers

View profile for Natasha Johnston
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Please note this article was published at 9.30am on Tuesday 24th March and is subject to change as further information is provided.

Businesses across the UK will have been heartened by the Chancellor’s announcement of a Coronavirus Job Retention Scheme, designed to support all UK employers to access support to pay part salaries to employees who would have would otherwise been laid off.

It is important to note that at present an assumption is being made that The Government is using the term ‘lay off’ in the broad and general sense rather than the technical term given to it in legislation. This is on the basis that on lay off or short term working, typically an employee continues in part to undertake some work.  

Any organisation can be eligible to apply for a grant to pay up to 80 percent of their employees’ salaries. This includes Limited Company’s, Sole Traders LLP’s, Partnerships and Charities. 

This will be welcomed by many UK companies which may have been considering implementing redundancies, temporary layoffs or short time working processes because of the impact of the Covid-19 Pandemic. 

JCP Solicitors’ HR Services team has put together some FAQ’s on the new scheme.

How do I access the scheme?

To access the scheme you will need to designate your employees as furlough. This is a new term in employment legislation and currently has no statutory definition, we expect this to change in coming weeks.   

What is a furloughed employee?

A furloughed employee is an employee whom either due to lay off, or redundancy, you would have otherwise not have provided work for. 

Can I just notify my employee they are furloughed?

If you have a contractual right to reduce hours, not to provide work, or have a lay off/short time working clause in the contract of employment then you may be able to inform employees of their change of status. In the absence of such clauses you will need to consult with staff and obtain their consent to make the change to their employment status.

Once I designate an employee as furloughed and change their employment status are they still an employee?

Yes, they are still an employee, and as such will still accrue annual leave etc. 

Can my employees work once they are designated as furloughed employees?

An employee cannot work if you are obtaining grant funding to pay part of their salary.

I need to keep a skeleton staff structure as I need to continue to produce products, how do I select who to change to furlough and who remains at work?

We would advise to use an objective selection criterion as you would in a redundancy situation. 

Do I have to pay the other 20% of salary?

There is no obligation to pay the difference in salary for furloughed employees.

Can employees work 20% of their usual working hours for me to justify paying the additional 20%?

No employees cannot part work if they have been designated as furloughed. 

Is there a cap?

Yes the upper limit is £2500.00 per employee per month. The guidance suggests this grant will cover all costs associated with employing an individual, therefore it is unclear if this is the cap an employee can actually receive as a payment or if it is the cap including all of the associated employment costs, we expect this to be clarified in the coming days. 

Why £2500 per month?

The Chancellor stated this is the median UK Salary and equates to £30,000 per annum. 

Can an employee trigger being furloughed?

No. The employer must designate employees as furloughed on the basis they have insufficient work for them, an employee cannot inform the employer they are on furlough leave.

How long will this grant be available?

The Chancellor announced the scheme will initially run for three months, effective from 1 March 2020. He also advised it could be extended if required.

What about employees who are on maternity leave, can I change their status?

The is no clear guidance on this, however, on the basis they have a statutory right to this time off and would ordinarily be given priority access to roles in a redundancy situation, we would advise they should remain on maternity leave and you would consider their employment status as they return to work.  

Who administers the scheme?

HMRC will have responsibility for running the scheme, they are currently creating the portal employers will need to submit their employee’s salary information into to make a grant application.    

Can I backdate my application?

Yes. Back-dated applications will be accepted and you will receive backdated grant payments as the portal is unlikely to be ready to use before April.

JCP Solicitors’ Employment and HR team is on hand to give you tailored advice to suit the specific needs of your business. Get in touch today on: 01792 525478.

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