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June 26, 2020
FAQs: The NEW Coronavirus Job Retention Scheme
On 29 May, the Chancellor announced changes to the Job Retention Scheme. This includes more flexibility and a requirement for employers to contribute to furlough workers’ wage costs.
Read on for helpful answers to FAQs regarding the new Coronavirus Job Retention Scheme (CJRS).
Q: What is the new COVID-19 Job Retention Scheme?
On 1 July the previous COVID-19 Job Retention Scheme is replaced by a New Job Retention Scheme that offers more flexibility. Employers and furloughed workers will be able to return on a part-time or reduced-hours basis while still being able to claim financial support to continue to pay part of the workers’ wages for the days they are not in work.
Q: Which organisations does it apply to?
A: The current scheme applies to all UK business, so limited companies, sole traders, LLP’s, partnerships and charities, recruitment agencies (agency workers paid through PAYE) who had a PAYE payroll scheme registered on HMRC’s real time information system for PAYE on the 19 March 2020 (defined as “a qualifying PAYE scheme”).
However, claims will be restricted to employees who have already been furloughed on the scheme for a minimum of 3 consecutive weeks before 30 June.
As a consequence, any organisation wanting to make use of the new scheme will need to have furloughed their workers who have not yet been furloughed by 10 June, to allow them to complete the minimum 21 calendar days required by the current scheme before it comes to an end on 30 June.
Q: What if I have more than one qualifying PAYE scheme?
A: The employer must make a separate claim in relation to each scheme and the amount of any payment will be calculated by HMRC separately in relation to each scheme.
Q: How long will new CJRS continue for?
The Coronavirus Job Retention Scheme was originally scheduled to finish at the end of June. This has now been extended until the end of October. The scheme will be gradually wound down in stages therefore it is very important that employers understand the key dates detailed below.
Q: Who is eligible to be furloughed under the new scheme?
Only employees who have been furloughed for at least 3 weeks on or before 30 June and for whom you have successfully claimed a previous grant under the ‘old’ scheme can be furloughed after 1 July. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have been furloughed for the first time was 10 June.
The only exceptions to this are parents returning to work after taking maternity, paternity, adoption, parental bereavement or shared parental leave.
Q: Can I furlough anyone who is currently in work, after the 10 June?
A: You can re-furlough a worker between 10 June and 30 June as long as they have been furloughed previously between 1 March and 30 June for a minimum of 3 consecutive weeks. However, you will have to wait the full 3 weeks before you can move them on to the flexible furlough scheme.
You can also furlough those returning from parental leave, for more information, visit our blog post about cut-off date confusion.
Q: Is there a limit to the number of employees I can furlough from 1 July?
The number of employees you can claim for in any claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under the ‘old’ scheme (although you wouldn’t include returning parents in this figure. Therefore, for employers who have been rotating furloughed workers as you will not be able to return the whole workforce and place on flexible furlough. For example, if you have split your 20 employees in to two groups of 10 and placed them on alternating 3 weekly furlough and work, you would not be able to put all 20 staff on flexible furlough so that everyone is back in work and working 3 days a week.
Q: Which employees does this apply to?
A: This applies to all employees who were employed on or before 19 March 2020 which were notified to HMRC on an RTI submission on or before 19 March 2020 and can be on any type of employment contract including; full-time, part-time, agency contracts and flexible or zero-hour contracts.
Q: What is a Furloughed Worker?
A: It is not a term that is written into UK law and has been created by the Government to describe those workers who are part of the COVID-19 Job Retention Scheme. Under the current scheme, they are workers who are paid via PAYE, but are temporarily instructed by their employer to cease all work in relation to their employment by reason of circumstances arising as a result of coronavirus or coronavirus disease. An employee has been “instructed by the employer to cease all work in relation to their employment” only if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment.
The new scheme which will come in to effect on 1 July, will allow more flexibility and employers will be able to bring back to work workers who have been previously furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours they are not in work. Employers will be able to agree any working arrangements with previously furloughed employees. To be eligible for the grant, employers must agree with their employees any new flexible furlough arrangement and confirm the agreement in writing.
Q: How do I claim the money?
A: The ability to furlough employees under the Coronavirus Job Retention Scheme has been operational since 20 April and the online service you’ll use to claim along with details of what you’ll need to make a claims is now available here. For help with this, you can follow the HMRC’s step-by-step employer guidance document. You will need to make any payments yourself and will be reimbursed. You will only be able to submit one claim every 21 calendar days, claims can be backdated to 1st March 2020 under the ‘old scheme’. The deadline to make a claim under the ‘old’ scheme is 31 July.
After 1 July, you cannot submit claims that cross calendar months. Therefore, if you have staff whose furlough period spans June and July, you must submit two separate claims, even if the furlough is continuously. Claim periods starting on or after 1 July must start and end within the same calendar month and last at least 7 days (unless you are claiming for the first or last few days of a calendar months and you have already claimed for the period ending immediately before it in the previous month or will claim for the period ending immediately after it in the following month).
Q: What if I cannot afford to pay any salary to these workers whilst waiting for the grant?
A: Visit here for more details of support available to businesses during this time.
Q: How much can I claim and what are the key dates?
A: Broadly speaking from 1 July you will claim a pro rata’d amount of 80% of salary, based on the proportion of hours not worked out of the employee’s normal working hours.
On the current scheme you can claim a grant from HMRC to cover the wages of a furloughed employee equal to the lower of 80% of their regular salary as at 28 February 2020, or £2,500 per month, plus the associated Employer National Insurance Contributions (NICs) and minimum Automatic Enrolment employer contributions. Included within the grant are wages, deferred wages (so long as they are not deferred to be paid on condition of the Job Retention Scheme paying out), past overtime, fees and compulsory commission. Not included within the grant are anything which is not “regular salary or wages’’ so discretionary bonuses/commission, performance related bonuses, any conditional payments (e.g. where a threshold must be met or conditional on the Job Retention Scheme paying out), tips and non- financial benefits such as benefits in kind (i.e. the value of health insurance or a car).
The new scheme will periodically reduce the amount an employer can claim from the grant with the intention of ending the scheme completely on 31 October. In July employers will continue to be able to claim for 80% of the workers regular salary and the associated Employer National Insurance Contributions and minimum Automatic Enrolment employer contributions, however from 1 August the government will still cover the cost of wages, but the employer will be asked to pay Employer National Insurance and pension contributions. In September the government will drop its contribution to 70% of wages, with the employers expected to contribute the other 10% (if still paying staff 80% of their wages rather than topping up to 100%), on top of the national insurance and pension contributions. In October, this will change again, with the government’s contribution dropping to 60% and employers contributing the remaining 20%.
Q: How long do employees need to be furloughed?
A: Prior to 1 July, employees on furlough must have been furloughed for a minimum of 3 weeks (21 calendar days). From 1 July, you will be able to bring back previously furloughed employees for any amount of time and on any pattern of work, this would be dependent on the needs of the business and agreed with the employee and claim a grant for the hours not worked.
Q: What would do we pay a worker who is part working / part furloughed?
A: The employer would be expected to pay their normal contractual pay for the hours they are returned to work and they would claim under the CJRS grant 80% of the workers normal pay for the hours which they are furloughed (it would still be at the employers discretion whether or not to top this up to 100%).
Q: Can I still have people on furlough full-time?
A: Yes, you can continue to have workers furloughed full time until 31 October, you as explained above from August the employer contribution would gradually increase.
Q: What do Businesses need to do immediately?
A: If you are considering using the new scheme or would like to have the option should you need it, then you should ensure that staff have been furloughed under the current scheme before 10 June.
Contact your furloughed staff and discuss the potential return to work and the hours you are proposing. Also, discuss if they have any commitments which may affect their availability i.e. childcare responsibilities or having to care for a vulnerable adult, issues regarding public transport etc. Confirm any agreed hours in writing (which may be in an electronic form such as an email) retaining all written agreements on your files for a minimum period of 5 years. This process should be subject to “meaningful consultation” meaning you should talk to your workers and gain their verbal and written agreement. In the context that their other options may be lay off, short time working without additional pay or even redundancy, it is highly probable that most workers will agree.
The key areas to cover in seeking your workers’ agreement are:
What change you are proposing
Why you are proposing to make that change
When that change will take effect
Who is likely to be affected by that change and for how long that change will be in place?
If you don’t engage your workers, then there is the theoretical risk of breach of contract or constructive dismissal claims. If you have a recognised trade union or employee consultation group, do check the terms of any collective agreements that are in place and contact Moorepay for advice. Trade unions were involved in creating the scheme and therefore are likely to be broadly supportive. Moorepay have the relevant letters and advice to support you with either the notification or agreement process.
If you are a HR Services customer, please call the usual number for advice or review the HR Hub for relevant template letters. If you are not a HR Services customer, please call us on 0345 184 4615 selecting option 1.
Q: What should I do if I am unsure whether I have the relevant clause to just notify employees of the changes?
A: If you are an HR Services Customer you can contact the usual number for advice. You must ask the employees to accept the changes proposed in writing and then record the relevant recorded documentation on your Company files for a minimum of five years.
Q: What do I do if someone doesn’t agree to being Furloughed?
A: If they do not agree to being Furloughed your options (with the relevant contractual right) are lay off or short time working (which may attract statutory guarantee pay not covered by the COVID-19 Job Retention Scheme), or redundancy which (if the employee has more than two years’ service) may attract a redundancy payment (also not covered by the COVID-19 Job Retention Scheme). Please take advice on this question before taking any action.
Q: What if I have not furloughed staff under the current scheme but after June, I find there is not sufficient work to return staff full time?
A: Unfortunately, you will not be eligible to utilise the new scheme and your options (with the relevant contractual right) are lay off or short time working (which may attract statutory guarantee pay) or redundancy which (if the employee has more than two years’ service) may attract a redundancy payment. Please take advice on this question before taking any action.
Q: What if an employee was sick on the day, I Furloughed them?
A: Furlough does not begin until the current period of sickness has ended.
Q: What if a Furloughed Worker becomes unwell after they have been Furloughed?
A: The advice at this stage is the normal rules in relation to incapacity for work will apply for employees and workers. That said, employees do not qualify for SSP if they are furloughed as part of the Coronavirus job retention scheme. Isolation or fit notes are now able to be obtained from NHS 111 online. If an employee or worker who has not been furloughed provides you with an isolation note, then they should move onto SSP, which is payable from day 1. Based on the known advice and payments now available under the Job Retention Scheme, practically speaking it is unlikely a Furloughed Worker will advise you of their requirement to self-isolate or even if they become sick.
Q: Do Furloughed Workers still accrue holidays?
A: Yes, as they are still employed their contractual rights including holidays continue as normal. When they are working reduced hours under flexible furlough, they would continue to accrue holidays based on their contract hours not on their reduced hours.
Q: Can an employee carry over holidays that were unused whilst they were furloughed?
A: The government has introduced a temporary new law to deal with the disruption of COVID-19 in relation to holiday accrual. Employees and workers continue to accrue leave as per their contract and can carry over up to 4 weeks’ paid holiday over a 2-year period, if they cannot take holiday due to Coronavirus.
Q: Can I allow a Furloughed Worker to take holidays during the time they are Furloughed?
A: If they have accrued the holidays in question you can allow them to take it, subject to payment details below. We recommend you do not approve the un-accrued part of the holiday request. Employers do have flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period. It is possible to agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.
Q: Can an employee do any work while Furloughed?
A: From 1 July, they will be able to work some hours / days as agreed and furloughed to the remainder, for the hours you are claiming as furlough hours they must not carry out any work
Q: What if an employee is on Statutory Sick Pay (SSP) or Shielding?
A: Employees on sick leave or self-isolating should get SSP as per legislation, anything relating to Coronavirus COVID-19 is payable from Day 1, however after the period of sickness employees can be then furloughed. Employees who are shielding in line with guidance can be furloughed, however the exception that applies to returning parents has not been extended to shielding workers, therefore they can only be furloughed after 1 July if they have previously been furloughed for 3 continuous weeks before 30 June.
Q: What if an employee works for another employer as well?
A: If your employee has more than one employer they can be furloughed for each job. Each job is treated as separate and the cap applies to each individual employer. In practical terms this means an employee can be furloughed in one job whilst still working in the other job. It is important to know employees can start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one). The guidance expressly allows for this and does say it has to be allowed under the old employment contract, but we presume the old employer can waive that. You should discuss with your employee what you expect of them regarding availability if they have taken up additional work under this current furlough scheme.
Q: What if an employee is on, or due on Maternity Leave?
A: The same principles apply for all parental leave types but if an employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance then the normal rules apply, and they are entitled to 39 weeks of SMP or allowance. Employees who qualify for SMP are still eligible for 90% of their average earnings in the first 6 weeks followed by 33 weeks of SMP or average weekly earnings, whichever is lower. If you offer a company or enhanced contractual pay to women on Maternity leave, this is included as a wage cost you can claim through the scheme. If they are returning from maternity leave (or shared parental leave, adoption, paternity or parental bereavement leave) after they 10 June they can be furloughed, even if this is for the first time, provided you have previously submitted a claim for any other employee in your organisation in relation to a furlough period of at least 3 consecutive weeks anytime between 1 March and 30 June. The employee in question started their leave before 10 June and has returned from that leave after 10 June and they were on your PAYE payroll on or before 19 March (meaning RTI submission notifying payments in respect of that employee to HMRC must have been made on or before 19 March).
If you’ve got more questions that relate to the Coronavirus Job Retention Scheme, these will be covered off in our previous set of FAQs here.
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Ask Moorepay for expert advice on all things payroll and HR.
Andrew has a wealth of experience in advising and representing clients of all shapes and sizes in a range of Employment Law topics from unfair dismissal through to all forms of discrimination and the complexities of TUPE. Andrew heads up our Advice Line and Advocacy teams who provide Employment Law advice to our clients 24 hours a day, 365 days a year and support our clients in presenting defences at Employment Tribunals throughout the UK & Ireland.