COVID-19 Update: UK Coronavirus Job Retention Scheme
On 17th April 2020, HM Revenue & Customs updated its policy guidance on the current Coronavirus Job Retention Scheme (CJRS). This is a UK Government financial aid scheme designed to help businesses that cannot afford to maintain their workforces.
- Furlough period limit: Furloughed employees must be on furlough for a minimum duration of three consecutive weeks. Employees can be taken off furlough and then re-furloughed. Upon being re-furloughed, this must last for the same duration.
- Employer payments: Employers can claim for systematic payments to their employees, either 80% of their salaries or up to a monthly cap of £2500.00. These payments only include wages, compulsory commission payments, over time and other fees. This excludes discretionary bonuses (including tips), commission and non-cash payments.
- Furlough Eligibility: Company directors can be furloughed. However, they can still carry out their statutory obligations, but must not work as if in normal circumstances.
- Working on Furlough Leave: If employment contracts stipulate that employees can undertake other employment; employees can work elsewhere whilst on furlough
- Employee Redundancy/Dismissal: Employees dismissed or made redundant after 28th February 2020 can be re-employed and have their wages claimed through the scheme.
- Statutory Sick Pay (SSP): Furloughed employees do not qualify for this. Employers wishing to furlough employees currently off sick can do so. They are no longer entitled to sick pay. For non-furloughed employees, SSP Regulations allows payment of SSP from day one, versus day four, of an employee’s absence; employees must be deemed incapable of completing work for COVID-19 associated reasons.
The operation of the CJRS has been extended further to end in June 2020, with the end date originally being 31st May 2020. This is under review and may be granted further extension. Employers can now apply under the CJRS from 20th April 2020 through HMRC’s online service.
Any employee on any type of contract (full-time, part-time, zero hours etc) can be furloughed. This including foreign nationals, individuals who are shielding or have caring responsibilities relating to COVID-19 and employees whose employment has been transferred to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) after 19th March 2020.
The only mandatory requirement is the employer or employee must have been on the PAYE payroll on or before 19th March 2020. This was originally from 28th February 2020. Employers can choose to supplement the 20% of their employees’ current salaries.
HMRC guidance for employees suggests they can accrue or take annual leave on furlough. Additionally, holiday pay should be in alignment with “your usual holiday pay”. Employers should pay employees their original (pre-furloughed) wages for any annual leave taken. HMRC guidance for employers remains unclear on the issue of annual leave whilst on furlough.
Should you require further information regarding the above, please get with a professional you deal with at Hudson McKenzie via email at firstname.lastname@example.org or by telephone +44(0) 20 3318 5794