FAQs - Coronavirus Job Retention Scheme
Our friends at DMH Stallard have answered some frequently asked questions about the new Coronavirus Job Retention Scheme, which was announced at the end of March 2020.
Who does the Scheme cover?
The Chancellor’s statement and the initial information online referred to ‘workers’. The Guidance now only refers to ‘employees’ but makes clear that this includes those who are employed by an agency, as well as those on flexible and zero-hours contracts. The Government has recently published the arrangements for the self-employed.
How does the employer qualify?
They must have operated a UK payroll and held a UK bank account on 28 February 2020.
What about the affordability test?
The Chancellor’s announcement made clear reference to this. While there is no direct reference in the Guidance to affordability, employers would be well advised to ensure that they retain information which was relied upon at the time the decision to furlough employees was made that supports the view that it was not affordable to continue to employ staff at their normal rate, and that likely alternatives were lay off or redundancy.
So it sounds like the Scheme is going to be an open and generous one?
The Guidance makes clear that HMRC reserves the right to audit retrospectively. The Scheme will cost billions of pounds and in due course HMRC will no doubt seek to recover money in cases of abuse. The attendant publicity for any employer which is found to have made a dishonest claim will likely be severe.
What information do I have to provide?
Claims will be made through a portal which is not yet set up, though the target date for this is the end of April. The Guidance refers to a claim requiring:
- PAYE reference number;
- The number (but interestingly not the names) of employees being furloughed;
- The claim period (start and end dates);
- The amount claimed;
- Your bank account number and sort code;
- Your contact name; and
- Your phone number
How much can I receive per employee?
The Guidance clarifies that the Scheme will reimburse 80% of the employee’s salary up to a maximum of £2,500 per month. The previous reference to ‘wage costs’ has been removed, and it is clarified that the employer can claim 80% of wages plus the employer NI contribution and compulsory auto-enrolment contributions in addition.
When should claims be made?
Only one claim can be made per employee in a three week period, and the Guidance states that claims should be made at the point at which the employer runs its payroll or in advance of an imminent payroll.
Can I re-hire those employees made redundant after 28 February 2020?
The Guidance has confirmed that employees made redundant can be re-hired if the employer chooses to do so and then be put on the Scheme. However, it is unlikely that employees made redundant for reasons not related to the economic COVID-19 would be included in this group.
Do furloughed workers still have to make employee auto-enrolment pension contributions?
Yes, where applicable, unless they have opted out.
Are employees who have already been made redundant eligible for the scheme?
Yes, so long as they were originally hired on or before 28 February 2020 an employer can rehire them and put them on Furlough so long as all the other requirements of the scheme are met.
What if we pay 80% and that means the employee will be paid less than the National Minimum Wage or National Living Wage? Do we have to pay the difference?
No. The only exception is if during furlough you require the employee to attend training, in which case you will have to pay the difference for those hours of training.
I thought that no work at all could be carried out, including training, while on furlough?
The Guidance confirms that training can be carried out, but that this is provided the training does not provide a service which generates revenue for the employer.
Is there any more information on how we communicate with staff about designating them as furloughed?
The Guidance says that employers should discuss with their staff and make any changes to the employment contract by agreement. It is not clear, but this is likely to be directed at the vast majority of employers who do not have contractual lay off clauses in their contracts of employment. The guidance also goes on to say that if sufficient numbers of staff are involved, it may be necessary to engage in collective consultation processes to procure agreement to changes to terms of employment. This suggests that the obligation to collectively consult where there are likely to be 20 or more redundancies within a 90 day period still applies. The concept of ‘redundant’ for the purposes of collective consultation includes traditional redundancy situations and also circumstances such as changes to terms and conditions through dismissal and re-engagement.
Can employees currently on sick pay or self-isolating be placed on furlough?
No, they should only be furloughed afterwards.
As with the Chancellor’s initial announcement, we still await any actual legislation in respect of the Scheme, so the Guidance, while very welcome cannot be taken as a definitive statement of the law.