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Coronavirus job retention scheme — what we now know

When the UK government announced the job retention scheme on Friday 20 March 2020 (i.e. a lifetime ago) the details were sketchy.

The headline news was the introduction of the concept of the “furloughed worker” and the government undertaking to reimburse 80% of furloughed workers’ wages up to £2,500 per month.

However many questions remained.

These included 80% of what exactly? What about new starts? And could workers be furloughed for short periods?

More detail

We now have more details in guidance issued on the evening of 26 March and although there is still some uncertainty the greater clarity is helpful.

While all employers should review the actual guidance here are some major points —

  • The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020
  • The 80% (up to the £2,500 cap) is for gross normal earnings, but not including fees commission and bonuses
  • The government will, in addition, reimburse employer National Insurance contributions and pension contributions up to 3%
  • Employees on variable (or zero) hour contracts are covered. The guidance sets out how their normal earnings should be calculated. For most this will be the higher of the same month's earning from the previous year, or average monthly earnings in the 2019-20 tax year
  • To be eligible, staff must be furloughed, i.e. not working, as opposed to working reduced hours
  • The minimum period to be furloughed is three weeks. This does not mean employees cannot return earlier, but the funding will not be available for the shorter period.
  • Staff who commenced after 28 February 2020 (in the sense of not being on payroll until after that date) are not covered by the scheme. This places many new starts, and those who have been offered a post but are yet to commence, in an unfortunate position
  • Furloughed staff remain employees with most employment rights unaffected, including under the Equality Act and (in my view unhelpfully) the rules governing collective consultation
  • The online service to allow employers to reclaim is expected to be available end of April 2020

We are still dealing with guidance and announcements as opposed to actual legislation; however, for most employers this is not regarded as time for undue caution.

If we wait for absolute certainty businesses may not survive.

Accordingly most of us are taking the government at its word and assuming that, when the time comes to reclaim the costs of furloughed workers, we will not be faced with a stack of new conditions, red tape or small print.

Kirk Tudhope

Inverness-based partner Kirk Tudhope heads the firm’s employment law team, he regularly represents employers, including private and public sector organisations, at employment tribunals.

Posted, 30 March 2020 by Kirk Tudhope
Categories: Coronavirus | Coronavirus and employment law | Employment | Insights