6 min read | 30 March, 2020 By Nick Hardy
With developments moving so quickly, we'll keep updating this blog and promise to share any developments with you as soon as we can.
On Friday 20th March, the government announced a job retention scheme (JRS) to avoid job losses and/or redundancies during COVID-19. The details are currently very high level and therefore we need to approach any action with a level of caution. This document is intended to set out what we do know and what is yet to be advised. Please note that as thee situation is evolving, all point in this article are subject to change. We will do everything we can to keep this post up to date.
To avoid job losses and redundancies, the government have agreed - where the employer cannot afford to pay - to fund up to 80% of an employee’s salary up to £2,500 per month - where the employer cannot afford to pay them.
Employees of any type of organisation (e.g. Ltd, PLC, LLC etc).
Employment costs can be claimed from 1 March 2020 for those employed on or before 28 February 2020.
You need to designate affected employees as ‘furloughed workers’ and notify your employees of this change.
Changing the status of employees remains subject to existing employment law and depending on the employment contract, may be subject to negotiation.
If you have existing contractual clauses that relate to lay-off, you can invoke that clause. If not, you need to consult your employees for their consent to this change.
Ultimately options become quite limited for an employee when there is no work available. Currently as we see it, you have three options that you would give to your employees:
You can ask them to select what they would like and use the correct process for what they have chosen.
You do. They would remain on payroll and you continue to pay them. The government are working to set up a system where you would submit information to HMRC for reimbursement.
The government have said that the scheme will be available initially for 3 months from 1 March 2020 but will be extended if required.
Currently there is no guidance on this, and our advice is to contact your financial institution to see what arrangements they have on offer.
No. This is not a mechanism to boost salaries of employees still working. It is a scheme designed to safeguard jobs and keep employees on payroll, where there is no work to undertake.
Yes - as the situation currently stands.
Yes – if you wish to but you are under no obligation to.
If you need to choose a proportion of your workforce to furlough then you would need to implement a fair and transparent process to determine who to keep and work.
You can either defer the period of annual leave or “interrupt” the period of furlough, as long as you have been on this status for a minimum of 3 weeks, take the period of leave and then go back on to furlough status. This is of course, subject to the approval of your employer.
Employees would continue to accrue holidays at their standard entitlement based in the contracts of employment.
Unfortunately not, only employees that have been employed on or before 28 February 2020 are eligible to be furloughed.
No, you do not attend work or do any work from home for the Company during this period.
You will continue to be on sick leave or selfisolating until the end of that current period and will then be become a Furloughed Worker following this. If you become sick or need to selfisolate during the period of being a furloughed worker, normal reporting procedures apply.
Normal rules apply and you are entitled to claim up to 39 weeks of pay or allowance.
Look at the individual’s pay from the month in the previous year, compare against current month and use the higher figure of the two, i.e. for April 2020 salary, use salary from April 2019 and use the higher amount of the two. You can also use the average monthly earnings from the 2019/2020 tax year.
There are still many unknowns about this scheme and this guidance will be updated as new information becomes available.
If you have any questions or need advice please email ForrestHR team or give them a call on 01892 726060.
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