COVID-19: Furloughing - Further Guidance on the Coronavirus Job Retention Scheme

/ employment

The government have today, 27 March 2020, published further guidance for businesses on the temporary Coronavirus Job Retention Scheme in, which should assist employers. The information set out below is a useful summary of the further information provided, but it is certainly worth reading the entire guidance for employers considering using the scheme.

  • The Government have clarified that the scheme is open to businesses including charities, recruitment agencies, and public authorities, though it is envisaged at this stage that public authorities will be unlikely to need to use the scheme.

  • Companies in administration can also access the scheme via the administrator.

  • Businesses can claim for all employees on their PAYE payroll provided that they had been on the payroll prior to 28 February 2020. This includes full-time, part-time, and agency employees, as well as employees on zero hour contracts.

  • It also confirms that you have made redundancies since 28 February 2020, you can re-hire and furlough these employees.

  • The guidance confirms that employees must not be working while on furlough leave (though they may be able to undertake some form of voluntary training so long as it does not generate income for the employer).

  • The guidance emphasises that the scheme does not overwrite existing employment rights (see our previous post in this regard)

  • Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.

  • Employees on sick leave or self-isolating (because either they or a member of their household have symptoms of coronavirus) should receive SSP, but could be furloughed after they have returned to work.

  • Employees who are "shielding" i.e. vulnerable employees such as those over 70 or pregnant women may be placed on furlough.

  • Employees on maternity leave should continue receiving statutory maternity pay or maternity allowance as usual. However, if your business offers enhanced maternity pay, this is included as a wage cost that you may be able to reclaim under scheme.

  • Calculating the amount of pay for employees whose pay varies has also been clarified in the guidance. The government has confirmed to claim higher of: –

    • The same months’ earnings from the previous year; or

    • Average monthly earnings from the 2019-20 tax year.

  • Employer national insurance and pension contributions must continue to be paid and these costs will also be covered by the scheme. It should be noted that if you choose to top up your employees pay, the additional amount of employers NI and autoenrollment pension contributions will not be covered.

  • One of the big questions has previously what would happen with employees on minimum wage, as they will receive less than minimum wage unless you are topping up. The guidance confirms that employees are only entitled minimum wage for the hours that they are working. That right therefore suspended whilst they are on furlough, and you do not have to top up (subject to existing employment rights).

Should you have any queries about the issues raised in this article, or on any employment related matter, please contact our expert Arvin Sandhu by email or on 01494 893 542.