Coronavirus Job Retention Scheme (CJRS) otherwise known as The Furlough Scheme

Current guidance as we understand it, with further guidance published on the coronavirus job retention scheme at:
(https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme)

Being furloughed means an employee is placed on a leave of absence by the employer because they cannot afford to pay their salary due to the COVID-19 pandemic.  The employee remains employed during this time and retains all existing employment rights.

Who can claim CJRS

The CJRS is available to all UK employers who operate on a PAYE system.  The PAYE system must have been in place from 28 February 2020.

To be eligible, the employee must have been on the payroll on 28 February 2020.

Staff who were on the payroll on 28 February 2020 and have since been made redundant can be rehired and put on the scheme. If staff were made redundant or placed on unpaid leave before 1 March 2020 they will not be covered by the scheme.

The CJRS covers any contract type, including full-time, and part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.

Any business, company or organisation with employees can apply.  This includes charities and recruitment agencies.  There is no limit on the amount of employees.

The CJRS does not exclude agency workers although the agency worker must not be working to be eligible.

Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.

Employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement.  Claims can be backdated to 1 March 2020.

What can be claimed

Employers will be eligible to reclaim up to 80% of wage costs per employee. There will be a maximum amount in place of £2,500 per month, plus the employers National Insurance Contributions and minimum auto enrolment pension contributions on each employee wage.  Fees, commission and bonuses are excluded from the CJRS.

For employees on the CJRS, an employer may make the additional payments to increase an employee wage to 100%.  This is not mandatory but is subject to employment law and the negotiations of contractual entitlements.

For employees whose pay varies:

• and have been employed for over one year, the employer will be able to claim for the higher of the employee's earnings in the same month the previous year or the employee's average monthly earnings in the 2019/20 tax year.
• and have been employed for less than one year, the employer will be able to claim for an average of the employee's monthly earnings since they started work.  For example – if an employee only started in February 2020, the employer will be required to pro-rata the employee's earnings so far.

The CJRS covers the application of the National Minimum Wage (NMW) to furloughed employees.  Employees who are entitled to the NMW whilst working must be paid at the 80% rate (or maximum of £2,500) if furloughed, even if this would bring their wage below the applicable rate of the NMW.  If employees are required to complete online training courses whilst furloughed then they must be paid at least the NMW for the time spent training, even if this is more than the 80% of their wage that would be funded.

There is nothing in the CJRS prohibiting rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.

The employee must not carry out any work for the employer if furloughed.  They are able to undertake training and do volunteer work, providing they do not provide services to or make any money for their employer.

The employer must take into account any possible discrimination that may arise when deciding which employees be offered furlough.  Prioritising vulnerable employees and those over 70 is almost certainly justifiable and not likely to cause any issues.  Giving all employees a fair opportunity to be considered for furlough would help minimise the chances of discrimination claims being raised.

Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed once they have returned from sick leave or self-isolation. Employees who are shielding (self-isolating due to health issues that make them vulnerable) can be placed on furlough.

Employees on maternity, paternity, adoption or similar leave can continue to draw SMP or similar payments.  Women on maternity leave will be entitled to return to work early, if they so wish, and will then be eligible for furlough.

The government will be issuing further guidance on the mechanics of claiming the payment in due course.  It says it expects the scheme will be up and running by the end of April 2020.

Advanta
March 2020