The chancellor’s announcement on Friday 20 March 2020 of a coronavirus Job Retention Scheme has left employers and employees asking a lot of questions about how the Scheme will work.
We have set out below some key points about the Scheme based on currently available information:
- The government has said the Scheme will apply in respect of all employees on PAYE including, apparently, those who have zero-hours contracts.
- The Scheme will be for those employees who would otherwise have been laid off during the coronavirus crisis (we interpret this to mean either made redundant or laid off without pay although this point is not clear from the information available to date).
- Those employees who are paid under the Scheme will be “furloughed workers” and will not be required to work by their employers. If furloughed workers continued to work for their employers, HMRC could view this as an abuse of the Scheme.
- HMRC will reimburse 80% of furloughed workers’ wage costs up to a cap of £2,500 per employee per month.
- There is no obligation to top-up wages to 100% (or to a lesser extent) but employers are at liberty to do so.
- Normal employment law principles will still apply. Therefore, changing an employee’s status from their current status to that of a furloughed worker will require agreement in the absence of the employer having a contractual right to furlough a worker. If a change to terms of employment is agreed with an employee this should be documented in the usual way.
- Employers are not obliged to furlough workers or utilise the Scheme. If employers do utilise the Scheme we would recommend adopting a fair, non-discriminatory basis to decide which employees to offer the option of being furloughed.
Posted on March 23, 2020