Coronavirus Job Retention Scheme

On Friday 20 March, as part of the government’s daily coronavirus update, the chancellor announced the introduction of a Coronavirus Job Retention Scheme. Under the scheme, employees would be paid 80% of wages, up to a maximum of £2,500 per month. (Current as of 8am, 23/3/20)

Having read the various government website pages about this scheme, we have established that:

  • All UK businesses are eligible, and this includes charities.
  • ‘Employees’ includes everyone paid through PAYE. This includes ‘casual’ or zero-hours staff. The government has yet to confirm how their salary would be calculated. For example, whether it will be based on the average earnings over recent months or simply based on February’s earnings.
  • The government stated that ‘HMRC are working urgently to set up a system for reimbursement’. This means that employers would need to pay the 80% of salary first, before receiving it back from HMRC. Details have yet to be announced. It appears that employers are not obliged to make up the salary to 100% of usual earnings.
  • The government is pointing businesses to the Coronavirus Business Interruption Loan for support with cashflow.
  • It is important to note that this scheme does not change UK employment law. This means that if an employer does not have any work for an employee, it is likely that a redundancy situation would arise. The purpose of this scheme is to provide employers with an alternative to making staff redundant. However, employers are not obliged to take up the scheme and employees are not obliged to agree to becoming ‘furloughed employees’ and taking a reduction in wages.
  • We believe that employers will need to consult with staff and get agreement on whether they wish to become a ‘furloughed worker’ as an alternative to the employer pursuing a redundancy situation.
  • The government has stated that this will continue for three months. Given that it has said payments will be backdated to 1 March, this suggests the payments will last to 31 May and it will then review it. This means that if a worker has worked until say 15 March, they can only be furloughed from 16 March.

What we don’t know:

  • Given that a ‘furloughed worker’ is a new type of status, we do not know what their rights are during this time, other than they cannot be made redundant. However, given that their contract of employment is preserved, we believe that staff will continue to accrue annual leave and their continuity of service will be preserved.

If you are considering taking up this option and need support with the process, please contact us on 01403 240205 or email your HR consultant.