25 March 2020
Quick Q&A: Coronavirus Job Retention Scheme
1. What is the Coronavirus Job Retention Scheme?
All UK employers, regardless of size or sector, can claim a grant from HMRC to cover 80% of the wages costs of furloughed workers, up to a cap of £2,500 per calendar month for each furloughed worker.
2. What does ‘furloughed worker’ mean?
Employees who would otherwise have been laid off or whose employment would have been terminated but are instead agree with their employer that they will not work but will be kept on the payroll.The scheme applies to all employees on PAYE, including those on zero-hours contracts.
3. What steps must I take to put employees on furlough leave?
- Decide which employees to designate as furloughed employees.
- Notify those employees of the intended change.
- Consider whether you need to consult with employee representatives or trade unions.
- Agree the change with the furloughed employees.
- Confirm the employees’ new status in writing.
- Submit information to HMRC about the employees that have been furloughed and their earnings through the new online portal.
- Ensure that the employees do not carry out any further work while they are furloughed.
4. Do I have to top up the remaining 20%?
It’s up to you, however bear in mind that withholding 20% of your employee’s salary will amount to breach of contract and unlawful deduction of wages unless the employee gives their consent.
5. What does the £2,500 cover?
It is unclear at the moment whether the £2,500 reimbursement is intended to cover anything other than the employee’s basic salary. The use of the words “all employment costs” in the Government Guidance for Employees suggests this could include additional costs such as pension contributions or other benefits.
6. What if I’ve already laid people off?
You may want to re-engage these employees, agree with them that they are furloughed workers and allow them to keep their continuity of employment.
7. Can employees request to be furloughed?
Yes, but you don’t have to agree – it is your decision which employees to place on furlough leave or make redundant.
8. How should I deal with annual leave?
Although there has been no specific Government guidance on this point, in usual circumstances, if the employment contract is not broken during a period of lay-off or short-time working (so that the employee remains "on the books" rather than being dismissed and re-engaged), statutory holiday entitlement is unaffected.
To avoid employees returning to work after the coronavirus outbreak and all requesting to take their annual leave at the same time, you may want to require employees to take one or two weeks annual leave on full pay now and then designate them as furloughed workers after this period.