COVID-19: our further advice on the Coronavirus Job Retention Scheme

Please Note: All information correct at time of writing on 23 March 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.

Following the publication of the government’s very general, initial guidance on how the Coronavirus Job Retention Scheme will work on Saturday 21 March, we’ve understandably had many questions coming through to our advice line.

We understand that it is a very worrying time for many business owners and employers. While we don’t currently have all the information from the government about the very specific details on how this will work, we’ve put together some answers to some of the questions we’ve received to our advice line.

And remember, as we find out more information, we will always update you as soon as we can.

What do I pay people who are ‘furloughed workers’?

Based on the government’s early guidance on the scheme, here’s what we know so far:

  • Employers can claim a grant of up to 80% of employees’ ‘wage costs’, up to a cap of £2,500 per month
  • Employers do not have to make up the remaining 20%
  • Employees may also be able to access benefits, including Universal Credit

What we don’t know yet, but we’re waiting for further guidance on:

  • What information the employer will have to provide to HMRC in relation to employees they have designated as ‘furloughed workers’
  • When HMRC’s new online portal will be operational
  • What mechanism will be created for reimbursement (although the Chancellor indicated that he thought monies would come through before the end of April)
  • What can be included in the pay claim
  • How it will be calculated if an employee works variable hours (the Chancellor said that this would be made clear when detailed HMRC guidance is published)
  • Whether this will be taxable
  • Whether anyone will be excluded from the scheme – such as salaried directors

Intervening events in a period of furlough

Furlough is a new concept and therefore the rules of what should happen during a period of furlough will depend on full details of the scheme. All we know for a fact is that the employee should do no work for an employer during this period.

  • What if they get a temporary job elsewhere? We don’t know, but this will be no doubt be covered in the scheme. As everything seems to be linked to the PAYE reference, HMRC should be able to track if someone has received pay at the same time a claim was made for reimbursement of furloughed pay. However, the key question is how would this be recovered given that the grant will have been paid to the employer, who probably is unaware of the employee’s other work and should not be penalised for this by recovery of part of the claim. Hopefully, the scheme rules will clarify this.
  • What if they have a pre-booked holiday? The government has given very little information as to the status of the employment relationship during a period of furlough. We’re assuming that contractual rights such as holiday will continue to accrue (unless the scheme provides otherwise). We have to assume that a period of furlough is treated differently to a period of maternity leave which can’t be interrupted (apart from Keep In Touch days). However, we simply do not know for sure until the government releases more information. Our best advice – honour the holiday and see what can be recovered when the scheme gets up and running.

Furlough and discrimination claims

This is an area riddled with potential risk. Let’s look at some scenarios:

  • Employee A has received a letter advising her to self-isolate for 12 weeks as she has a disability which has compromised her immune system. What should she be paid?

If she works in a food distribution depot where work is continuing as normal, this is a period of absence from work which has been caused by COVID-19 and therefore this will be treated as a sickness absence and paid accordingly.  If it were not for her condition, she would be in work.

If she works in a shop which has temporarily closed because of COVID-19, there would be no work available for her even if she did not have a disability. If we were to treat this as sick leave and pay her SSP, while her co-workers received furlough pay, she would be suffering detrimental treatment directly as a result of her disability. Although the intent of the scheme is not clear, there is a considerable risk here and we would, therefore, advise clients to designate Employee A as a furloughed worker and explain to her that this is what they will be doing, that they are hopeful this will be accepted by HMRC and if the scheme does not allow for this, she will continue to be treated as on sick leave.

Until it’s clarified that someone in her position can be treated as furloughed, they should continue to pay SSP, and if the scheme allows for her to be accepted as a designated furloughed worker, they can pay to her the balance between the SSP she has received and the 80% pay she is entitled to for the furlough period. This can go back to 1 March but the starting point was the date the shop closed, not the date she started self-isolation (assuming this was earlier).

If the scheme allows for those on disability-related self-isolation to be treated as a period of furlough, when to do otherwise would be discrimination, the employer needs to be careful that they do not submit a claim for reimbursement of SSP and furlough pay for the same period.

  • Employee B works as a manager in a café and advised her employer that she would not be able to come into work this week because she had no one to look after her 6-year-old twins because of the school closures.  She was told that this was fine but the period of absence would be unpaid. On Saturday her employer wrote to all employees advising them that the café was closed until further notice and they were to be treated as furloughed workers and would be receiving 80% of their wages.

In this case, there could also be discrimination issues. Furthermore, she is not really exercising the right to take time off work when in fact there is no work available. We’d advise that the employer should explain to the employee that they would try to designate her as a furloughed worker and as soon as they know whether this is possible, they will let her know.

  • Employee C was on holiday in Italy and can’t get a flight home. All her colleagues have been put on furlough.

In this case, we would advise that Employee C would not be a furloughed worker until such times as they’re back in the country and available to work.

  • Employee D had a minor back operation 2 weeks ago and has a fit note for a further 2 weeks.

Potentially the furlough period here would only start when an employee is fit to return to work.

It's important to note that the situations listed above are based on the very limited guidance we currently have on designating furloughed workers. We are waiting for more detailed advice to be published. A good starting point would be: is there no work available for your employee? If not, you can put them forward as furloughed workers but advise them that it is unclear yet whether they will fall within the scope of the scheme.

Can you have successive periods of furlough?

We simply don’t have the answer to this situation yet. It’s possible that you would be able to genuinely end a period of furlough if you feel work is now available and if this too disappears, put someone on furlough leave again. However, given the administrative burden of getting to grips with this scheme, this would have to be something that is tightly managed. It may be that HMRC could decide this would be too difficult to administer and may limit this to one period of furlough. In those circumstances, the employer would need to be confident about the availability of continuing work before bringing them back to work.

What if you have offered a job to a new starter but they have not joined the business?

We’re not sure what the scheme will say about this specific situation just yet. Clearly, if a business wants to withdraw an offer, they can’t do so after it has been accepted. Therefore technically they would have to terminate with notice.

Updating you with the latest coronavirus updates as they happen

Government measures to protect jobs and businesses amid the spread of coronavirus are fast-moving. We’re living in a time of unprecedented change, and it can be very confusing for employers.

Our HR and Employment Law experts are tracking the updates as they happen and we will be updating you as soon as we have more information and helping you translate those updates into meaningful action for your business.

And remember, if you’re a Citation client you can get in touch with us any time of the day or night on our 24-hour advice line on 0345 844 4848.

Not yet a Citation client? If you want to chat through your business needs you can call our friendly team on 0345 844 1111 or fill out your details in the form opposite.

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