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On 26 March 2020, the government provided guidance on the coronavirus (Covid-19) Job Retention Scheme (JRS).
This fact sheet is intended to provide answers to some of the many questions that everyone has.
Q WHAT IS THE JRS?
A The JRS is a ‘temporary’ scheme open to employers for at least 3 months starting on 1 March 2020. The JRS is designed to support employers who have been severely affected by Covid-19. There’s no financial limit on what employers can claim.
Q HOW DOES THE JRS WORK?
A Employers can apply to HMRC for a grant to cover wages for their employees, which will cover the lower of 80% of the wages of retained employees to a maximum of £2,500 each a month plus employer’s National Insurance Contributions and employer’s minimum auto-enrolment employer pension contributions of 3%.
Q DOES THIS INCLUDE COMMISSION, FEES AND BONUSES?
Q HOW DO EMPLOYERS CALCULATE THE WAGES OF EMPLOYEES WHO WORK VARIABLE HOURS?
A If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, the employer can claim for the higher of either: (a) the same month’s earning from the previous year; (b) average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, an employer can claim for an average of the employee’s monthly earnings since they started work.
Q WHAT EMPLOYERS ARE ELIGIBLE FOR THE JRS?
A The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 28
February 2020 and have a UK bank account. Where a company is in administration, the administrator will be able to access the JRS.
Q WHICH EMPLOYEES CAN BENEFIT FROM THE JRS?
A The JRS applies to employees who were on PAYE payroll on 28 February 2020 who are “furloughed” instead of
being laid off.
Q IS THE JRS LIMITED TO CERTAIN TYPES OF EMPLOYEES?
A No, it applies to all full-time employees, part-time employees, employees on agency contracts, and employees
on flexible or zero-hours contracts.
Q ARE WORKERS AND SELF-EMPLOYED CONTRACTORS ELIGIBLE FOR THE JRS?
A No, as they are not normally subject to PAYE. However, they may be eligible for the new Self-Employed Income Support Scheme or Universal Credit.
Q IS THERE A QUALIFYING PERIOD THAT EMPLOYEES MUST BE EMPLOYED BY THEIR EMPLOYER TO BE ELIGIBLE FOR THE JRS?
A No, provided that the employees were on PAYE payroll on 28 February 2020.
Q CAN EMPLOYEES WHO START THEIR EMPLOYMENT ON OR AFTER 1 March 2020 BE FURLOUGHED?
A No, the JRS only applies to employees who were employed and on a PAYE payroll on 28 February 2020.
Q CAN EMPLOYEES WHO START THEIR EMPLOYMENT ON OR BEFORE 28 FEBRUARY 2020 BUT ARE NOT PAID UNTIL AFTER 1 MARCH 2020 BE FURLOUGHED?
A Possibly, but this is not clear from the guidance.
Q HOW LONG MUST EMPLOYEES BE FURLOUGHED?
A Employees must be furloughed for a minimum continuous period of 3 weeks.
Q CAN EMPLOYERS ROTATE FURLOUGHED EMPLOYEES?
A Yes, provided that the employees are furloughed for a minimum of 3 weeks at a time.
Q DOES THE JRS APPLY TO THOSE EMPLOYEES WHO ARE ON REDUCED HOURS, OR WORKING FOR REDUCED PAY?
A No, as they are still working and the JRS only applies to employees that are not working.
Q CAN EMPLOYEES THAT HAVE 2 EMPLOYERS BE FURLOUGHED FOR BOTH?
A Yes, there is no prohibition on an employee being furloughed by each employer.
Q DO EMPLOYERS HAVE TO TOP-UP THE DIFFERENCE BETWEEN THE GRANT OF 80% of WAGES AND A FURLOUGHED EMPLOYEES’ NORMAL WAGES?
A No, employers do not have to top-up furloughed employees’ wages by 20% of the wage costs. But they can do if they so wish.
Q IS THE GRANT OF 80% OF WAGES SUBJECT TO INCOME TAX, NATIONAL INSURANCE CONTRIBUTIONS AND OTHER DEDUCTIONS?
Q WILL EMPLOYERS HAVE TO REPAY ALL GRANT PAYMENTS?
A No, the JRS is not a loan.
Q HOW DO YOU APPLY FOR THE JRS GRANT?
A Applications for JRS will be through an HRMC online portal. The aim is that this will be completed by the end of April 2020.
Q CAN FURLOUGHED EMPLOYEES WORK FOR ANOTHER EMPLOYER?
A No, furloughed employees can do volunteering or training, providing it does not generate any money for their employer. If employees are required to complete online training courses while furloughed then they must be paid at least the National Living Wage/National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will subject the grant.
Q WILL THE GRANTS BE LONGER THAN 3 MONTHS?
A Possibly. The grants will end on 31 May 2020, but the government has indicated that the JRS will extend beyond this date.
Q DOES HOLIDAY ACCRUE WHILE EMPLOYEES ARE FURLOUGHED?
Q CAN EMPLOYEES ON UNPAID LEAVE BE FURLOUGHED?
A No, unless they were placed on unpaid leave after 28 February 2020.
Q CAN EMPLOYEES THAT ARE ON SICK LEAVE OR SELF-ISOLATING BE FURLOUGHED?
A No, but they can be furloughed when they are fit to return to work. However, employees who are shielding can be placed on furlough.
Q WILL EMPLOYEES BE ENTITLED TO RECEIVE THEIR CONTRACTUAL BENEFITS WHILE FURLOUGHED?
A Unless the government provides guidance to the contrary, employees will be entitled to receive their contractual benefits in the normal way unless there is a contractual provision indicating otherwise or the employees have agreed not to receive them.
Q CAN EMPLOYERS INSIST ON EMPLOYEES BEING FURLOUGHED?
A No, employers can only furlough employees if they have a contractual lay-off clause in their employment contracts. If not, they will need to comply with employment law.
Q HOW DO EMPLOYERS FURLOUGH EMPLOYEES WHEN THERE IS NO CONTRACTUAL RIGHT TO DO SO?
A Employers must comply with employment law when designating employees as furloughed (i.e. consult with their employees and seek their consent). Specific legal advice should be sought.
Q WHAT IS THE DIFFERENCE BETWEEN LAY-OFF AND REDUNDANCY?
A Lay-off is where there is a temporary cessation of work and employees are placed on a leave of absence. During this time, employees remain employed and their continuity of service is preserved. Redundancy is when then requirements of the business to perform work of a particular kind [in the place they were employed] has ceased or diminished and could result in dismissals. In either case, employers will need to comply with employment law.
Q CAN EMPLOYERS RE-EMPLOY EMPLOYEES THAT HAVE BEEN MADE REDUNDANT AND FURLOUGH THEM?
A Yes, provided the employees were on PAYE payroll on 28 February 2020 and their employment ended by reason of redundancy after this date.
Q CAN EMPLOYEES DEMAND TO BE FURLOUGHED?
A Probably not, but employers should take care to ensure any furlough process does not discriminate against those with protected characteristics. Prioritising vulnerable workers is likely to be reasonable. Employers will need to comply with employment law. Specific legal advice should be sought.
Q CAN EMPLOYEES REFUSE TO BE FURLOUGHED?
A Yes, as the change in status is subject to existing employment law. If there is no contractual right for the employer to lay off, the employee could refuse to be furloughed and work under protest. The employee could then bring a claim for unauthorised deduction from wages each month. Employers will need to comply with employment law. Specific legal advice should be sought.
Q CAN EMPLOYEES ON MATERNITY LEAVE BE FURLOUGHED?
A The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed or electing to change to shared parental leave and then being furloughed. Employees on maternity (or similar) leave will continue to draw statutory maternity pay (or similar) payments if they are not furloughed.
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