On March 20th the government announced plans for financial help to ease the strain on organisations and retain employees for an extended period of time. This is called the job retention scheme, as of now not much information has been given as to how it’s going to work. Here’s what we do know though!
What is the Job Retention Scheme?
The job retention scheme involves the organisation placing their employees on what the call “furlough” the term is foreign to the United Kingdom and we believe it originates from the USA. In a nutshell this means you place an employee on a temporary leave of absence, they do not have to work and receive no pay but are brought back in to work when needed.
Companies that do this will be given a grant from the Government that will cover 80% of the employees wages up to a maximum of £2500 per person per month.
What companies is the job retention scheme available to?
The retention scheme is available to all companies and organisations there are no restrictions.
How do I get the government grant to pay staff wages?
You will first need to choose which of your employees are going to be furloughed and then submit their details to the HMRC with details of the employees earnings. You will then receive the grant to cover 80% of the employees wages. We are waiting for more information from the government about the online portal that is to be used to submit these details along with other information that may be required from you.
Rishi Sunak the Chancellor state that he hopes the first instalment of grants will be paid out to companies by the end of April 2020 and they are to be backdated to the 1st March 2020. At the moment we know that the scheme will run for 3 months with the room to be extended if needed and the coronavirus pandemic continues.
Which of my employees can be furloughed?
In most cases any of your employees can be placed on furlough. As long as they are on PAYE. The guidance states that the ability to place your employee on furlough depends on the employee contract. It is highly unlikely that your employee contracts have furlough clauses in them, however they may have the right to lay-off employees on no pay for a temporary period.
The only difference is that employees that are on layoff will get statutory guarantee pay (SGP) whereas the furloughed employees will receive the 80% of their wages. SGP is £29 per day up to a maximum of 5 days in a rolling 13 week term, this rises to £30 from the 6th of April. Furlough is a much more favourable option for employees.
If the employee contracts do not contain unpaid layoff clauses you can ask your employee to agree to be furloughed. 80% of their wages may not be as promising as full pay but it is better than making them redundant. In the wake of this COVID19 pandemic it may also be a better deal for your employees that are at present struggling with their childcare arrangements.
What if I have already laid-off some employees?
If you have done this it’s not too late to get in touch with your employees and ask them to agree to change their status from being laid off to being furloughed. This would be a simple process and involved changing their pay from zero to 80 percent of their wages, providing they haven’t already got alternative employment.
Do I need to pick certain employees?
It is totally your choice as to who you furlough. If you are not placing your whole work force on furlough you should choose wisely with careful consideration. It may be assumed that the best options are the employees in the high risk category and forcing them on to a furlough agreement without talking to them first, this could end up in a discrimination claim from your employees that claim they were forced because of their age, disability or even a pregnancy. Check out our legal implications of Coronavirus post for more information.
We believe you should ask for volunteers initially and any volunteers that come forward in the high risk category should be chose first. There is not at present a maximum number or a minimum of employees that can be furloughed.
Do I have to make up the missing 20% of the furloughed employees wages?
This is voluntary and down to you as a company to decide there is no requirement to do so.
How will the 80 per cent be calculated from a zero hour contract employee?
The Government have not given any insight to this just yet but the Chancellor stated that his intention was to try and cover as broad a group of employees as possible.
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