CORONAVIRUS JOB RETENTION SCHEME
On Friday 20 March, the government announced its Job Retention Scheme to help employers retain employees and avoid the necessity to make redundancies in order to cut costs during this incredibly difficult period of trading.
As you have no doubt already read, the premise of the scheme is that the government will fund 80% of employment costs up to a maximum of £2,500 per month per employee.
This scheme is open to all U.K. companies, no matter what their size is.
Employers do not have to top up the remaining 20% (or more if the employee earns more than 20% more than the £2,500 cap) if they do not wish to do so, albeit that this is subject to agreement between the employer and the employee.
Uncertainty about payments
There is an absence of detail following this announcement which leaves some questions unanswered. We trust that the government will provide answers to these issues in the coming days.
The uncertainties at the time of writing relate to the calculation of the reimbursement. The government have stated that employers will be reimbursed:
"80% of furloughed workers wage costs, up to a cap of £2,500 per month"
and that the scheme will allow an:
"employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month"
It is not certain from these statements if the scheme is intended to cover the basic salary or additional costs such as pension contributions or other benefits.
It also appears that the intention of the scheme is that the employee receives £2,500 NET pay. We are awaiting confirmation from the HMRC on these points.
Steps that employers must take
In order for your business to be able to recover money under this scheme you must:
- Decide which employees you wish to furlough;
- Notify employees of the intended change and reach agreement with them
- Consider whether you need to consult with employee representatives or trade unions. For example, if you intend to vary the contracts of 20 or more employees, and you intends to dismiss employees who do not consent to the change in their terms, those employees will be classed as dismissed for the purposes of collective consultation and a potential protective award of up to 90 days pay. It is unclear, whether the government expects employers to follow this process before placing employees on furlough leave. Our advice is that you should be clear that this is a step that you are taking to avoid the need for redundancies and that you will reassess any need for redundancies after you have identified those you wish to furlough (and perhaps also sought volunteers for furlough leave).
The statutory lay off scheme
If you have a contractual right to lay employees off without pay in your contracts of employment you are permitted to do so without being in breach of contract.
The statutory lay off scheme (which is not new) provides that this can take place for up to 4 continuous weeks or 6 discontinuous weeks in any 13-week period.
If the workless period lasts for longer than that then a redundancy payment is automatically triggered.
If you have reserved this contractual right, you do not have to use the government Job Retention Scheme. However, it is likely that employees will expect you to given the funding that is being made available to employers.
Information about the Government scheme can be obtained from:
Please also be aware of the ACAS guidance which is being regularly updated and is available from:
We will of course keep you informed of all developments.
NEWLY AVAILABLE MATERIALS
We have just published the following materials:
Banked Hours Agreement:
An agreement permitting the placing of employees on a period of paid absence. During this period, the hours not worked are 'banked' by the employer and worked back by the employee at a later date instead of using premium rate overtime.
Furlough Leave Agreement:
An agreement for you to place an employee on Furlough Leave to enable the business to claim 80% of employment costs from the government under the Job Retention Scheme set out above.
These agreements are available at a charge of £100+VAT each or £150+VAT for both. If you are an existing client they will be provided to you free of charge under our normal arrangements.
FREE ONLINE SEMINAR.
We intend to hold an online seminar at
10.00am and 4.00pm on Thursday 26 March 2020
to address all employment issues relating to the COVID-19 pandemic.
The seminar will last 1 hour.
We will cover issues such as:
- What government assistance is available
- When do we have to pay sick pay
- What sick pay do I need to pay (company or statutory)
- Can I reduce salaries
- Can I lay people off
- How do I reach a Furlough Leave Agreement
- Redundancy processes
- Can I enforce holidays or banked hours
- Are there specific steps that I need to take for people that are now working from home
We will provide further details of how to book shortly.
Please save the date and time now!