As we all pull together in these uncertain times I wanted to get some bullet points out to help employers who will undoubtedly have to make some urgent decisions in the coming days.
This note is intended to give employers enough information to start making workforce planning decisions with some clarity and with hopefully, a little bit more breathing space. So, whether you are a client of Mogers Drewett or not, I am around all week and happy to field calls on this and other issues as they may arise.
- The scheme allows employers to access funding from HMRC for 80% of an employee’s salary (capped at £2,500 per employee) when an employee is unable to work because of the corona virus.
- The scheme applies to all UK businesses and sectors and is administered by HMRC. The portal that is needed to operate the scheme is not yet up and running.
- The scheme allows employers to ‘furlough’ employees. Furlough does not have a legal meaning and is likely to mean employees who are being retained as an employee as opposed to being made redundant. I suspect it will also include employees who are being laid off in accordance with a provision of their employment contract.
- An employer must designate an employee as furloughed and then notify them that they are so designated.
- Furlough arrangements are still subject to the usual employment rights and what I think this means, is that the employer must furlough an employee with the consent of the employee. Technically the employee could refuse to be furloughed. It is hard to imagine employees objecting (other than perhaps highly paid employees), but if the alternative is being made redundant, and your employer potentially not being able to make statutory redundancy payments for cash flow reasons, it is likely most will agree.
- The designation bit should therefore be done in writing. Ordinarily, I would advise a letter which is counter signed by the employee. That may not be possible however and subject to other guidance being published, an exchange of emails notifying the employee of their designation, and recording their consent should be created and retained. HMRC need to be informed of who is furloughed so some written evidence is likely to be required.
- CJRS is only available to employees who are not performing any work for their employer. It will not therefore apply where you have reduced employees’ hours or have them on short time working patterns. The government guidance for employees specifically refers to not undertaking any work for your employer if you are furloughed.
- The guidance that the Government has published for employers is silent on whether there is an obligation to fund the remaining 20% of the salary. The guidance for employees however makes it clear that such funding is at the discretion of the employer and there is therefore no current obligation to pay it.
- We are waiting for further guidance on a number of important points including the following (you will have ones I have not thought of):
- How will the scheme work for employees with irregular earnings, or on zero hour contracts? Will there be some form of averaging earnings calculation to, akin to calculation for working time, minimum wage, statutory holiday pay etc?
- Once furloughed, can an employee return to work, then subsequently be furloughed again and still be entitled to CJRS? If so, with what regularity can you furlough an employee?
- How long will employers have to wait to receive payment from CJRS? The initial guidance suggests the scheme will be paying out by the end of April at the latest, but there is no further guidance on whether particular businesses or sectors will be prioritised.
- Can an employer delay making payment to employees until they receive funding from the CJRS? It would appear from the initial guidance that employers will have to make the payment initially, and are then reimbursed by the CJRS. However, there is no guidance on whether it will be possible to delay payment of wages becoming due this month until April, when the scheme should be up and running. The guidance does point to the ability to use the business disruption loans suggesting this can be used to bridge the cash flow until the employer is reimbursed by CJRS.
- What happens if an employer has already had to terminate employees before the CJRS was announced? The initial guidance does suggest that the CJRS will look to support employer’s employees who were employed at 1 March, so some clarity is needed on whether terminated employees can be re-hired and qualify for CJRS.
Whether you are a client of Mogers Drewett or not, I am around all week and happy to field calls on this and other issues as they may arise. Please do get in touch we are here to help call 01225 750 000 or 07809 772301 or email Sean.McDonough@mogersdrewett.com