BLOG POST BY OUR MEMBER BUCKLES SOLICITORS LLP
The Coronavirus Job Retention Scheme (CJRS), announced by the UK Government on 20 March 2020, introduces several measures to help mitigate the economic impact on businesses.
The Scheme introduces the concept of furlough leave which allows all UK employers to reclaim 80% of their wage costs, up to a maximum of £2500 per month per employee. They can also reclaim the related employer NI and minimum pension auto-enrolment contributions.
The intention of this scheme is to allow businesses to retain employees through a period of enforced inactivity due the coronavirus situation and reduce the need for redundancies. All employees on the payroll on 28 February and under a PAYE scheme are covered by the CJRS. The Scheme is backdated to 1 March and available for an initial period of three months, which the Government can extend if necessary. It’s anticipated that the HMRC portal will be accessible to employers from the end of April.
Before reclaiming wage costs from HMRC, employers must agree the period of furlough leave with the employees concerned. Employees must be furloughed for a minimum of three weeks and furloughed employees are not permitted to conduct any work during the furlough period. Employers can rotate the allocation of furlough leave among their employees if they wish.
Employees who have been made redundant since 28 February can be furloughed if rehired. Any employees currently on sick pay or self-isolating can only be furloughed when these periods end.
Some employees have already had their working hours and pay reduced temporarily since the crisis began. Employers cannot seek to reclaim wages costs for employees who continue to work in this capacity. Reducing hours and pay may be attractive to employers seeking to continue trading, however, in most cases, this approach is likely to prove more expensive than taking advantage of the furlough leave scheme.
In summary, the process that employers must follow when accessing the CJRS is as follows:
- Determine which employees you wish to place on furlough leave and notify them of your intention. It would be good practice to have sound objective grounds for this selection process to avoid allegations of discrimination arising. This can also involve requesting volunteers to take furlough leave.
- Agree furlough leave with the employees concerned. For most, this will be a formality as furlough leave will be a preferable option compared to redundancy, however, it is possible that an employee may refuse to agree to the change in which case other options such as reduced hours/pay or redundancy may need to be considered.
- Confirm furlough status in writing to employees concerned. This is an eligibility requirement for accessing the CJRS.
- Submit details to HMRC about the furloughed employees and their earnings through the new online portal when this goes live
- Ensure that furloughed employees do not continue to work for you for the applicable period.
We’re helping employers with this approach to help protect their employees’ jobs and the ongoing viability of their businesses. If you require any help, please contact us.