Coronavirus Job Retention Scheme: the detail emerges

These are unprecedented times generally and, in the field of employment, it is unprecedented to see such change in the space of a week. On 20 March 2020 the Coronavirus Job Retention Scheme was announced. In the days since then there has been much speculation both informed and ill informed as to what this would mean in practice. Guidance was issued on 26 March , so what is the detail on this?

First of all, any UK organisation can seek to benefit from the Scheme. This includes businesses, charities and recruitment agencies where agency workers are paid through PAYE and Public Authorities. It is expected that it will not be used by many Public Sector organisations, but may be used where organisations are not primarily funded by the Government and where staff cannot be redeployed to assist with the Coronavirus response.

To qualify, the employee who is to be placed on furlough leave must have been on PAYE on 28 February 2020 and can be full-time, part-time, on an agency contract (if not working) or on a  flexible/zero  hours contract. The Scheme will not be available to those who are hired after 28 February 2020. In relation to the situation where an employee has been made redundant after 28 February 2020, they can be covered by the Scheme if rehired. During their furlough time off, the employee cannot provide any services for the employer or generate revenue, although they can undertake training. In terms of the process to be followed, employers should discuss the position with their staff and make any changes to their employees' contracts by agreement. The guidance sets out that in making decisions as to who is to be placed on furlough, equality and discrimination laws still apply. This raises the question of whether or not it is discriminatory to prioritise those over 70 and those who are vulnerable. Our thinking is that it would not be prohibited to make decisions in that way.

For an employee to be placed on furlough, the employer must write to the employee confirming the position and ensure that a record of this is retained. Any employee who is on Statutory Sick Pay (SSP) should continue to get SSP but can be placed on furlough upon their return to work. Employees who are shielding (a measure to protect those who are extremely vulnerable by minimising interaction between them and others) can be placed on furlough. The standard rules for maternity leave, adoption pay, paternity pay and shared parental pay will still apply.

Turning to the level of payments covered under the Scheme, employers will be able to reclaim up to 80% of salary costs, subject to a cap of £2500 per month. What cannot be included are fees, commissions and bonuses. In addition to this, the associated Employer National Insurance Contributions and minimum Auto Enrolment Pension Contributions based on that salary figure can be claimed. It is possible for an employer to top up the payment to the usual salary, but they are not obliged to do so.

Where the employee's pay varies, the employer can claim for the higher of (1) the same month in the previous year or (2) the average monthly earnings in the 2019-20 Tax Year. In terms of National Living Wage and National Minimum Wage, furloughed workers can be paid lower than this except for any period when they are undertaking training.

Furlough leave can be taken in minimum blocks of three weeks to be eligible for funding and this would seem to allow some form of rota arrangement albeit the guidance does not specifically state this.

This guidance will be greatly welcomed by employers. Whilst it does deal with many of the questions that have been asked over the last week, there are still outstanding matters of detail to be considered such as what happens in relation to holiday pay. All these and other matters may become clearer once further guidance is issued.