COVID-19
Job Retention

The new Coronavirus Job Retention Scheme unveiled by the Chancellor as part of his emergency response is available to all UK employers in all sectors. The scheme was launched with a message for employers to “stand behind workers” and to “think carefully before laying people off”. The scheme offers businesses a welcome breathing space and time to focus on their activities. However, how long the scheme will serve to protect employees in the longer term remains to be seen. The Chancellor announced that the scheme will be backdated to 1 March and open initially for at least three months but extended ‘for longer if necessary’.

 

Under the scheme, employers will be able to access support to continue paying part of their employees’ salary for “those employees that would otherwise have been laid off during this crisis“.  While layoff is a specific statutory concept in employment law, the Chancellor’s statement and the guidance strongly suggest that the government is not just looking to support employees who may be laid off under the statutory rules, but wants to capture under the scheme all employees at risk of redundancy due to COVID-19. We wait clarification on this.

 

The scheme will pay 80% of the salary of each affected worker up to £2,500 a month. It is assumed that this is gross pay, but further clarification is expected. Employers will need to know what aspects of a salary are covered by the scheme. For example, does it include pension contributions and benefits or additional payments, such as overtime, which can substantially increase an individual’s pay packet? The employee guidance from the government states that an employer can choose whether they wish to top up a payment made to an individual who remains employed under the scheme but “they do not have to“.

 

When will CJRS be live?

 

There's no set date to when the CJRS will be live and yet it doesn't look that it's expected to be immediate. There's no explanation or detailed instructions from the government apart for 'HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.' Further, as per their guidance they indicate 'If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.' It's essential you speak to your bank manager to discuss this and how to apply. More information can be found here.

 

Can an employer delay making payment to employees until they receive funding from the CJRS?

 

It appears 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 the end of April, when the scheme is expected to be up and running.

 

How can employers access the scheme?

 

Employers who wish to benefit from the scheme will need to:

• Identify their affected employees who should be designated as “furloughed workers”. At present, the term furloughed workers it’s not defined in UK employment legislation. It’s a concept used in other jurisdictions though, such as the US to refer to an employee who are essentially put on unpaid leave, that is they do not work and are not paid but remain an employee.
   

• The government’s guidance for businesses acknowledges that if an existing employee is to become a furloughed worker it will require a change in their employment status, which remains “subject to existing employment law” and that “depending on the employment contract this may be subject to negotiation”. This suggests that employee consent will need to be obtained unless the employment contract provides for this situation. In most cases it is likely that consent to the terms of furlough will be needed. Depending on what payments are covered by the new scheme, employers may also need to factor in to these negotiations what benefits and payments an individual will not receive during furlough leave.
   

• A furloughed worker will need to be notified of their change in employment status.

 

If you would like to follow for more details about the scheme which does appear to be regularly updated it can be found here. Brief guidance notes have also been issued for businesses and employees with more detail expected shortly.