Notes in relation to the Government Coronavirus Job Retention Scheme (Furlough Scheme)

  1. The Health Protection (Coronavirus Restrictions) (England) Regulations 2020.
    These came into force on 26 March 2020 and 3 relevant provisions of this emergency legislation consist of:

    Clause 4 which requires certain premises to be closed during the emergency period – including any premises in which food or drink are sold for consumption on the premises.

    Clause 5 – this consists of a requirement to close businesses offering goods for sale or for hire (save where the service can be carried out by making deliveries).

    Clause 6 contains wide-reaching restrictions upon the movement of people.  This clause provides that during the emergency period no person may leave the place where they are living without a reasonable excuse.  A reasonable excuse includes to obtain basic necessities (including food and medical supplies), to take exercise, to seek medical assistance and (most importantly) to travel for the purposes of work where it is not reasonably possible for the person to provide those services from the place where they are living.

    Accordingly, there is a statutory prohibition in the Regulations of travelling from home to work where it is not reasonably possible to carry out work from home. The Regulations provide other restrictions as well.

  2. Coronavirus Government Job Retention Scheme Preliminary Points
    1. There is no obligation on an employer to place its staff on special leave at home under the scheme. They can (after proper consultation and/or selection procedures) make their staff redundant instead, or request a short time working as an alternative.
    2. There is also no obligation upon the part of an employee to agree to be placed upon the Government Job Retention Scheme
    3. Also, an employee who is away on sickness absence cannot participate in the scheme until they are fit to return back to work. During the period of sickness absence, they can claim either company sick pay (if this is available under the terms of their contract) or statutory sick pay.  The Government has provided special measures for employees who are ill due to the coronavirus. In particular, there is no three-day waiting period before an employee who is ill with Coronavirus is entitled to claim statutory sick pay.
  3. Summary Details of the Scheme (“the Scheme”)
    1. The Scheme is available to any UK organisation in both the public and private sector.
    2. The scheme is available for both full-time and part-time staff, including those on agency contracts or those on flexible or zero-hour contracts.
    3. It is a requirement to participate in the Scheme that the employee must have been on the employer’s PAYE payroll as of 28 February 2020. Accordingly, staff who first were engaged after 28 February 2020 cannot be laid off under the Scheme.
    4. Employees who are away on sick leave cannot be furloughed until the sick leave has come to an end.
    5. Employees on maternity leave – they are entitled to statutory maternity pay which still has to be paid by an employer. In short, this is 90% of their average weekly earnings in the first six weeks followed by 33 weeks of pay usually at the statutory flat rate of circa £150 per week.  Maternity pay can usually be recovered by an Employer (at 92% or 103% for a qualifying small employer) by way of deduction from NI payments.
  4. How much can be Claimed?
    80% of the employee’s normal wages or if less £2,500 per month (plus employer’s national insurance and also minimum pension enrolment contributions).  Commission and bonuses are not included.  There is no obligation upon an employer to pay more than the amounts under the scheme although they can top up the payments if they so wish.

    For employees on variable pay, there are special provisions dealing with this which involve using the month’s earnings from the previous year or average monthly earnings for the 2019/2020 tax year.

  5. Employer’s National Insurance and Minimum Pension Auto-enrolment

    6. These continue to be payable in respect of furloughed employees but recovered as part of the Government Scheme.

  6. How you make a claim
    The Government is to set up an online claim via a portal.  A claim can be submitted at least once every three weeks.
  7. No working by furloughed employees.
    Employees who have been furloughed are not entitled to work to any extent.

    Directors of Companies if their remuneration is subject to Paye may also be laid off under the Scheme, and there is a view that they can still however (if laid off under the Scheme) continue to undertake their statutory duties in their capacity as a director.

  8. Tax Status of Payments made under the Scheme
    The payments under the scheme will be subject to tax and national insurance in the usual manner.
  9. Pensions and Accrued Holiday
    Employees will also be entitled auto-enrolment pension contributions assuming that they are participating in such scheme.  The view is that holiday does not accrue during the period an employee is laid off under the Scheme, however, accrued leave arising before being laid off can be carried forward to be used by the employee after the employee has returned back to work.
  10. How long will the scheme last for?
    At the moment only three months commencing from 1 March 2020.  However, it may be possible that the scheme will be extended.
    An employee can also be laid off under the Scheme for a minimum period of 3 weeks.
  11. How to lay off an Employee under the Scheme
    In the absence of a formal agreement, the best practice appears to be to provide a letter to the Employee, setting out provisions for the laying off of the employee under the Scheme, with a request for the Employee to countersign the letter by way of confirmation that they agree to be laid off under the Scheme.
  12. Can you require an Employee to attend your premises, where they cannot carry out their work from home?
    Can you require an employee to attend your premises for work where the employee is not able to carry out their work from home?  The answer is yes however there is a legal duty on the part of the Employer to be responsible for the health and safety of their employees.  If the employees are especially susceptible to coronavirus or they are pregnant or have a pre-existing health condition such as asthma, diabetes or heart disease then requiring an employee to attend your premises for work may be in breach of the employer’s legal duties in relation to health and safety.

    Further complications arise for those staff members who are in self-isolation due to a family member where they are living being unwell with coronavirus or suspected coronavirus or where they have vulnerable family members living with them.

    13. In these cases, it may best to suggest to the staff member that they are laid off under the Scheme.

Lawrence Rodkin

Partner

Simons Rodkin Solicitors LLP

3 April 2020