There has been a lot of news recently about the Coronavirus Job Retention Scheme (“the Scheme”), or furloughing.
As time has progressed, the details regarding the Scheme have become more apparent and in some instance have changed.
Below is a summary of the latest position regarding some of the key points:
- Under the Scheme, an employer can instruct an employee to cease doing all work in relation to their employment as a result of circumstances arising from Covid-19.
- There is a discrepancy in the government advice as to whether the employee should merely be informed by their employer in writing that they are being furloughed or whether the employee needs to agree in writing to being furloughed. Best advice is to be cautious and for the employee to agree in writing to being furloughed.
- The employee is to cease work for a minimum of 21 days.
- The employer can claim 80% of the wage costs of each furloughed employee back from HMRC (up to a cap of £2,500 per month), plus related employer national insurance contributions and the related minimum automatic enrollment employer pension contributions.
- The employee will receive gross pay, which is then subject to income tax and national insurance in the usual way.
- To qualify for the Scheme, the employee must have been on the employer’s payroll on or before 19 March 2020.
- The Scheme will in practice primarily apply to employees, but it will also apply to other groups, provided that they are paid though PAYE, such as office holders and agency workers.
- Currently, the Scheme is to operate between 1 March 2020 and 30 June 2020.
- Employees employed and on payroll on 28 February 2020 that were made redundant or stopped working after that date but before 19 March 2020 can take part in the Scheme if the employer re-employs them, even if they are re-employed after 19 March 2020.
- If the employer agrees, an employee can take holiday during furlough and while on holiday, the employee is entitled to their full pay.
The law stated in this article is correct as of 23 April 2020.
If you have any employment law queries, please do not hesitate to contact David Nathan at [email protected] or on 020 7822 2247.
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