Coronavirus Job Retention Scheme (CJRS)
The introduction of the Coronavirus Job Retention Scheme (CJRS), also referred to as furlough, was announced by the government on 20 March 2020. Under the scheme, all UK employers, can claim a grant from HMRC to cover 80% of the wages costs of employees who are furloughed, of up to £2,500 a calendar month for each employee until 31 July 2020. Between 1 August and 31 October 2020 (when the scheme closes) employers need to make a contribution to furlough pay. Prior to 1 July 2020 furloughed employees were not permitted to work. From 1 July 2020, furloughed employees have been able to work flexibly.
Q: Can an employer still claim under the CJRS
A: Unless the employer is making a new claim for an employee who is a military reservist or is returning from statutory parental leave, they can only continue to claim through the scheme if:
- they have previously furloughed the employee for 3 consecutive weeks between March 1 and 30 June
- They submitted the claim before 31 July
NB: The scheme will be closing on the 31st October 2020 and the government have been quite adamant that this will not be extended further.
Q: What is flexible furlough?
A: This refers to phase 2 of the CJRS which, that since 1 July, permits employers to bring furloughed employees back to work on a flexible basis (i.e. for any amount of time and shift pattern), while still being able to claim CJRS grant for the hours not worked (furloughed hours). Whilst employees are permitted to carry out work for their employer, this must not done during furloughed hours.
Q: Does an employer need a separate agreement for flexible furlough under the CJRS?
A: Yes. As employees were prohibited from working for their employer while on furlough in the initial phase of the CJRS (1 March to 30 June 2020), a properly drafted furlough agreement for furlough commenced during that period will prohibit employees from carrying out any work for the employer during furlough. In any event, the agreement must be confirmed in writing in order to claim in respect of flexible furlough from 1 July 2020
Q: Does an employee have to be at risk of redundancy to be covered by the scheme?
A: The circumstances in which an employer is entitled to claim through the CJRS has been the subject of inconsistency and confusion since the scheme was launched. Early versions of the HMRC guidance referred to redundancy and lay-off and led to a concern that the CJRS was only accessible if the alternative was redundancy. It now appears clear that this is not the case. The Treasury directions require that there is a connection between putting employees on furlough and the consequences of COVID-19
Q: What is the maximum number of employees an employer can claim for under the CJRS?
A: Employers will not be able to claim for more employees that the maximum number that they have claimed for under any previous claim.
For example, if you previously submitted 3 separate claims. One claim for March which related to 10 employees who had been furloughed, another claim for April but for 20 employees and a third claim relating to 30 employees for the month of May. The maximum number of employees that you will be able to claim for is therefore 30 as this is the maximum number you have claimed for under any previous claim.
Q: What contributions will an employer have to make from 1 August 2020?
A: To be eligible for the grant employers must continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed. From 1st August, the government grant will reduce and employer will be responsible for paying the shortfall.
From 1st August 2020, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay employers’ NICs and pension contributions for the hours the employee is on furlough.
From 1st September 2020, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay employers’ NICs and pension contributions and top up employees’ wages (i.e. the 10% shortfall) to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
From 1st October 2020, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages (I.e. the 20% shortfall) to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers may choose to top up employee wages above the 80% total (or £2,500 cap) for the hours not worked at their own expense if they wish.
NB: Where an employee is on flexible furlough arrangements, employers will be responsible for employee’s wages for the hours worked.
Q: Does the CJRS override an employee’s contract of employment?
A: No – the employer/employee relationship will continue to be governed by the contract of employment but the furlough agreement put in place between an employer and employee may vary some of these terms for the duration an employee is on furlough leave.
Q: Does holiday continue to accrue during furlough and at what rate?
A: Yes – the rate will be governed by the contract of employment.
Q: Can we ask employees to take annual leave whilst on furlough leave?
A: Yes – proving adequate notice has been given. Generally speaking an employer has to provide two days’ notice for every day they want an employee to take.
Q: If an employee becomes sick whilst on furlough leave what do I have to pay them?
A: If an employee becomes sick while on furlough, it is up to the employer to decide whether to move them to SSP or to keep them on furlough. If the employee remains on furlough, the employer can continue to claim their salary through the furlough scheme. If the employee is moved onto SSP, the employer will have to pay this and can no longer claim their salary through the furlough scheme.
Q: Can an employer place an employee on furlough leave if they become sick?
A: Aside from the fact that the employee may no longer be eligible, the government guidance provides that the CJRS is not intended for short-term absences from work due to sickness so an employer would not be able to place an employee on furlough leave in response to an employee becoming sick in order to subsidise their wages under the CJRS. In this situation, if they are genuinely sick and meet the criteria under Statutory Sick Pay (“SSP”) provisions, they may be entitled to receive SSP.
Q: If an employee decides to self-isolate at home because they are worried about being in a ‘vulnerable group’, are they entitled to SSP?
A: No. An employee is only entitled to SSP (subject to eligibility) if they are self-isolating in line with the regulations laid down by Public Health England (“PHE”), based on advice from NHS-111 or test and trace, if they are presenting symptoms (or if they live with someone who is) or if they have coronavirus.
Q: Will an employee receive SSP if they are self-isolating?
A: An employee may be eligible for SSP if they are self-isolating because:
- they (or someone they live with) has coronavirus symptoms or has tested positive for coronavirus
- they’ve been notified by the NHS or public health authorities that they’ve been in contact with someone with coronavirus
- someone in their ‘support bubble’ (or ‘extended household’) has coronavirus symptoms or has tested positive for coronavirus
- they’ve been advised by a doctor or healthcare professional to self-isolate before going into hospital for surgery
‘Shielding’ has currently been paused by the government and, as of 1 August, employees classed as ‘clinically extremely vulnerable’ are no longer eligible for SSP on the basis of being advised to ‘shield’.
Also, an employee cannot get SSP if they’re self-isolating after entering or returning to the UK and do not need to self-isolate for any other reason.
Q: Should employees now be returning to the workplace?
A: With second spikes in infection rates potentially on the horizon, concerns over possible childcare issues employers should take a pragmatic approach to returning staff en-mass back to the workplace. Planning ahead, communication and flexibility will be key in order to resolve such issues.
Where this is possible, working from home will be the most practical option.
Q: Can the CJRS be used to subsidise an employee’s notice pay?
A: If an employer is not able to retain an employee the Government guidance says that employers are able to legitimately use the scheme for the period of time that someone may be working their notice (whether that be statutory or contractual notice).
Q: Can the CJRS be used to subsidise an employee’s statutory redundancy payment?
A: No. This is expressly prohibited in the government guidance relating to the CJRS.
Q: Can the CJRS be used to subsidise annual leave?
A: If an employee is taking annual leave whilst they are on furlough leave then this may be permitted. For any annual leave taken by an employee, thee employer will have to top this up to 100% of the employees contractual rate of pay.
However, please do note that the government guidance says that employees should not be placed on furlough simply because they are due to take annual leave during that period.
Q: What if an employer has claimed more than they are entitled to under the CJRS?
A: If this is the case, then an employer should contact HMRC to correct the error ASAP. There are timescales for this and further information can be found here. Failure to do so could mean that an employer may have to pay a penalty, regardless of however innocent the mistake was.
Q: What happens when the CJRS comes to an end?
A: When the CJRS comes to an end you will resume full responsibility for an employee’s wages without government support (as you did before the CJRS was introduced). With this in mind you will either:
- have to bring your employees back to work
- consider your options to vary an employee’s terms and conditions of employment i.e. reducing salary (with or without a corresponding reduction in hours) – the usual laws and rules will apply and you should seek guidance if considering this as an option
- consider whether there is a need to initiate a redundancy process – again the normal rules apply in connection to a redundancy process and you should seek advice to ensure a fair process is effected
Q: What support will be available for when the CJRS ends?
A: The government has introduced a number of measures that it hopes will go some way to incentivise employers to retain and even engage new staff, including:
This is a one-off payment to employers of £1000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021. The aim of the scheme is to encourage employers to retain as many employees in meaningful employment as possible.
- An Apprenticeship Incentive Scheme
The government will make a payment to employers of £2,000 for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the government already provides (subject to eligibility).
The government aims to create high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
These measures are not direct replacements for the CJRS however and the government is currently looking new innovative support packages it can implement to support businesses who continue to be greatly impacted
Q: What can an employer do if an employee refuses to attend work?
A: This isn’t a clear cut answer unfortunately and will entirely depend on the individual situation. Please do get in touch so that we may advise you in relation to your options.
We trust that you have found these FAQ’s helpful, however, if you do have any further questions please get in touch with a member of the Employment team. You can call us now or contact us using our online form and we will help you through this difficult time.
Please contact a member of the Employment team if you have any questions. You can call us now or contact us using our online form and we will help you through this difficult time.
