The government has revealed further detail about its Coronavirus Job Retention Scheme, also known as the Furlough Scheme, and it is expected to be up and running by 30 April 2020.
The temporary scheme will be open to all UK employers that had a PAYE scheme in place on 28 February 2020 for at least three months, guidance published yesterday evening (26 March) says. They will be able to claim back wage costs for furloughed employees, backdated to 1 March.
Employers will be able to use a portal to reclaim up to 80% of wage costs up to a cap of £2,500 per month from the government, plus employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Fees, commission and bonuses are not included. Employers can choose to top wages up to 100% if they wish.
Any organisation with employees can apply, including charities, recruitment agencies and public authorities. Public sector employers are not expected to use it, as long as central government continues funding wage costs.
Employees must have been employed by the organisation claiming the benefit on 28 February 2020 – any staff who joined later are not covered.
Staff must be furloughed for a period of at least three weeks. They must not work at all during this time in order for the organisation to claim this benefit, however they are allowed to volunteer or to undertake training, provided they have not been paid for this.
Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Those on parental leave can still continue to claim statutory payments and can be furloughed if they choose to “return” to work during this period.
Diane Gilhooley, a partner and global head of employment, labour and pensions at Eversheds Sutherland, said the guidance answers many of the questions employers had when the scheme was announced last week, but there were still some areas they lacked clarity.
She said: “In particular, it now suggests that the scheme only covers ‘employees’. It would be very surprising if the scheme does not cover ‘workers’ too, otherwise a significant part of the UK’s workforce, and a group particularly impacted by this crisis, would be unprotected. Urgent clarification is needed on that point.
“The scheme also allows employers to rehire employees made redundant after 28 February 2020, place them on furlough leave and make a claim for their wages. This may be helpful in allowing some redundancies to be reversed – or at least their immediate impact mitigated – but raises a number of wider employment law issues which will need careful consideration.
“As with many aspects of the scheme, this is uncharted territory and employers should take advice to understand and navigate around the legal risks and practicalities.”
Julian Cox, head of employment at law firm iLaw, said: “The devil is the detail within this scheme and it is important that employers fully understand what the rules mean. One key point to take from this is that where a person is furloughed they cannot work or provide any financial advantage to the business, or they will not be able to receive support.
“This does raise an interesting question in terms of whether furloughing can be applied retrospectively back to 1 March to any staff who have continued to work beyond that date up to and including the date when they agree to be furloughed. The guidance although does explicitly state ‘when on furlough an employee can not undertake work for and on behalf of the organisation’. This implies it cannot be applied retrospectively unless until the employees agree to be furloughed.”
The full details of the scheme can be found on the government website.