News Update

Latest updates to Coronavirus job retention scheme

Since our latest article on the Coronavirus Job Retention Scheme (Scheme), the Government has updated the Guidance to the Scheme to include some important changes and clarifications. We have set out below some recent key developments:

  • Change to eligibility – On 15th April, the Government confirmed that employers can claim in respect of furloughed employees who have been on the employer’s payroll on or before 19 March 2020, provided that the employer sent HMRC a real-time information submission notifying a payment in respect of those employees on or before 19 March 2020. The previous qualification date was 28 February 2020. This change will ensure that employers are able to furlough any new hires recruited between 28 February and 19 March who previously fell outside of the Scheme. Former employees whose employment terminated on or after 28 February 2020 will qualify for the Scheme even if they are not re-deployed after 19 March, as long as they were on the employer’s payroll as at 28 February 2020. It is also notable that, during any period of furlough, the furloughed employee must not carry out any work for the employer or any linked or associated organisation.
  • Salary reduction – Employees must receive no less than 80% of their reference pay, up to a monthly cap of £2,500. Employers are therefore not permitted to enter into any ‘transactions’ with their furloughed employees to reduce their wages below this amount.
  • Unpaid leave – Employees who went on unpaid leave on or before 28 February cannot be furloughed until the date on which it was agreed they would return from such leave.
  • What can be claimed – An employer can apply for a grant that covers 80% of the furloughed employee’s monthly wage costs, up to a cap of £2,500 per month, plus the associated employer NI contributions and pension contributions (up to the level of the minimum auto-enrolment pension contribution, which stands at 3%) on the subsidised furlough pay.
  • Sick leave and self-shielding employees – Self-shielding employees or those on long-term sick leave can be furloughed, in which case they would become eligible to receive furlough pay, rather than sick pay. If an employee on furlough leave becomes ill, or needs to self-isolate or self-shield, they may qualify for SSP and can be designated as being on sick leave instead. However, it is up to the employer to decide whether to keep these employees on furlough leave (at the applicable furlough rate) or to move them to statutory sick pay. It is worth noting that an employee cannot be on sick leave and on furlough leave at the same time.
  • Furlough leave and TUPE – Any incoming employer in a TUPE transfer after 19 March 2020 will be eligible to claim under the Scheme in respect of the employees who transferred. We assume that the incoming employer can only furlough those employees would have qualified for the Scheme whilst employed by their previous employer.
  • Impact of furlough leave on immigration visa –Employees on all categories of immigration visa can be furloughed. Grants under the Scheme do not amount to ‘access to public funds’.
  • How to submit a claim – The HMRC is expecting to launch the online portal for the Scheme on 20 April 2020. As for the method of submitting a claim, the Government has clarified that, if the employer has furloughed less than 100 employees, the HMRC will require the employer to enter details of each furloughed employee directly into their system. Where the employer has furloughed 100 or more employees, they will be expected to upload a spreadsheet of the relevant information on the HMRC’s system. The information that the HMRC will expect to receive will include the furloughed employee’s name, NI number, claim period and amount.

We are actively working with clients to assist their workforce planning during this difficult time (including preparing communications with ‘Furloughed workers’). If you require any assistance with that or any other employment issue, then please do not hesitate to contact Jonathan Bruck.

This article is provided for general informational purposes only.  Although every effort has been made to ensure that information in this article is accurate, it does not constitute legal advice and should not be relied on as such. In case you require any legal advice, please do not hesitate to contact us.

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Key Contacts

Jonathan Bruck
Head of Employment
+44 20 7539 7305
Karin Kiho
Solicitor, Employment
+44 20 7539 7304
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