Coronavirus Job Retention Scheme: Including FAQs

We thought it would be helpful to summarise the key information you need to know about COVID-19 and the economy – in a downloadable document – to help you better protect your business and employees.

Last week, the Chancellor of the Exchequer, Rishi Sunak, set out an unprecedented package of measures to support businesses through the disruption caused by the COVID-19 pandemic.

One of these key measures is the introduction of the Coronavirus Job Retention Scheme (CJRS). This means employers (in big, small, private and public sectors) can access financial support to continue paying the wages of employees who are temporarily sent home because there isn’t enough work from them.

These staff are called ‘furloughed’ workers. It means putting employees on temporary leave of absence, during which time they do not work and do not receive pay, but are retained on the company’s books to be brought back in when they are needed.

Coronavirus Job Retention Scheme (CJRS) overview

Here is a brief overview of the Coronavirus Job Retention Scheme:

• Employers can ask an employee or employees to stop working but still keep them on the payroll. These employees are known as furloughed workers
• The government will give employers cash grants totaling 80% of the wages for furloughed workers, for as long as they keep the employee employed during the furlough period. There is a cap for the grants at £2,500 per employee per month
• This scheme should be running by the end of April 2020

Can all employers have access to the scheme?

The following employers will have access to the scheme:

• UK employers that operate PAYE can access the scheme. Employers need to have created and started a PAYE payroll scheme on 28 February 2020
• Schemes apply to all employers, no matter the size or sector of the business, including charities, recruitment agencies and public authorities
• A business does not have to be considered as ‘essential’ in order to access the scheme, nor is it a requirement for employers to show they are suffering any sort of financial hardship

How much can employers request?

HMRC (HM Revenue & Customs) will reimburse 80% of furloughed worker’s wage costs to employers, up to a maximum of £2,500 per employee, per month. There is no limit on how much an employer can claim. We are not yet sure whether this means up to £2,500 before or after tax.

Employers will be able to make a claim for the money once HMRC’s new system is available. The Government’s guidance for employers does not specify the start date, but in its guidance for employees it states that the scheme will apply for three months from 1^st March 2020, with the potential for it to be extended if necessary.

How do employers access the scheme?

Employers will need to designate relevant staff as furloughed workers and notify employees of this change. The employer needs to get agreement from the worker to do this, unless it’s covered by a clause in the employment contract.

Any furlough agreements should be in writing. It’s a good idea to include:

• The date furlough starts
• When it will be reviewed
• How to keep in contact during furlough

The employer will then need to submit information to the HMRC on the ‘furloughed workers’ and their earnings, via the HMRC online portal.

Furlough Agreement template

We have created a Furlough Agreement template for our clients. Please do get in touch if you would like a template for your employees. Either call us on 0333 200 0714 or drop us an email at advice@rdgaccounting.com

What about apprentices?

We have not had any information that suggests apprentices who continue to study are at risk of not being eligible for the same support. However, for apprentices, the individual’s study requirements also need to be factored into their furlough period.

As of 23 March 2020, the advice from the ESFA (government funding body) is:

“Where apprentices are furloughed (granted a leave of absence) or placed on unpaid leave, or where the nature of their employment changes and no longer supports their apprenticeship, the apprentice, employer and training provider should consider whether a break in learning would be appropriate.”

This allows training providers to use a break in learning if it would be in the best interests of the learner but does not stipulate that it is a recommended or preferred course of action.

However, the Association of Education and Learning Providers (AELP) provides advice to training providers and, on consultation with them, they have given the following guidance:

“Just to be clear, the guidance does not say providers cannot offer training to furloughed apprentices. The AELP advice continues to be that providers should support furloughed workers and only resort to using a Break in Learning (BIL) if the apprentice doesn’t want to undertake any training whilst they are temporarily stood down from work.”

What are we taking from this?

There seems to be no immediate reason why furloughed apprentices should pause their learning and development too. Many organisations are choosing to continue with learning, using a blend of online e-learning and personalised mentor support. There may be some disruption to exam sittings, but it’s likely that programmes will be adjusted to consider this disruption – so learning and development for apprentices should be able to continue as normal. Where ‘learning’ on the job is required, courses may adapt, or record learning and development during the furloughed period as counting towards their total hours.

There is the added benefit of keeping apprentices in the loop, focused on their work and ready for their return; continuing with at-home learning while furloughed may be in the best interests of both your business and your employee.

Coronavirus Job Retention Scheme FAQ’s

When will the new HMRC portal go live so employers can apply for the CRJS loan?

HMRC are hoping to get it up and running by the end of April 2020. It may be done sooner.

Is the CRJS a grant or a loan?

It is a grant from the Government, and it is understood that it does not need to be repaid by either employer or employee.

Does the scheme apply to everyone?

The scheme applies to employers who pay employees through PAYE which also includes zero-hour employees. With zero-hour employees, it is not clear how this will be calculated but it will be probably based on average hours worked.

How soon will I receive the grant?

The CJRS is intended to be set up as a reimbursement scheme, so employers will need to pay their employees 80% of their wages while they are furloughed, and then they will need to apply for the reimbursement grant from the HMRC.

For employers and businesses with cash-flow problems, they may be able to apply for a Coronavirus Business Interruption Loan to help in the meantime. We can advise further on this.

Grants may not be paid until May 2020, so the timing of receiving grants and paying wages may cause issue. The Government has offered VAT deferral payments along with the interruption loan to help out.

The scheme applies to employers who pay employees through PAYE which also includes zero-hour employees. With zero-hour employees, it is not clear how this will be calculated but it will be probably based on average hours worked.

Can employers pay 100% of their wage?

Yes, it is possible to top furloughed workers up to 100% but this is not a requirement, so is up to the business.

What about holiday pay?

Holiday pay will continue to accrue while an employee is furloughed.

Can employees continue working while being furloughed?

Employees who are furloughed are still employed by the business, but they must not work.

• Employees who continue to work must be paid like usual
• It’s not the case that furloughed employees are getting 80% from the Government, and if they want the other 20% they have to work.
• It is an offence to furlough an employee and then ask them to work on a voluntary basis
• Furloughing employees is subject to each individual company’s circumstance. If a furloughed worker has another employer who is able to carry on with their business, they don’t need to stop working for them.

What about employees who were recently dismissed or left their positions?

The scheme will be backdated to 1 March 2020, however, it is understood that the scheme will be applicable to employees who were employed when the CJRS was announced by the Chancellor on 20 March 2020.

Anyone dismissed before 20 March 2020 may not come within the scope of the scheme, however, further details are yet to be provided.

What happens if employees do not agree to becoming ‘furloughed workers’?

While it is assumed that most employees will accept being furloughed, the other options include:

• Being made redundant but with no promise of the employer being able to pay a redundancy payment. Therefore, the employee would need to incur a great deal of additional time and cost in suing their employer/claiming from a government fund.
• Being dismissed for “Some Other Substantial Reason (SOSR)” for genuine business reasons due to the inability to pay these people and a failure on their part to co-operate at a time of crisis.
• Being asked to take unpaid leave for an unknown period of time (as no one knows if/when things will get back to normal)
• Being asked to use up their paid annual leave (employers can ask employees to take leave as long as they give twice the amount of notice than the leave they want them to take) and then, after that, being on unpaid leave.

Can an employee decide that they want to be furloughed?

No – this has to be the choice of the employer, so if the employee requests to be furloughed, the employer can refuse to agree eg if there is still work for them to do.

What if an employee has taken paid or unpaid holiday/leave?

• Employees who are currently on paid holiday may wish to continue taking their holiday as it may seem more favourable to them, especially where the employer will not be making up for the 20% shortfall in salary as a result of applying for the grant from the CJRS.
• However, it doesn’t appear that many employees would opt to simply use their holiday entitlement just to receive the 20% remainder of their salary which wouldn’t be paid by the CJRS anyway. Unless, of course, their salary is substantially high.
• For those who have already agreed to take unpaid leave, our advice would be to write to them to confirm that they are now ‘furloughed’ so as to include them in the group that is covered by the government grant.

What about employees who are on sick leave or receiving sick pay (stator or contractual)

• It is unclear what rights these people will have in respect of the CJRS. However, it appears that these employees could still be considered when deciding which employees to designate as ‘furloughed’. This is as long as you can show that if they were fit and healthy and not self-isolating in line with official advice, there would be no work for them to do.
• We are anticipating that further guidance will be provided in respect of sickness or self-isolation and we will update you as soon as this has been published.

What about employees who are currently on maternity leave?

• The CJRS will not apply to those on maternity leave.
• It would be best to wait until the maternity leave has ended and, if at that point there is a need to designate that employee as ‘furloughed’, the scheme could apply in respect of that employee, but not while they are still on maternity leave.

How do employers document/provide evidence that employees are furloughed?

• It is unclear whether anyone will be testing to see if there is indeed a downturn in work to justify ‘furloughing’ employees so it is arguably open to abuse) but you must work on the basis that it could be checked, so you must comply with the rules of the scheme.
• Ensure that you document your thought processes and discussions when deciding which employees are to be furloughed. We would recommend treating it as if it is a redundancy situation and think about how you would need to provide evidence to substantiate your decision.
• Consider if putting employees on furlough leave is absolutely necessary and reasonable to do in the circumstances. Again, make sure you record your reasons in writing.

What can we do to help you?

If you are a client

If we prepare your payroll, as well as informing your employees, you must let us know:

• Which employees are furloughed and the date this commenced.
• Is the company intending to voluntarily pay their employees more, or apply caps from the grant of 80% at £2,500?

If you aren’t a client

If you aren’t a client but have questions or would like to talk to one of the team, call us on 0333 200 0714 or fill in the form below with a brief description and we will be in touch.

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Furloughed employees

As part of our payroll service, we will take care of any staff who have been furloughed, meaning another job you don’t have to worry about. We are keeping up to date with the latest government schemes and funding available, so we can make sure clients are getting the financial support they need to survive.