Employment law experts in Shropshire have welcomed further guidance issued by the government regarding the coronavirus job retention scheme.
Chancellor, Rishi Sunak, announced the scheme on March 20, which he stated would cover 80 per cent of payments to employees up to a total of £2,500 per month, back-dated to March 1 – initially for three months, but to be extended “if necessary”.
The initial details of the scheme were very limited, and employers and employees alike have keenly awaited further information.
The government published further guidance on Thursday (March 26), and head of employment at Lanyon Bowdler Solicitors in Telford, John Merry, has outlined the main points for employers.
He said: “The scheme is open to all UK employers that had a PAYE scheme in place on February 28, 2020.
“To be eligible, the employee must have been on the payroll on February 28. If they were hired later, they are not eligible. Anybody who was on the payroll on that date and has since been made redundant can be rehired and put on the scheme.
“Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding. However, there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.
“The employee must not be working for the employer at all. They are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
“There is nothing in the guidance which prohibits an employee who is on furlough with one employer undertaking paid work elsewhere. Indeed, it is stated that if an employee has more than one employer, they can be furloughed for each job, as each job is separate, and the cap applies to each employer individually.
“Further, it is expressly stated that only agency employees who are not working can be subject to the scheme – which suggests that the absence of an express proviso that only employees (of any kind) who are not working anywhere can be subject to the scheme is intentional.
“Any organisation can apply, including charities, recruitment agencies and public authorities. However, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way.
“With agency employees, the scheme is only available for agency employees who are not working.
“Employers can reclaim up to 80 per cent of wage costs up to a cap of £2,500 per month plus (not including) the associated employer National Insurance Contributions and minimum auto-enrolment pension contributions on that wage.
“Therefore any additional contractual pension contributions, commissions, bonuses or the cost of other benefits, like cars (or car allowances) or life or medical insurance are not included.
“Some employers operate salary sacrifice arrangements in relation to what would be employee auto-enrolment pension contributions. Affected employers should consider the implications of this regarding pension contributions payable in respect of furloughed employees.
“Employers can choose to top up pay to 100 per cent, or otherwise pay employees in excess of the capped amount recoverable under the Scheme, but do not have to if contracts of employment or otherwise arrangements agreed with employees do not require them to do so.
“As stated in the original guidance, the ability of employers to pay employees in full is subject to the terms of individual contracts and otherwise employment law considerations.
“If employers do make payments beyond the cap applicable to the Scheme, associated employer NICs and auto-enrolment pension contributions will not be recoverable.
“We note that some employers are furloughing employees on reduced pay in breach of contract and, where 20 or more employees are affected at one establishment, in circumstances which expose them to protective awards of up to 90 days’ pay per employee.
“We strongly encourage employers to obtain advice before reducing an employee’s pay in circumstances where a lay-off clause entitling them to do so has not been successfully incorporated into the contract – and indeed, where such a clause appears in a written contract, it will be a matter of advice as to whether it actually has operational affect.
“In any event, employers should also be wary to not unlawfully discriminate between those who are furloughed and those who are not.”
More guidance is on John’s latest blog at https://www.lblaw.co.uk/blog/the-coronavirus-job-retention-scheme-further-details
