The much-anticipated additional government guidance regarding how the Coronavirus Job Retention Scheme will work in practice has now been published.
The latest guidance confirms that employers will be able to use a portal to claim a grant from HMRC to cover:
- the lower of 80% of the furloughed employees’ usual monthly wage costs, or £2,500 a month;
- PLUS the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage;
Fees, commission and bonuses should not be included in the calculation of employees’ wage costs.
Importantly, it has been confirmed that as individuals are only entitled to the National Living Wage or National Minimum Wage for the hours they are working, the grant available to employers shown above can take some furloughed workers below the NLW/NMW. However, if employees are asked to undertake any online training whilst on furlough leave, they must be paid at least the NLW/NMW for this period, even if this takes their wages over the 80% threshold covered by the Scheme.
In addition, it has now been clarified that furloughed employee’s wages will be subject to the usual income tax and NI deductions, plus automatic enrolment pension contributions where applicable.
The new guidance also confirms that the Scheme (which will initially run for 3 months from 1 March 2020) will only cover employees who:
- have been on the employer’s payroll since 28 February 2020; or
- who have been made redundant since 28 February 2020, if they are rehired by their employer; and
- who do not undertake work for or on behalf of the employer’s organisation;
- are furloughed for a minimum of 3 weeks.
Employees who are still working but whose hours may have been reduced will not be eligible for the Scheme.
Employers are being urged to have discussions with those employees who they are proposing to furlough so that changes to employees’ terms and conditions during the furlough leave period can be agreed. If this is likely to encompass more than 20 employees, the usual collective consultation obligations will apply. However, where it is not reasonably practicable to do so, employers may, in certain circumstances, be able to rely on the little know “special circumstances” defence available in section 188(7) of the Trade Union and Labour Relations (Consolidation) Act 1992. However, we would always encourage employers to proceed with caution, to take steps to ensure compliance and to adopt a consultative approach as far as reasonably practicable.
In addition, in what may be the first of a number of measures which acknowledge that there will equally be some workers who are facing the challenges associated with a significantly increased workload, the government has also announced that it is allowing workers to carry over up to four weeks annual leave into the next two leave years, where it is not reasonably practicable for them to take some, or all, of the holiday they are entitled to due to coronavirus. The change is aimed at allowing businesses under particular pressure from the impacts of COVID-19 the flexibility to better manage their workforce, while protecting workers’ right to paid holiday.
If you need any assistance please do not hesitate to contact a member of the Geldards’ Employment team