There still quite a number of unknowns in relation to the Government’s new Coronavirus Job Support Scheme. Hopefully the answers will become clear in the coming month as further guidance is published. But at present employers looking to forward plan before the Furlough Scheme ends on 31 October 2020 will have to make some assumptions.
So far, what we do know is:
When will it start?
- The scheme will open on 1 November 2020, running for 6 months until the end of April 2021.
Which employers can participate?
- It is not automatically open to all employers (the Coronavirus Job Retention Scheme, (“Furlough Scheme”) was open to all).
- Large businesses will need to meet a financial assessment test to be able to take advantage of the scheme.
- SMEs (small and medium enterprises) will not be subject to the financial assessment test.
- The scheme is only available to those employers whose turnover is lower now than it was before experiencing difficulties as a result of Covid-19.
- The scheme is open to employers with a UK bank account and a UK PAYE scheme.
- Employers do not need to have made use of the Furlough Scheme to participate.
- Employers can use the scheme and still claim the Job Retention Bonus – if the eligibility criteria are met.
- Employers will need to seek agreement of employees to participate in the scheme under the same employment law principles applicable to the Furlough Scheme.
Which employees are eligible?
- Employees must be on an employer’s PAYE payroll on or before 23 September 2020 (meaning that a RTI submission must have been made for the employee in question before that date).
- For at least the first 3 months employees must work at least 33% of their usual hours (to be reviewed after 3 months when the Government will consider whether this should be increased).
- Employees will be able to come on and off the scheme – but each “short time working arrangement” (ie period of 33% working under the scheme) must cover a minimum period of 7 days.
- Employees do not need to work the same pattern of hours each month.
What will employees be paid?
- Of the balance of the employees usual hours which are not worked the Government and the employer will each cover 33% and the employee will forfeit the balance.
- For a full time (100%) employee working the minimum requirement, this means:
- The employee works 33% of their usual hours and receives normal pay for those hours from their employer.
- Of the remaining 67%
- the Government contributes 1/3 under the scheme – subject to cap of £697.92; and
- the employer also contributes 1/3 (22% of normal pay – so the cost to the employer is 55% of the employee’s normal pay – plus NI and pension (see below)).
- Overall the employee receives 77% of their usual pay.
- Usual pay is pay pre furlough pay if the furlough scheme has been used.
- NI and pension contributions must be covered by the employer in full – there is no Government assistance for this.
Interaction with redundancy
- Employees cannot be dismissed by reason of redundancy or put on notice whilst the employer is claiming under the scheme.
- Employees would therefore have to be brought back to normal working hours before being given notice.
How will claims be made?
- “Usual wages” will need to be calculated in a similar way to the Furlough Scheme calculations, with the same principles applying (details to be confirmed in the guidance).
- Claims will need to be for a minimum period of 7 days.
- Employers can only submit claims a month in arrears after employees have been paid and those payments have been reported via RTI.
And…… what we don’t know:
- Usual Hours? – What are “usual hours” for the purposes of the scheme? Does “usual include overtime”? Presumably similar principles to the Furlough Scheme payment calculations will apply to hours.
- What about holiday? – Presumably holiday will continue to accrue in the normal way as if the employee was working at 100% and if holiday is taken during the period that the scheme is operating employees will need to be paid at 100% for those holiday days. This is how the Furlough Scheme operated and there is no suggestion that this will be any different. Indeed the Government guidance in relation to the Furlough Scheme made it clear that normal employment law principles continue to apply – including the right to take and be paid for holiday.
- What about those on statutory leave who would be due to return? Can they return early to take advantage of 33% working for the next 6 months with the income that will provide? Presumably they can, for the same reasons amendments were made to the Furlough Scheme to permit this.
- Does the employee have to be engaged on their usual duties? Could, for example, one different role be shared between three people who would otherwise be made redundant? There seems to be silence on this so far but as the scheme is aimed at supporting jobs there seems no reason why it would preclude forms of job share whilst businesses move through this crisis. However, employers will need to consider that although this may protect more jobs it will cost them more than 100% of the wages of one full time worker.
- Can an employee work more than 33%? – There is nothing to prevent this, so presumably an employee could work 50% with the Government and the employer each picking up 33% of the other 50% and the employee forfeiting the balance.
- Can the employer top up to 100% of salary should they wish to do so? There is nothing to suggest that they can (although equally nothing to suggest they cannot) and indications seem to be that this is not envisaged – hopefully the guidance will clarify.
- Can an employer consult with employees for redundancy purposes whilst those employees are subject to the scheme provided they are not dismissed and notice is not given? This is not expressly prohibited (so far the references are to not making redundancies or giving notice) but it is contrary to the intention of the scheme, so prohibitions may be built into the more detailed guidance.