CJRS: What we know so far
On 20 March 2020, the Government announced measures to protect employers and employees under the Coronavirus Job Retention Scheme (CJRS). Under the CRJS, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
Without further details being announced and an unknown reimbursement date, it appears at the moment to represent a leap of faith for many businesses who wish to use it.
Here’s what we know so far:
The bare bones of the scheme can be found here.
Legislation has not yet been announced so a lot of details and complexities are unanswered at the moment.
When will the scheme go live?
HMRC are working urgently to set up the scheme and a system for reimbursement. They expect the first grants to be paid within weeks, and are aiming to get it done before the end of April (though we have seen some sources suggest early May).
What does it mean to be furloughed?
In the UK, the government has instituted a policy in response to the COVID-19 pandemic, reimbursing employers who continue paying employees that cannot work due to the pandemic. These employees are designated as “furloughed.”
The scheme is optional and it is the choice of the employer.
Who is it for?
All UK-wide employers with a PAYE scheme will be eligible – this includes the public sector, Local Authorities and charities.
The scheme is said to cover all staff who are on the PAYE scheme for the business and who would otherwise have been made redundant or laid off.
Despite speculation that this would just be for businesses forced to close as a result – such as pubs, restaurants and airlines, the government website makes it clear that it is open to all UK businesses.
How long is the scheme available?
The scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months – the Chancellor stated that the scheme will be extended for longer if necessary.
How can employees wages be financed in the interim?
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
Are furloughed workers still employed?
Yes, employees who have been furloughed have in effect just been paused, they are still considered to be employed by their employer and will pick up where they left off once the furlough status ends.
Can an employer fund the difference between the grant and employee pay?
Yes, the government will cover 80% of furloughed employee pay, up to £2,500 per month, employers can voluntarily make up the rest of the employees’ pay if they wish to.
Can the furloughed worker still work for the business?
It is important to note that a furloughed worker is not permitted to undertake any work for the employer. The Scheme does not therefore assist employers who wish to keep their employees at work but for reduced hours and/or on reduced pay.
What if I choose to not wait for the scheme?
You have other options such as layoffs, redundancies, using holiday etc.
See here for more details: https://www.acas.org.uk/coronavirus/if-the-employer-needs-to-close-the-workplace
Again it is important to abide by the existing employment laws and contracts.
Details we don’t know for definite until the legislation comes out:
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- can a sole director be furloughed,
- can furloughed workers be rotated
- can an employee be re-furloughed
- is the 80% gross or net (per gov guidance on the employee section, not the employers, it would appear to be gross)
- implications with maternity
- how zero hour contract workers will be included if at all
- can you furlough employees who are already stuck at home unavailable to work due to childcare issues or sick
- what happens with new starters (a 28th of February date was mentioned but currently unclear)
How do you designate an employee as a furloughed worker?
Although detailed guidance has yet to be issued, to claim under the scheme employers will need to:
- insist on designating an employee as a furloughed worker only if their contract of employment has a clause which allows lay-off or short-time working. Without such a clause then the employee needs to agree to be designated a furloughed worker.
The employee would also need to agree to any proposed pay reduction to 80% of pay.
Given that in most cases the alternative is likely to be compulsory redundancy – and possibly the insolvency of the employer – most employees are likely to agree. - submit information to HMRC about furloughed employees through a new online portal. As this has yet to be built we do not have any further details as to what information will be required.
- await the grant funds from HMRC
A note of caution
To furlough your employees means to change their status. This change will be subject to existing employment law and employee contracts. As a result, we recommend you seek legal advice before committing to any changes for this new scheme.
We expect there will be strict measures in place to prevent abuse of this scheme. Please ensure you only consider the scheme for workers who otherwise would have been made redundant or laid off. Misuse of the scheme would likely be considered fraud.
There is also potential discrimination and unfairness with regards to employees and who is chosen to furlough. In essence some employees could be working reduced hours, some could be working full time for full pay, some could be at home furloughed not working on 80% pay. This certainly raises some internal issues that need to be considered.
Up to date information
We hope to hear more information from the government this week and will update this page as new details are announced.
The information contained in this guidance has been obtained from public sources and every attempt has been made to ensure its accuracy at the date of publication. Due to the limited information available so far, we will accept no liability for losses arising from changes in the law or the interpretation thereof that occur after the date on which the advice is given.