On Friday 20 March 2020, the Government announced the new Coronavirus Job Retention Scheme. This scheme will allow all UK employers to claim back part of their employees’ salary if those employees have no work to do and would otherwise have been ‘laid off’. The key details are:
- Employers will need to designate affected employees as “furloughed workers”. You will need to carefully consider how those employees are to be selected.
- Employers will need to notify these employees that they are now furloughed workers. However, note that the Government has made it clear that this is subject to existing Employment Law and also dependent on the Employment Contract, and being a furloughed worker may be subject to negotiation.
- Employers will need to be careful when deciding which employees should become furloughed and who remains at work. This is to avoid potential discrimination claims and also to avoid breaching the implied term of trust and confidence which could allow those employees with over 2 years’ service to claim unfair dismissal. Please, therefore, take further legal advice before designating and informing employees that they are furloughed workers.
- Many businesses will want the furloughed workers to accept a reduction of 20% in pay, this may be possible unilaterally depending on your employment contracts but will otherwise require agreement from the staff.
- Information about the furloughed employees will need to be submitted to HMRC along with their earnings. This will be through a new online portal that HMRC are currently setting up.
- HMRC will subsequently reimburse 80% of the “wage costs” of furloughed workers. The wage costs could include salary, employers’ national insurance and pension contributions. It is not however clear yet what the wage costs are intended to cover. Note that there is a cap of £2,500 per month that will be reimbursed in respect of each furloughed worker.
Further guidance will no doubt be issued over the coming days, this information is correct as at 9am 23 March 2020, however, to obtain further legal advice in relation to the scheme please do not hesitate to contact Tracey Guest or Sarah Calderwood in the Employment Team at Slater Heelis. We can advise on the procedure you now need to follow to make employees ‘furloughed workers’ and how this ties in with redundancies and lay-offs. We will also ensure you do not expose yourselves to discrimination and unfair dismissal claims.