The Most Frequently Asked Job Retention Scheme Questions
Whether you’re an employee or employer, you probably have questions about the Coronavirus Job Retention Scheme. Here at Tinsdills, we have the answers to these questions and more.
By utilising our expert Employment Law team here at Tinsdills Solicitors, we have answers to all of your most burning Job Retention Scheme questions, be they on pay, tax, or something else entirely.
This government scheme has been put in place to provide a safety net for employers and their employees. Hopefully, our answers will go some way to easing any anxieties caused by such extreme circumstances.
If you don’t find what you’re looking for below, feel free to contact us using the form here, and we will be happy to help.
Please click here to read the Coronavirus Factsheet for Employers – 15/04/2021
Frequently Asked Questions On The Job Retention Scheme
It is a temporary scheme devised by the government to support employers to retain and pay a proportion of the wages of their employees who would otherwise have been laid off or made redundant. The affected employees will be put on “furloughed” status.
Furlough means you will remain on the payroll of your employer, but you will have been asked to stop working.
You will have been asked to stop working completely for your employer for any furlough period prior to 1 July 2020, but since 1 July 2020 you may have returned to work on a part-time basis, if agreed with your employer, whilst remaining a furloughed employee for the days/hours you do/did not work.
You furlough an employee by agreeing with the employee, and confirming the agreement in writing, that the employee will be furloughed and will cease to undertake all work on behalf of the business. Following the latest extension of the Scheme (announced on 3 March 2021 in the government’s annual budget), the employee must have been furloughed prior to 31 October 2021 if you wish to claim the grant under the Coronavirus Job Retention Scheme.
You may agree with a furloughed employee (in writing) that they will return to work on a part-time basis but remain furloughed for the rest of the time not worked.
Placing an employee on furlough is a variation of their contract of employment and will therefore be subject to the usual employment law principles on variation.
Confirmation of the agreement to furlough an employee must be retained on the employee’s employment record.
Yes, you will be paid during furlough. However, you may be paid a lower monthly sum than you would ordinarily receive.
For the period from 1 November 2020 up to 1 July 2021, HMRC will reimburse your employer for 80% of your gross basic wages up to a maximum of £2,500 It is then up to the employer whether they pay the remaining 20% (or more if 80% of your salary exceeds £2,500) but they are not obliged to do so.
From 1 July 2021, the amount your employer can recover under the scheme will reduce on a sliding scale and employers will be required to ‘top up’ employees pay to 80% of your gross basic wages (up to a maximum of £2,500). Employers can opt to pay more than 80% at their discretion but the amount they can recover under the scheme will not change as a result of any addition payment.
HMRC ceased reimbursing employer for its NI and pension contributions on 1 August 2021, so your employer should have resumed payment of these amounts (and should continue to do so following the extension of the Scheme).
If you are working part-time whilst furloughed then, under the flexible furlough provisions, you should be paid in full for the time you spend working and you will receive the furloughed rate for those hours not worked.
You should receive 80% of your basic wage or £2,500 (whichever is lower) per month less any employee income tax, NI and pension contributions that you would usually make. Payments under the grant do not include any performance-related bonuses, discretionary payments (such as tips), any conditional payments (e.g. where a threshold or target must be met) or any non-financial benefits. Again, it is up to your employer whether they wish to make these additional payments.
If you receive a regular wage, your basic wage should be whatever you usually receive (this may be different to the amount stated in your written contract of employment).
If the hours you work each week / month vary and the amount you are paid varies accordingly (e.g. zero hours contract), your basic wage is calculated as the higher of:
- the pay you received that month in the previous year; or
- the average of your pay in the tax year 2018/19.
Performance-related bonuses, discretionary payments (such as tips), conditional payments (e.g. where a threshold or target must be met) and any non-financial benefits will not be included in the calculation of your basic wage. However, it appears that where your regular pay includes compulsory commission this may be included in the calculation.
If you are placed on furlough, and so are undertaking no work for your employer, they can pay you 80% of the National Minimum Wage (which is, of course, less than National Minimum Wage). However, if you undertake any training or volunteer work for your employer or work part-time whilst on furlough then you are entitled to receive National Minimum Wage for those hours spent training or working.
Whether any payment to employees usually entitled to receive National Minimum Wage will need to be increased if National Minimum Wage is increased (as occurred on 1 April) whilst those employees are on furlough and being paid 80% of their salary will depend on the wording of the employment contract. However, if you are undertaking training or working part time for the employer then the amount you receive for the time spent training or working should equate to the level of National Minimum Wage payable at that time.
Following a change in HMRC guidance on 7 August 2020, it would appear that your employer may be able to calculate your rate of pay under the scheme using the method for employees whose pay varies. This will only apply if you have worked enough overtime (in the tax year 2019 to 2020) to have a significant effect.
Payments made under the scheme prior to 1 August 2020 covered 80% of your basic salary or £2,500 per month, whichever is the lower, plus the employer’s pension contributions, and NI contributions. However, deductions were made for normal employee contributions to income tax, NI and pension schemes.
However, HMRC ceased reimbursing your employer for its NI and pension contributions from 1 August 2021 so your employer should have resumed payment of these amounts from that date.
Yes. Following the extension of the Scheme, which was announced in the government’s annual budget on 3 March 2021, employees who were hired on or before 31 October 2021 are now eligible under the scheme, provided that you have submitted real time information payroll data through the PAYE system for the affected employees before 3 March 2021. Those employees do not need to have been put on furlough before to be eligible.
You must get the employee’s agreement to being furloughed but this agreement does not necessarily have to be in writing. If the employees’ contracts of employment contain existing lay off provisions, then it may be that this will be sufficient ‘agreement’. In any event, confirmation of the agreement to be furloughed must be made in writing, even if the agreement itself was made verbally and so you should follow up any verbal agreement with an email or letter to confirm that agreement.
You may rotate employees under the scheme but you should remember that any one employee should be subject to furlough for a continuous period of at least 3 weeks to be eligible under the scheme. However, employees can work on a part-time basis (i.e. part working, and part furloughed) and the grant will still cover those days where the employee does not work and is on furlough. The grant will not cover those days/hours worked, though.
Yes, whilst furloughed you will continue to accrue holiday at the same rate as if you were not furloughed.
Yes you can take holiday whilst furloughed. If you take holiday your employer must pay you 100% of your basic wage for that period of holiday, but will only be able to claim back the relevant percentage applicable under the scheme at that time for the period of holiday (or other applicable amount from 1 July onwards).
You can refuse to be furloughed but you must remember that you may be at risk of being laid off or made redundant by your employer if you do not accept furlough status.
As furlough is meant to be a temporary measure, it is not a redundancy situation and therefore there is no requirement to consult employees or to appoint employee representatives. However, strictly speaking, where there are no ‘laying off’ provisions in your contract of employment, any agreement to furlough would be a change to your terms and conditions of employment, for which consultation is required. The length of time employers are required to consult depends on the number of employees affected.
You should consider that consultation on change of terms can be a lengthy process and so (given the exceptional circumstances) employers may ask you to agree to being furloughed without a full consultation and you will need to weigh up the right to be consulted with the potential risk of redundancy if you do not agree to be furloughed (given that furlough is being used as a means to try and prevent redundancy and lay offs).
On 3 March 2021, it was announced that the scheme will now run until 30 September 2021 and the level of grant will reduce on a sliding scale from 1 July 2021 (with the employer then being required to ‘top up’ employees pay to 80% of their basic wage or £2,500 (whichever is lower).
No, following a change in law, statutory redundancy and notice pay should be based on your average weekly pay from before you were furloughed rather than your current, lower rate of pay whilst on furlough. (This does not apply to any additional contractual entitlements that you may have.)