Interpretation of incomplete guidance from Gov.uk 23 March – CJRS

Key announcements today 23/03 have largely been around the CJRS scheme is now open, but we await detail on what is and importantly ISN’T covered under the furlough scheme. HMRC are expected to make further announcements in the ‘next few days’

Much of the detail is yet to be announced and so we have summarised what we know so far.

What is the scheme and who can partake?

Available from the 1 March 2020 for a minimum of three month, the Coronavirus Job Retention Scheme will allow business to recover 80% of wage costs for any employee on ‘furlough leave’, which is a new class of indefinite leave where the Government reimburses the employer for wage costs. The scheme has been launched as alternative to redundancies, lay off, unpaid leave or other measures for their employees and will be available for all businesses.

From what we understand the scheme will only cover employees and not other workers, such as casual staff, contractors or the self-employed.

What costs can be recovered?

Costs of up to £2500 per month per employee can be recovered and there is no limit to the number of employees or duration that can be claimed for. We also anticipate the costs to include wages, pension contributions and Employer NI contributions.

As an employer, what do I need to do?

First of all, you will need to agree with your employee to them being designated as a ‘furlough worker’. We advise that you send a letter or email to the employee and get them to agree to this in writing. Employees cannot elect themselves to be designated as a ‘furlough worker’. See example of letter here.

You will the have to submit details to HMRC via their new online portal which is being set up urgently.

Am I required to top the pay up to 100%?

The short answer to this is no, but some employers may wish to do so. All you need to do is ensure this is made clear from the offset and we would advise a consistent approach.

What if employees have already been dismissed or taken unpaid leave?

The Government will be backdating to 1 March 2020 and has urged employers to take back anyone they have dismissed and covert them to a ‘furlough worker’.

When does this not apply?

The scheme does not support situations where employees have agreed to a pay cut or reduced hours but still required to work. Currently there is no option to mix ‘furlough leave’ and reduced working hours.

What are the consequences?

Employees will remain on the employer’s payroll and continue to accumulate holiday and service.

It may cause resentment from other employees as those on ‘furlough leave’ will be getting 80% of their pay for doing nothing and those ill or self-isolating may only be getting SSP. In addition those on ‘furlough leave’ will be incentivised not to inform employers when they are self-isolating or ill because of the adverse pay consequences.

See more: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses