Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme is an initiative to try and prevent businesses from terminating employees by meeting 80% of the wage cost up to a cap of £2,500 per month.
The employee must be on the payroll on 28 February 2020.
If you were not on the payroll on 28 February, your employer may still opt to pay you but they will not be able to claim the government funding. Some businesses may not be able to continue paying its employees without the government support.
The employee does not claim the 80% themselves. The employer has to furlough the employee, pay them and reclaim the 80% back.
Furloughed employees are temporarily not working but remain on the company’s payroll.
The minimum furlough period is 3 weeks.
The current HMRC systems are not set up for this but it is expected to be operational by the end of April and can be backdated to 1 March.
(If you are a business with employees and are wondering how this will affect you, please visit here)
It is the company that designates whether an employee is furloughed, rather than the other way around.
With that said, the employment law to do with changing people’s employment status has not changed, so it might be that there is a negotiation to be had between employer and employee.
Additionally, the company must opt to access the Coronavirus Job Retention Scheme and furlough the employee(s) rather than terminate them. The employee cannot make this decision.
The business does NOT have to close in order for employees to be furloughed.
In fact, the business needs to remain open to a degree in order for them to do the necessary payroll administration.
At the end of the furlough period
When the Coronavirus Job Retention scheme ends, the employer must decide if the employees can return to their jobs. If the employee(s) cannot return because the business is no longer viable or is operating on a smaller scale then termination or redundancy may be necessary.
The Coronavirus Job Retention Scheme (which is how the government will pay 80% of a furloughed employee’s pay costs up to a maximum of £2,500 per month) is NOT the same as sick pay.
Don’t confuse inability to work through sickness (therefore, sick pay) with inability to work because there is no work (80% pay for furloughed employees.
Sick pay comes into play when you cannot work due to being having covid-19, having covid-19 symptoms, being in self-isolation or someone in your household is in self-isolation or you have been told to self-isolate by a doctor or NHS 111.
The government is changing the legislation to enable people to claim Statutory Sick Pay (SSP) from day 1 (as opposed to day 4). This will apply from 13 March once the legislation has been passed.
You may need to go through the process for obtaining an isolation note online, which replaces the GP’s “fit note” (also called a “sick note”). This involves answering some questions and then, if eligible, an isolation note is emailed to you which you then provide to your employer.
Statutory Sick Pay (SSP) is £94.25 per week and is paid through your normal payroll. You should talk to your employer if you need to claim SSP.
Your employer may pay more than the statutory sick pay amount if it is in your employment contract.
Not everyone is entitled to Statutory Sick Pay – for example, if you earn less than the “lower earnings limit” are self-employed. If this applies to you, then you may be able to claim for Universal Credit (UC) or the new style “Employment and Support Allowance”
Many employers will arrange working from home, where possible. On the other hand, if you do not wish to go into work because you or your family are high risk (but are not eligible for sick pay, as above), your employer may agree for you to take annual leave or unpaid leave but is not obliged to agree to either.
It is completely unchartered territory and the mechanisms for all these changes are not in place (current payroll & reporting systems are not set up to handle them), there may be some delays and hitches.
Renegotiating Financial Obligations
Do not be afraid to contact your mortgage lenders and ask for a payment holiday and renegotiate any other payments that can (although do be aware – mortgage and other interest is not necessarily cancelled and it might be that it is added to later payments), if necessary.
Since things are changing on a daily, if not hourly, basis, some of the above may change, be superseded or clarified in the future.
Please double-check any of the above before acting on them.