23 Mar Guidance on the COVID-19 Pandemic – Job Retention Scheme
Guidance on the COVID-19 Pandemic
Job Retention Scheme
Dated: 23 / 3 / 2020 Information may change as the scheme and events change
What is the Job Retention Scheme?
The purpose of the scheme is to save jobs and income during the pandemic by offering up to 80% of pay for roles that would have been redundant. In circumstances where you have no work for an employee the government will offer employers the following to protect jobs for the next three months (backdated to 1/3/2020): –
- 80% of the salary (capped at £2500) for employees who’ roles have gone – for the scheme to apply they must NOT be dismissed, rather given a leave of absence
- An online portal is being made available for payroll to submit the affected employee data on pay and confirming they have been ‘furloughed’ in order to claim the 80% pay;
- If a person is paid via PAYE, then the scheme should apply to them (it presently excludes anyone on self-employed terms – such as consultants);
- Funding / cash is being made available by the end of April
Employment and HR consideration: how do we put the scheme into effect internally?
Recommended process for laying off staff / furlough of roles
Remember even if you place an employee on furlough, to avoid creating a breach of contract claim you still need: –
- A contractual right to lay off in the contract; and
- Agreement to reduce pay by 80%;
What if the employee wont agree?
Where an employee refused to confirm agreement to reduce pay by 20% then your options could be:
- Go ahead anyway relying on the extreme circumstances to protect the role and risk breach claims; or
- As a last resort simply make the role redundant anyway (albeit that incurs much needed capital costs)
If you do have a lay off clause then you can in fact unilaterally vary pay too.
All of this must be done in consultation with staff to ensure no further claims of breach are made by employees.
We would expect in the circumstances the majority of staff will agree but we do stress internal processes must be followed to avoid claims:
- Consult with staff on the basis for the need to cut back;
- Work with them to reach a solution;
- Properly record the consultation and any agreement reached.
Caution: selection to ‘furlough’ is not without employment law risks!
As in any selection process employers must have a objective and fairly implemented basis for selection an employee for furlough. Selection must not be discriminatory for example, selecting X employee because he is always off sick due to his ongoing depression problems – that would likely create a discrimination claim – or selecting employee Y for Furlough because she has is part-time and has childcare commitments – that would be sex discrimination.
Decisions to Furlough roles must be:
- based on operational needs;
- consulted with all staff openly;
- agreed with staff.
We recommend publishing to staff: –
- the reductions suffered in each area of work;
- the need to reduce in each area;
- the roles that are ‘provisionally’ considered for Furlough; and
- requesting swift consultation on how that will:
- be implemented; and
- operated in practice.
That should be done prior to actually implementing, although we do understand in the present extreme circumstances time may be limited.
Does the scheme apply to those roles we need albeit need on reduced hours?
At present, no. If the role is needed then reduced hours and pay would need to be covered by the employer although staff in the same skill areas could agree to alternate, one week on reduced, one week on Furlough.
How does the scheme effect holiday accrual and benefits?
These are not covered by the scheme at present, again, it may be that consultation should secure approval and formal agreement to vary terms pro-rata based on the 80% scheme to avoid arguments of breach of other payment terms too.